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Consumer Warranty Law: 18.1 Limited Applicability of the Uniform Commercial Code
The Uniform Commercial Code (UCC) defines “goods” as “all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale.”1 Houses—as distinguished from manufactured homes2—are not goods and so Article 2 does not apply.3 Courts are split as to whether a house’s component parts that were goods before being incorporated into the house lose their status as goods once incorporated.
Consumer Warranty Law: 18.2 Limited Applicability of the Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act applies to “personalty,”8 and thus does not apply to most forms of housing. Two courts have also held that a modular home does not come within the Act’s definition of “consumer product.”9 However, as with the UCC, the Act may apply to components built into a house.10 The Magnuson-Moss rules provide:
Consumer Warranty Law: 18.3.2 Overview of Modern Common Law Implied Warranties
All fifty states recognize an implied warranty of some sort in the sale of a home.26 But, unlike the Uniform Commercial Code, there is significant variation from state to state as to the nature and extent of these implied warranties.
Consumer Warranty Law: 18.3.3.1 Does the Warranty Apply Only to Buyers for Their Own Use?
A few courts apply the warranty of habitability only to those buying a house in order to live in it, and not to those buying for investment or commercial purposes,40 but most courts rule that the warranty does not depend upon either the buyer’s purpose41 or sophistication.42 “[R]esolution of the question whether the buyer has received that which he bargained for does not depend upon the status of the buyer or ultimate user; it depends upon the qual
Consumer Warranty Law: 18.3.3.2 Do Subsequent Buyers Have Rights Under the Warranty?
Courts diverge on whether a warranty of quality extends to subsequent purchasers—those further down the chain of title from the original purchaser. Can a subsequent owner sue the original builder, as the subsequent owner is not in privity with the builder? This question is different than whether a subsequent owner (purchasing a used home) can sue the seller. Instead the subsequent owner wants to bring a claim against the original builder for a defect that traces back to the original construction.
Consumer Warranty Law: 18.3.4.1 Do Only Professional Builders Provide the Warranty?
Some courts require that, to be subject to the warranty, the seller must be in the profession of building houses49 and build the house with the intention of selling it—that is, with a commercial purpose.50 This view echoes the UCC’s warranty of merchantability, which arises only when the seller is a merchant with respect to goods of the kind sold.51 Other courts though do not find that the breach of a warranty of quality applies only to professiona
Consumer Warranty Law: 18.3.4.2 Other Parties Liable Under the Warranty
In cases in which the builder and seller are different legal entities, courts have been willing in certain circumstances to adapt the warranty to provide redress to the consumer against both the builder and the seller.60 Developers who did not actually construct the house, but did the infrastructure work of site selection and preparation, have been found by some courts to have extended the implied warranty.61 When a building owner hires a contractor to convert the building into condominiums and
Consumer Warranty Law: 18.3.4.3 Is a Warranty Provided If the Buyer Already Owns the Land?
Courts are divided over whether a warranty of habitability arises only when the builder sells the buyer a package of land and house, or whether it also arises when the builder builds the house on land already owned by the buyer or acquired by the buyer from a third party.
Consumer Warranty Law: 18.3.5.1 Used Homes
A seller of used residential property generally is not liable for the implied warranty of habitability,76 although the original seller may be.77 However, even if the builder uses and occupies the home for a substantial period of time, the home will rarely be deemed used.78 A warranty of habitability may also arise in the sale of a used home if the seller substantially rehabilitates the property.79
Consumer Warranty Law: 7.6.4 UCC Limitations Period for Warranties for Leased Goods
The limitations period in Article 2A for warranty claims involving leased goods is significantly different from that in Article 2.
Consumer Warranty Law: UTAH
Utah Code Ann. §§ 13-20-1 to 13-20-7, 41-3-406 to 41-3-414 (West)
Consumer Warranty Law: VERMONT
Vt. Stat. Ann. tit. 9, §§ 4170 to 4181
Consumer Warranty Law: VIRGINIA
Va. Code Ann. §§ 59.1-207.9 to 59.1-207.16:2
Vehicles covered: Passenger cars, pick-up or panel trucks, motorcycles, autocycles, motorized portions of motor homes and mopeds, demonstrators, and lease-purchase vehicles (§ 59.1-207.11).
Persons covered: Purchasers, lessees, transferees during express warranty period, or any person entitled to enforce the warranty (§ 59.1-207.11).
Consumer Warranty Law: WASHINGTON
Wash. Rev. Code §§ 19.118.005 to 19.118.904
Vehicles covered: Leases or purchases made in state, including demonstrators, motorcycles, and lease-purchases; excludes business fleets with ten or more vehicles, non-motor portions of motor homes, and trucks over 19,000 lbs. (§ 19.118.021(11)).
Persons covered: Consumers under agreement or contract for transfer, lease, or purchase of a new vehicle (§ 19.118.021(4)).
Consumer Warranty Law: WEST VIRGINIA
W. Va. Code §§ 46A-6A-1 to 46A-6A-9
Vehicles covered: Passenger automobiles purchased in state or registered and titled there, including pick-up trucks, vans registered as Class A motor vehicles, any self-propelled motor vehicle chassis of a motor home registered as a Class A or Class B motor vehicle, and self-propelled farm vehicles with thirty-five or more horsepower (§ 46A-6A-2(4)).
Consumer Warranty Law: WISCONSIN
Wis. Stat. § 218.0171. See also Wis. Stat. § 218.0163(2)
Vehicles covered: Vehicles registered and purchased or leased in state, including demonstrator or executive vehicles; excludes mopeds, semitrailers and trailers used with trucks (§ 218.0171(1)(d)).
Persons covered: Purchasers or lessees, transferees during express warranty period, or any person entitled to enforce the warranty (§ 218.0171(1)(b)).
Consumer Warranty Law: WYOMING
Wyo. Stat. Ann. § 40-17-101
Vehicles covered: Every vehicle under 10,000 lbs. sold or registered in-state which is self-propelled (§ 40-17-101(a)(ii)). No reference to leased vehicles.
Persons covered: Purchasers, transferees during express warranty period, or any person entitled to enforce the warranty (§ 40-17-101(a)(i)).
Period covered: One year from the date of delivery (§ 40-17-101(b)).
Disclosure requirements: Manufacturer has none.
Consumer Warranty Law: 7.7.4.4 Defects Not Discovered Until After Period Expires
The more difficult case is when the defect sued upon was discovered after the expiration of the specified warranty period. This is first of all a question of contract construction. Most courts have held that standard warranty language requires that the defect be discovered within the warranty period.570 For example, in Walsh v. Ford Motor Co.,571 the manufacturer promised to repair or replace any parts “found to be defective” within the warranty period.
Consumer Warranty Law: 7.7.4.5 Is There Another Warranty with a Longer Period?
If the warranty cannot be interpreted to cover the defect, several arguments are still available. First, the transaction may have given rise to warranties that are not subject to the time limit.
Consumer Warranty Law: 7.7.4.6.1 Manufacturer’s knowledge; unconscionability
Courts are reluctant to find that time-limited warranties cover latent defects that are not discovered during the warranty period because of concern that this would nullify the time limit and make the manufacturer a guarantor that the product will be defect-free for its entire life.585 One response to this argument is to show that the manufacturer knew of the defect during the warranty period.
Consumer Warranty Law: 12.2.1 General Rule Barring Recovery of Economic Damages
The economic loss rule is the major impediment to use of either a strict liability or negligence claim in consumer warranty cases. This rule restricts damages on those tort claims to personal injury or damage to property other than the defective goods purchased, and denies recovery for “economic loss.”
Consumer Warranty Law: 12.2.2 Rationales for Economic Loss Doctrine
Supporters of the economic loss rule emphasize its importance as “the fundamental boundary between contract law, which is designed to enforce the expectancy interests of the parties, and tort law, which imposes a duty of reasonable care and thereby encourages citizens to avoid causing physical harm to others.”24 They argue that allowing tort liability would disrupt the UCC statutory scheme of rights and remedies covering economic expectations.