Hawkes Television, Inc. v. Maine Bureau of Consumer Credit Protection: A New Loophole in Maine's Consumer Credit Code

The Uniform Consumer Credit Code (U.C.C.C.), enacted in Maine in 1974, is a comprehensive regulatory measure intended to provide "an adequate volume of credit at reasonable cost under conditions fair to both consumers and creditors." Although the Code applies to all consumer credit transactions, consumer credit sales are subject to greater regulation than are consumer leases, and creditors have sought to evade such regulation by characterizing what is in essence a conditional sale as a series of short term renewable leases. The issue in Hawkes Television, Inc. v. Maine Bureau of Consumer Credit Protection (Hawkes TV) was whether such a device exempted certain "rent-to-own" programs from the Maine Consumer Credit. Code's usury provisions. Applying a literal and formalistic interpretation of the Code's language, the Maine Supreme Judicial Court, sitting as the Law Court, held that such programs are not covered because they involve no extension of credit. A significant loophole thus appeared in Maine consumer credit law: by omitting from rental-purchase contracts any formal obligation to pay rent or by inserting a termination clause, creditors now may charge usurious interest rates. Drawing upon Federal Truth in Lending and Uniform Commercial Code decisions, this Note will compare the literal approach taken in Hawkes TV with a functional approach which focuses on the economic realities surrounding the transaction. Such a comparison will show that the functional approach is more consonant with the remedial purposes underlying the U.C.C.C., that the result in Hawkes TV is unfair to both consumers and conventional credit sellers, and that the case should be legislatively overruled at the earliest opportunity.