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Consumer Warranty Law: Establishing the Standard of Normal Care

Proof of the standard of normal care—the skill and knowledge normally possessed in the trade or profession—often requires expert testimony.191 Nonetheless, three significant exceptions to this general rule exist. First, when the jurisdiction has already established a standard of conduct by case law, the court should rule as a matter of law whether the seller violated this duty.

Consumer Warranty Law: Standard of Care As to Inspection for Defects and Preparation for Sale

As part of the duty to act reasonably in placing goods in the stream of commerce, a manufacturer has a duty to inspect the final product.202 This duty extends to inspecting component parts used in the finished product.203 Application of this holding to a manufactured home would mean the manufacturer would be liable in negligence for defects in the appliances or furnishings installed in the manufactured home if the manufacturer did not perform a reasonable inspection of those items before delivering the home.

Consumer Warranty Law: Standard of Care to Warn the Consumer of Defects or Dangers in Use

Acting reasonably in marketing goods includes warning buyers about the existence of defects in the goods of which the seller or manufacturer knows or has reason to know.218 For example, in Smith v. Hartford Accident & Indemnity Co.,219 the court held a manufacturer liable to a manufactured home owner for injuries the owner sustained when he fell through the floor. The manufacturer had failed to inform the owner that its manufactured homes had to be periodically “sealed” to prevent wall and floor damage.

Consumer Warranty Law: 12.4.2 Failure to Act in Conformity with the Standard

To prevail in a negligence action, the consumer must show that the defendant breached the specific duty it had to the consumer. The consumer must establish what action or inaction on the defendant’s part was negligent. Problems of proving what the defendant actually did or did not do are quite similar to those of proving that a defect existed at the time of sale for UCC breach of warranty claims.229

Consumer Warranty Law: 12.4.3 Proximate Cause

The consumer must prove that the defendant’s negligence was proximate cause of the consumer’s injury.239 Proximate cause refers to both causation-in-fact and the policy considerations involved in determining the limits of responsibility for the results one causes.240 Causation-in-fact means that the damage the buyer or other party suffered resulted from the goods’ nonconformity to the standard of care.241

Consumer Warranty Law: § 2301. Definitions

For the purposes of this chapter:

(1) The term “consumer product” means any tangible personal property which is distributed in commerce and which is normally used for personal, family, or household purposes (including any such property intended to be attached to or installed in any real property without regard to whether it is so attached or installed).

(2) The term “Commission” means the Federal Trade Commission.

Consumer Warranty Law: § 2302. Rules governing contents of warranties

(a) Full and conspicuous disclosure of terms and conditions; additional requirements for contents. In order to improve the adequacy of information available to consumers, prevent deception, and improve competition in the marketing of consumer products, any warrantor warranting a consumer product to a consumer by means of a written warranty shall, to the extent required by rules of the Commission, fully and conspicuously disclose in simple and readily understood language the terms and conditions of such warranty.

Consumer Warranty Law: § 2303. Designation of written warranties

(a) Full (statement of duration) or limited warranty. Any warrantor warranting a consumer product by means of a written warranty shall clearly and conspicuously designate such warranty in the following manner, unless exempted from doing so by the Commission pursuant to subsection (c) of this section:

Consumer Warranty Law: § 2304. Federal minimum standards for warranties

(a) Remedies under written warranty; duration of implied warranty; exclusion or limitation on consequential damages for breach of written or implied warranty; election of refund or replacement. In order for a warrantor warranting a consumer product by means of a written warranty to meet the Federal minimum standards for warranty—

Consumer Warranty Law: § 2306. Service contracts; rules for full, clear and conspicuous disclosure of terms and conditions; addition to or in lieu of written warranty

(a) The Commission may prescribe by rule the manner and form in which the terms and conditions of service contracts shall be fully, clearly, and conspicuously disclosed.

(b) Nothing in this chapter shall be construed to prevent a supplier or warrantor from entering into a service contract with the consumer in addition to or in lieu of a written warranty if such contract fully, clearly, and conspicuously discloses its terms and conditions in simple and readily understood language.

Consumer Warranty Law: § 2307. Designation of representatives by warrantor to perform duties under written or implied warranty

Nothing in this chapter shall be construed to prevent any warrantor from designating representatives to perform duties under the written or implied warranty: Provided, That such warrantor shall make reasonable arrangements for compensation of such designated representatives, but no such designation shall relieve the warrantor of his direct responsibilities to the consumer or make the representative a cowarrantor.

Consumer Warranty Law: § 2308. Implied warranties

(a) Restrictions on disclaimers or modifications. No supplier may disclaim or modify (except as provided in subsection (b) of this section) any implied warranty to a consumer with respect to such consumer product if (1) such supplier makes any written warranty to the consumer with respect to such consumer product, or (2) at the time of sale, or within 90 days thereafter, such supplier enters into a service contract with the consumer which applies to such consumer product.

Consumer Warranty Law: § 2310. Remedies in consumer disputes

(a) Informal dispute settlement procedures; establishment; rules setting forth minimum requirements; effect of compliance by warrantor; review of informal procedures or implementation by Commission; application to existing informal procedures.

(1) Congress hereby declares it to be its policy to encourage warrantors to establish procedures whereby consumer disputes are fairly and expeditiously settled through informal dispute settlement mechanisms.

Consumer Warranty Law: § 2311. Applicability to other laws

(a) Federal Trade Commission Act and Federal Seed Act.

(1) Nothing contained in this chapter shall be construed to repeal, invalidate, or supersede the Federal Trade Commission Act [15 U.S.C. § 41 et seq.] or any statute defined therein as an Antitrust Act.

Consumer Warranty Law: § 2312. Effective dates

(a) Effective date of chapter. Except as provided in subsection (b) of this section, this chapter shall take effect 6 months after January 4, 1975, but shall not apply to consumer products manufactured prior to such date.

Consumer Warranty Law: 20.1.1 Introduction

Service contracts, extended warranties, and mechanical breakdown insurance have become a fixture in the sale of new and used cars and other consumer products. This chapter focuses on enforcement of the consumer’s bargain under the contract:

Consumer Warranty Law: 20.1.2 Relationship of Service Contracts to Extended Warranties and Mechanical Breakdown Insurance

Service contracts, extended warranties, and mechanical breakdown insurance are functionally equivalent. The consumer receives, for a price, protection beyond that indicated in any applicable written warranty. If the parties involved in offering a written warranty also offer (for a price) the added protection, it may be called an extended warranty. If an insurance company offers the protection, it may be called mechanical breakdown insurance or vehicle breakdown insurance.

Consumer Warranty Law: 20.2 Distinguishing Service Contracts from Warranties

Service contracts are distinct from written or express warranties, and legal requirements and consumer enforcement rights under the two are different. Under the Magnuson-Moss Warranty Act, a written warranty must be “part of the basis of the bargain.”4 Under the Federal Trade Commission’s Magnuson-Moss rules a written warranty is part of the basis of the bargain if it is provided at the time of sale and there is no extra charge for it.5