Search

The legislative history, although relatively scant, includes helpful passages.⁶ Other resources for interpreting the Act are the FTC rules, set out at 16 C.F.R.

The Magnuson-Moss Warranty Act applies to transactions involving a “consumer product,” defined as “any tangible personal property which is distributed in commerce and which is normally used for personal, family or household purposes,”²⁴ and manufactured after July 4, 1975.²⁵ The Act applies equally to new and used consumer products.²⁶ Any ambiguity as to whether a particular product is covered is resolved in favor of coverage.

A product need not be exclusively used, but only “normally” used, for personal, family, or household purposes.³² The product can have other uses if the product is “normally” used for personal, family, or household purposes. Few products have only personal, family, or household uses.

The Federal Trade Commission (FTC) stated at one point that “general aviation aircraft” were not consumer products because no appreciable portion of new aircraft were sold to consumers; it deleted “small aircraft” from a list of consumer products.⁵³ While an unreported district court decision agrees,⁵⁴ the Seventh Circuit, in dictum, soundly rejected any blanket rule that would exclude all airplanes.⁵⁵ The court pointed out that more consumers were

Several courts hold that prosthetic heart valves and other medical devices are not consumer products.⁵⁷ Medical devices are not customarily made directly available to consumers but are surgically implanted by medical professionals, who first purchase the product.

A consumer product must be “personal” property. The Act does not apply to real property,⁶⁸ but does apply to property that is intended to be attached to or installed in real property,⁶⁹ including “separate items of equipment” such as water heaters, furnaces, and air conditioners.⁷⁰

The Act does not apply to services, only consumer products.⁷⁷ Warranties which relate to the quality of a repairer’s work in performing repairs, such as a warranty on the rebuilding of an automobile engine, are not covered.⁷⁸ A written warranty on both the parts and the labor, such as one relating to the rebuilding of an engine and the parts, does involve a product, and thus the Act applies.⁷⁹ Ambiguity as to whether the warranty applies to parts s

The Act applies only to consumer products manufactured after July 4, 1975.⁸¹ This exclusion is now largely irrelevant.⁸² The date of manufacture and not the date of sale to the claimant controls.⁸³

The Act’s remedies extend only to “a consumer”⁸⁴ and the term plays a role in other Act definitions and in certain substantive prohibitions. The Act includes a three-pronged definition of consumer:

Many provisions of the Act apply to “written warranties.” The Act contains its own definition of written warranty, which is more limited than the term “express warranty” under the Uniform Commercial Code (UCC).⁹⁶ The warranty must be written, so oral express warranties and express warranties by sample or model are not written warranties. A written warranty must meet one of two conditions:

Courts have held that the following are not written warranties:

The Act provides that expressions of general policy concerning customer satisfaction are not subject to Sections 2302, 2303 or 2304 of the Act, which govern disclosure of warranty terms, pre-sale availability, tie-ins, designation of warranties as “full” or “limited,” and standards for full warranties.¹⁵⁰ If the policy is not general, but is limited to specific consumer products, even these provisions apply.¹⁵¹ A general policy that includes an express limitation of duration, a limitation on the

Buyers of used goods may not receive a printed warranty; the sales contract may state the goods are covered by, for example, a “thirty-day 50/50 warranty on parts and labor” or a “thirty-day warranty.” Is this a written warranty?

It may be if the statement is a promise that the goods will be free of defects in the first thirty days. While the warranty may not explicitly promise that the goods are defect free or will meet a specified level of performance, such a standard is implicit, as repairs are required only if a product has a defect or malfunctions.

The Act’s written warranty definition requires that the promise or undertaking become part of the basis of the bargain.¹⁶² Some courts construe the “basis of the bargain” requirement as applicable only to the second of the two independent parts of the definition.¹⁶³ This requirement is not part of the Act’s definition of “service contract.”¹⁶⁴

Written advertisements and brochures can contain written warranties. Seals of approval such as the Good Housekeeping seal can also be written warranties.¹⁷² The written warranty can be on a separate document, in the sales contract, or in the manufacturer’s maintenance and information booklet. In the case of the seal of approval, the promise that the product is defect free, or that the warrantor will remedy any failure to meet specifications and that the product will perform at a specified level, need not be provided on the seal itself.

Transactions conducted over the internet raise the question whether a warranty that is presented as electronic text meets the Magnuson-Moss definition of “written warranty.” The Act was adopted before online purchases were widespread, and neither the Act nor the FTC’s rules and interpretations define written.

A service contract, also called an extended warranty or breakdown insurance, is a written contract to perform services relating to maintenance or repair of a consumer product over a fixed period of time or for a specified length of time.¹⁸⁵ A service contract may be sold on a product not covered by a warranty or it may supplement a warranty, for example, by having a longer duration, covering additional parts or services, or providing additional remedies.

In some states, some or all service contracts are regulated as insurance by state law.¹⁹² An example is automobile mechanical breakdown insurance regulated by a state as a form of casualty insurance.¹⁹³ The Magnuson-Moss Warranty Act applies to service contracts regulated as insurance, but at one time a mistaken, nonbinding FTC advisory interpretation¹⁹⁴ held that the Act did not so apply, because of the McCarran-Ferguson Act.

The Act gives a cause of action to any consumer who is damaged by the failure of a “supplier, warrantor or service contractor”¹⁹⁹ to comply with an obligation under the Act, a written warranty, implied warranty, or service contract.

Manufacturers are covered under the Act, both as suppliers and warrantors.²⁰⁵ A rare exception may be a manufacturer who, on a limited basis, sells surplus goods that it does not manufacture directly to consumers (and these surplus goods meet the requirements of a “consumer product”).²⁰⁶ It is not a supplier (it is not engaged in the business of making the product available to consumers), does not provide a written warranty, and is not obligated under an implied warranty, as it is not a merchant

Dealers (direct sellers) who provide written warranties or who are obligated under implied warranties are covered under the Act as warrantors.²¹³ A dealer’s promise in a car lease to repair any manufacturer’s defects is a written warranty.²¹⁴ Dealers that do not provide written warranties and effectively disclaim all implied warranties are still suppliers because they are in the business of making goods available to consumers.²¹⁵

Creditors will not usually meet the definition of “supplier, warrantor or service contractor” under the Act.²²⁶ An assignee or related lender, pursuant to the FTC Holder Rule, is generally subject to all claims and defenses that the consumer could raise against the seller.²²⁷ The Holder Rule requires that a notice be inserted in consumer credit contracts making any holder of the contract liable, up to a cap, for any claims that the consumer could assert under the contract against the seller.

The Act defines supplier as “any person” engaged in the business of making a consumer product directly or indirectly available to consumers, and defines warrantor as any supplier “or other person” who gives or offers to give a written warranty or who is or may be obligated under an implied warranty.²³⁹ These definitions are not restricted to corporations or businesses, but include natural persons.

Chapter 21, infra, examines consumer lessee warranty rights as against the manufacturer, dealer, and lessor. This subsection considers whether a consumer lessee has rights under the Magnuson-Moss Warranty Act to enforce written and implied warranties and service contracts applicable to the lessee, and also to enforce the Act’s other requirements.

The key question when determining lessees’ Magnuson-Moss coverage is whether a consumer lessee qualifies as a “consumer,” as defined by the Act: