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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.

Consumer Warranty Law: 14.2.8.10 Responsibility for Post-Cancellation Accidents

The typical lemon law allows the canceling buyer to continue to use the car until the manufacturer replaces the car or refunds the purchase price. Lemon laws do not indicate who is responsible during this period if the vehicle is damaged or stolen. The manufacturer has equitable title to the car, and arguably is responsible for any damage to the vehicle, unless the consumer is negligent. The manufacturer’s delay has forced the buyer to continue using the car.

Consumer Warranty Law: 14.2.9 Informal Dispute Resolution As Precondition to Lemon Law’s Enforcement

Lemon law statutes typically require that a consumer first use a dispute resolution process to enforce the right to the remedies available under the lemon law.449 Pennsylvania requires the consumer to have first “resorted” to the informal procedure before filing suit, a requirement which does not mean that the procedure must have concluded before the consumer may seek judicial remedies.450 The consumer only must have participated in good faith with the procedure as a condition to filing suit.

Consumer Warranty Law: 14.2.10.1 General

Lemon laws contemplate that manufacturers will replace a defective vehicle or refund its purchase price upon a consumer’s proof that the elements for relief have been satisfied. If a manufacturer refuses to grant lemon law relief, the lemon law may require or offer the consumer the option to submit the matter to a dispute resolution mechanism.

Consumer Warranty Law: 14.2.10.3 Is the Manufacturer’s Mechanism Qualifying?

Most lemon laws that establish manufacturer-created dispute resolution mechanisms do not set standards for a qualifying mechanism, but require that the manufacturer meet the minimum requirements set by the Federal Trade Commission (FTC) in its Magnuson-Moss Rule 703.473

Manufacturer dispute resolution mechanisms do not always meet the rule’s requirements.474

Consumer Warranty Law: 14.2.10.4 Federal Preemption

Magnuson-Moss Warranty Act and FTC Rule 703 requirements concerning dispute resolution mechanisms do not generally preempt state lemon law requirements concerning such mechanisms—the Act does not occupy the field of informal dispute resolution.483 While the Act explicitly preempts state law dealing with warranty disclosure requirements,484 the Act states that it does not “invalidate or restrict any right or remedy of any consumer under state law or any other federal law.”

Consumer Warranty Law: 14.2.10.5 The Conduct of a Dispute Resolution Proceeding

Lemon laws do not require any particular method for initiating the dispute resolution process. The Magnuson-Moss regulations and most individual mechanism procedures contemplate that the consumer will contact the mechanism program by telephone or in writing. Information concerning how to contact the mechanism is normally provided at the car’s delivery and should be posted in the dealer’s showroom. A number of states require that the manufacturer notify the consumer of the existence of the dispute resolution mechanism.493

Consumer Warranty Law: 14.2.10.6 Can the Mechanism Award the Consumer Attorney Fees?

A lemon law may provide that the dispute resolution mechanism can award attorney fees. When the law is not clear, a court may allow for such fees. The Connecticut Supreme Court has upheld an award of attorney fees for the consumer’s participation in the informal dispute resolution procedure when the statute allowed consumer attorney fees for certain actions, but was silent concerning the powers of the mechanism to award those fees. The court found a legislative intent to encourage consumers to resort to such procedures.501

Consumer Warranty Law: 14.2.10.7.1 When consumer rejects mechanism decision

Lemon laws typically specify whether the mechanism’s decision is binding on the manufacturer, the consumer, or both.510 In many states, if the dispute resolution decision does not satisfy the consumer, the consumer may choose to file a de novo action in civil court.511 Most courts hold that, when review is de novo, the consumer may include additional federal and state claims in the case.512

Consumer Warranty Law: 4.4.3 Dealing with Contract Clauses Stating That the Buyer Has Examined the Goods

Another problem for consumers is the effect on implied warranties of a fine print contract clause stating that the buyer “has examined the goods fully and finds them to be in good condition.” Two older cases hold that such an acknowledgment is conclusive on the issue of examination under section 2-316(3)(b) and precludes any implied warranty.270 The better view, however, is presented in Overland Bond & Investment Corp. v.

Consumer Warranty Law: 4.4.4 Other Remedies If Pre-Sale Inspection Has Vitiated Implied Warranties

A buyer who should have discovered defects or who is bound by an examination clause in the contract is not left without UCC rights. The implied warranties can still cover any defects or characteristics other than those the buyer should have discovered by an inspection, given the buyer’s knowledge and capabilities. The buyer whose inspection should have but did not reveal the defects may still have express warranty claims.275

Consumer Warranty Law: 4.5.1 Nature and Creation of Warranty of Title

Every contract for sale includes a warranty by the seller that the title conveyed is good and its transfer rightful, and that the goods will be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.278 There is no need to show that the seller knew of the problem with the title, as the warranty arises by operation of law regardless of the seller’s knowledge.279

Consumer Warranty Law: 16.1 Introduction

Lemon laws are not only applicable to cars. Numerous states have passed “wheelchair lemon laws”—a misnomer because many such laws’ coverage has been expanded beyond wheelchairs to include other types of devices intended to assist persons with disabilities in daily life activities. A more accurate description for these laws is assistive technological (AT) device warranty laws.

Consumer Class Actions: 2. Case Law Interpreting Rule 23

a. Rule 23 in general

The Utah Supreme Court has described the rule permitting the maintenance of class actions as “one of the most far-reaching and important changes in legal procedure in many a decade. Its impact on the enforcement of consumer rights, antitrust claims, securities claims and civil rights actions, to name but a few areas, has been monumental.” Richardson v. Ariz. Fuels Corp., 614 P.2d 636, 640 (Utah 1980).