Article 2 applies to “transactions in goods,”101 not just sales, but many of the key warranty provisions apply only to a “sale” or “contract for sale” of goods, or only to a “seller.”102 A sale “consists in the passing of title from the seller to the buyer for a price.”103 An installment sales contract is a transaction in goods even though it also involves financing.104 The consideration for a sale ma
The Magnuson-Moss Warranty Act covers consumer products, without any distinction as to whether the product is new or used. The product must simply be “tangible personal property which is distributed in commerce and which is normally used for personal, family, or household purposes.”113
Computer software is generally considered to fall within the definition of goods.123 However, development of software or design of a website is likely to be considered services.124 Maryland and Virginia have adopted the Uniform Computer Information Transactions Act, which has special provisions regarding software sales, including special warranty provisions and validation of terms contained in post-sale documents such as shrink-wrap licenses as long as the buyer has the option to return the prod
In general, neither UCC Article 2 nor the Magnuson-Moss Warranty Act applies to pure repair or service transactions. Nevertheless, they may apply to mixed transactions that include both goods and services.
The Magnuson-Moss Warranty Act applies to consumer products, defined as “any tangible personal property.”130 Real property and houses are thus not covered. The Act may apply to manufactured homes to the extent they are treated as personal property rather than real property under state law.131 In New York, the sale of shares in a cooperative apartment is considered a sale of goods covered by Article 2.132
UCC Article 2 applies to sales, and UCC Article 2A applies to leases. Every state except Louisiana has adopted Article 2A.
The UCC covers sales of goods by private parties as well as by merchants.
The UCC confers many of its rights upon the buyer, defined as “a person who buys or contracts to buy goods.”161 Whether a person pays the seller directly, or allocates insurance funds or public benefits to cover the purchase, is irrelevant to this definition.162 While the definition of sale refers to passing of title,163 the definition of buyer does not, and the language “contracts to buy” is an additional indication that passing of title is not ne
The Code defines seller as “a person who sells or contracts to sell goods.”165 An entity that contracts to sell goods meets this definition even if it never has title or possession of the goods it is selling, but arranges for another company to deliver them to the buyer.166 This term may not include the seller’s individual sales representatives.167 Nor does it include individual corporate officers unless the corporate veil can be pierced.
The UCC applies to sales between merchants as well as sales to consumers. Although courts may give special attention to the consumer nature of a transaction,169 in general there is no UCC requirement that the consumer plead that a purchase is for personal, family, or household purposes.
There is a strong policy under state and federal warranty laws against displacement of one remedy by another.
The Uniform Commercial Code (UCC) does not repeal earlier consumer protection laws.178 Such statutes provide cumulative protection to buyers. UCC section 10-104, which specifies the previous laws repealed by the UCC, identifies only those comprehensive statutory schemes that generally governed contracts within the UCC’s scope, such as the Uniform Sales Act. Section 2-102 specifically provides that Article 2 does not “impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.”
The UCC policy of cumulation of rights and remedies also applies to common law and equity principles except when specifically in conflict with the UCC.191 Section 1-103 provides that: “Unless displaced by the particular provisions of [the Uniform Commercial Code], the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions.”
Federal preemption of state warranty-type claims is an issue for certain highly regulated types of products, primarily medical devices, medications, pesticides, and herbicides. Manufacturers also sometimes argue, usually without success, that federal regulation of motor vehicle safety issues preempts consumer claims.
The Medical Device Amendments (MDA) to the Federal Food, Drug, and Cosmetic Act set up a system for Food and Drug Administration (FDA) review of medical devices.215 The statute categorizes medical devices as Class III, Class II, or Class I, depending on the risk they pose to consumers. For Class III devices, the ones that pose the greatest risk, the FDA requires pre-market approval, its most rigorous review.
Questions of federal preemption commonly arise in cases involving defects in medical devices that are subject to the system of review described in § 1.6.2.1.1, supra.
While Riegel did not address express warranty claims, many courts hold that federal law does not preempt an express warranty claim based on voluntary additional statements made by the manufacturer, rather than on FDA-approved statements in the product’s packaging and label.233 However, a court may perceive a conflict with the FDA’s approval of the safety and effectiveness of a device if the plaintiff claims that a manufacturer that complied with the FDA’s requirements breached an express warranty of safety and effectiveness.
The Riegel Court reiterated that the generic requirements that the FDA imposes across the board on almost all medical devices, and the review it conducts to determine whether a device qualifies for grandfathering, do not necessarily result in preemption.238 Accordingly, when the plaintiff’s complaint is based on poor manufacturing practices, such as contamination or poor quality control, the court should determine whether the FDA has imposed any device-specific requirements regarding these practices.
The Supreme Court also interpreted the statute in 2001 in Buckman Co. v. Plaintiffs’ Legal Committee,241 a case involving a “fraud-on-the-FDA” claim in which the plaintiffs were injured by a device that they claimed the FDA approved only because of false information submitted by the manufacturer.
A regulation adopted by the FDA gives a narrow reading to preemption under the Medical Device Amendments.
The portion of the Federal Food, Drug, and Cosmetic Act that applies to prescription drugs does not contain an express preemption provision.251 In 2009, the United States Supreme Court held that this Act does not preempt state failure to warn claims regarding name-brand prescription drugs.252 The Court relied heavily on the fact that, even though the FDA had approved the existing label for the medication, the manufacturer could have added a stronger warning once it became aware of side effects.
In 2011, in PLIVA, Inc. v. Mensing,258 the Supreme Court held that the Federal Food, Drug and Cosmetic Act preempts failure to warn claims regarding a generic medication. The Court reiterated that similar claims would not have been preempted if they had been asserted against a name-brand manufacturer,259 but based its ruling on differences in the statutory schemes.
Over-the-counter drugs cannot be marketed unless the FDA has approved them as safe and effective for their intended use.274 The statute preempts state requirements that relate to the regulation of non-prescription drugs and are different from, in addition to, or otherwise not identical to a requirement under the federal statute.275 A savings clause states, however, that nothing in the federal statute should be construed to modify or affect any action or the liability of any person under state pr
Vaccines are subject to a special preemption regime. The National Childhood Vaccine Injury Act280 sets up a federal no-fault compensation program for vaccine-related injuries. The Supreme Court has held that the statute precludes design defect claims, although claims based on side effects that could have been avoided by proper manufacture or proper warnings may be preserved in some circumstances.281