(a) No seller assisted marketing plan contract shall require or entail the execution of any note or series of notes by the purchaser which, when separately negotiated, will cut off as to third parties any right of action or defense which the purchaser may have against the seller.

(b) If the contract referred to in Section 1812.209 provides for a downpayment to be paid to the seller, the downpayment shall not exceed 20 percent of the initial payment amount. In no event shall the contract payment schedule provide for the seller to receive more than 20 percent of the initial payment before delivery to the purchaser, or to the place at which they are to be located, the equipment, supplies or products, unless all sums in excess of 20 percent are placed in an escrow account as provided for in subdivision (c) of Section 1812.214. Funds placed in an escrow account shall not be released until the purchaser notifies the escrow holder in writing of the delivery of such equipment, supplies or products within the time limits set forth in the seller assisted marketing plan contract. Notification of delivery by the purchaser to the escrow holder shall not be unreasonably withheld.

(Amended by Stats. 1989, Ch. 1021, Sec. 5.)