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Consumer Warranty Law: 14.1 Introduction

This chapter focuses on new motor vehicle warranty issues. As new vehicles invariably come with a manufacturer’s warranty, the pivotal question is not, as with used car cases, the warranty’s existence, but its enforcement.

Consumer Warranty Law: 14.2.1 Introduction

A common warranty problem for a new car owner is that, shortly after purchase, the car displays certain defects that persist despite dealer repair attempts. Such cars are colloquially termed “lemons.” State lemon laws offer targeted remedies for owners of such cars.

Consumer Warranty Law: 14.2.2 Lemon Laws Are Constitutional

Courts consistently uphold lemon laws against constitutional challenges.15 Courts have rejected constitutional challenges based on the Commerce Clause,16 even when the state lemon law is applicable to vehicles purchased in another state.17 The Eighth Circuit has ruled that a lemon law did not amount to a taking of private property without due process of law.18

Consumer Warranty Law: 14.2.3.1 Types of Vehicles Covered

Every lemon law covers private passenger motor vehicles purchased for consumer use. Whether trucks, tractors, mopeds, motorcycles, trailers,20 motor homes,21 and heavy equipment such as construction vehicles are covered depends on the specific language of the statute and judicial interpretation of that language.

Consumer Warranty Law: 4.3.2.8 “Impliedly Warranted to Be Fit for Such Purpose”

This clause of section 2-315 is what makes the implied particular purpose warranty of such value to buyers. When this warranty arises, the seller is promising that the goods are suitable for the buyer’s particular job. Goods may fail to do the job even though they are not defective and operate exactly as intended by the manufacturer or seller. The buyer is given more specific protection than that offered by the implied warranty of merchantability, which promises only ordinary quality.

Consumer Warranty Law: 4.3.3 Seller’s Good Faith Is Irrelevant

As with express warranties and the implied warranty of merchantability, the seller’s good faith is irrelevant.239 If the goods are not fit for the buyer’s particular purpose, and the elements of section 2-315 are shown, the seller is liable regardless of whether the seller relied on the manufacturer’s or distributor’s statements in recommending the product, whether the manufacturer made a defective product, or whether the seller otherwise was not at fault.

Consumer Warranty Law: 4.3.4.2 Parol Evidence Rule Not Applicable

The implied warranty of fitness for a particular purpose arises by operation of law rather than through agreement of the parties.243 This principle is true even though the existence of the warranty usually depends on verbal communication by the buyer to the seller of the buyer’s purpose for the goods.244 As a result, the parol evidence rule is no bar to claims of breach.245 The buyers are free, for example, to show that they told the seller why the

Consumer Warranty Law: 4.4.1 General

Except in mail order, catalog, or internet sale transactions, buyers often have an opportunity to inspect the goods, a model, or a sample before the sale is consummated. The mere opportunity to inspect has no effect on the existence or scope of any of the UCC warranties.

Consumer Warranty Law: 4.4.2.1 Defects That Could Not Reasonably Have Been Discovered

As section 2-316(3)(b) provides, examination of the goods or refusal to examine the goods can vitiate implied warranties only with respect to defects that are discovered, or should have been discovered, “in the circumstances.” An inspection does not waive the implied warranty for defects which could not reasonably have been discovered during the examination, such as latent defects.259 A typical consumer buyer, and often a commercial buyer, cannot be expected to conduct complicated testing or discover latent defects through an examination of t

Consumer Warranty Law: 4.4.2.3 Post-Sale Inspections Irrelevant

A post-sale inspection, unlike inspection upon delivery or before acceptance of the goods, is not an examination within the meaning of section 2-316(3)(b). As the deal has already been made, inspection after the sale has no bearing on whether implied warranties arose in the bargain. This point is made in comment 8 to section 2-316: “ ‘Examination’ as used in this paragraph [section 2-316(3)(b)] is not synonymous with inspection before acceptance or at any other time after the contract has been made.

Consumer Warranty Law: 4.4.2.4 Necessity of Demand by Seller When Consumer Fails to Inspect Goods

Sellers will rarely be able to avoid responsibility by looking to the “refused to examine the goods” language in section 2-316(3)(b). This provision applies only when the seller actually demands examination by the buyer before the sale. The buyer’s failure to examine the goods or even the buyer’s refusal of a request or offer to examine the goods is insufficient. Again, comment 8 to section 2-316 is explicit on this point:

Consumer Warranty Law: 14.2.3.2.2 Are living quarters excluded?

In many states the statutory language or judicial interpretation applies the lemon law to the motorized portion of motor homes and excludes the living quarters or non-motorized portion of the vehicle.37 The practical effect of the limitation has largely been eliminated in California, where the lemon law excludes the living quarters, but the Song-Beverly Consumer Warranty Act includes them, thus resulting in full relief for the aggrieved purchaser.38

Consumer Warranty Law: 14.2.3.3 Demonstrators and Low-Mileage Used Cars

With some exceptions, lemon laws apply only to new motor vehicles,42 although the term “new” may not be defined in the lemon law. Definitions found in other state motor vehicle laws will generally define “new,” and may state that a vehicle is “new” if it has not previously been subject to a retail sale or has not yet had a certificate of title issued.

Consumer Warranty Law: 14.2.3.4 Leased Vehicles

A number of lemon laws specifically apply to leased vehicles,54 but in other states the language is not clear. Some lemon laws define a covered motor vehicle merely as one that is registered in the state, and the statute should apply to leased vehicles registered in that state. Other laws define motor vehicle by its physical characteristics, such as weight, and not according to whether the car is sold or leased, and should also cover leased vehicles.

Consumer Warranty Law: 14.2.3.5 Out-of-State Vehicles

Some state lemon laws cover vehicles registered in that state, regardless of where they were purchased.62 Others apply only to vehicles purchased in that state,63 thus not applying to vehicles purchased elsewhere and then brought into the state.

Consumer Warranty Law: 14.2.3.6 Covered Car Owners

Many lemon laws apply to “consumers,” typically defined broadly enough to cover purchasers, transferees still covered under the manufacturer’s warranty, and any other person entitled by the terms of such warranty to enforce the obligations of the warranty.72 If the statute applies to “persons” or defines consumers as persons it will probably cover corporations that purchase vehicles as long as they meet the other requirements for coverage.73 In many states there is a definition of “person” in a gene

Consumer Warranty Law: 14.2.3.7.1 Manufacturers

Lemon laws obligate the manufacturer to refund the purchase price or replace the motor vehicle if the manufacturer is unable to conform the motor vehicle to the applicable warranties.83 The lack of privity between the manufacturer and the purchaser, or even a subsequent purchaser, is irrelevant.84

Consumer Warranty Law: 14.2.3.7.2 Dealers

Lemon laws generally obligate only the manufacturer, not the dealer, to offer the consumer a replacement or refund for a lemon. A Wisconsin court interpreted its blanket exclusion of dealers to apply even to a dealer that had installed numerous non-manufacturer parts for which the manufacturer could not be held responsible.92

Consumer Warranty Law: 14.2.4.1 Breach of Express Warranties

Most lemon laws explicitly apply to defects covered by “express warranties;”99 the consumer must prove the existence of a qualifying warranty.100 The term “express warranty” is broader than just Magnuson-Moss Warranty Act written warranties, although some state lemon laws specify that the warranty must be written.101

Consumer Warranty Law: 14.2.4.3 Manufacturer’s Obligation for Dealer Warranties and Actions

The manufacturer is often liable under the lemon law not only for breaches of its warranties, but also for breaches of the dealer’s warranties. The typical lemon law contains no requirement that the warranty be created by or that the underlying defect be caused by the manufacturer. A manufacturer may be liable under a lemon law for breach of an express warranty created by a dealer, because most lemon laws cover all express warranties, whether created by the manufacturer or the dealer.