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Consumer Warranty Law: DISTRICT OF COLUMBIA

D.C. Code § 28-3904

It shall be an unlawful trade practice, whether or not any consumer is in fact misled, deceived or damaged thereby, for any person to fail to supply to a consumer a copy of a service contract which the consumer executes (§ 28-3904(q)).

D.C. Code §§ 31-2351.01 to 31-2351.13

Consumer Warranty Law: 11.1.5 Defective Product As a UDAP Violation

The mere sale of a defective product can be a UDAP violation, apart from any breach of warranty. This claim can be based on express warranties and other statements that give the consumer the impression that the product is not defective, or the claim can be based on the seller’s failure to disclose product defects.

Consumer Warranty Law: 11.1.7 Other Misrepresentations About Warranties

It is basic UDAP law that a seller’s misrepresentation of the buyer’s legal rights is a UDAP violation.64 Thus, any form of misrepresentation of a consumer’s warranty rights is a UDAP violation. In addition, a number of state UDAP statutes specifically forbid misrepresentation of the nature of offered warranties, misrepresentation that implied warranties are not disclaimed, or misrepresentation of any other consumer or seller right or obligation.65

Consumer Warranty Law: 11.1.8 Misrepresentation or Nondisclosure of Condition or Features of Product

If the seller’s assurances regarding the condition or features of a product are false they are UDAP violations.84 They are violations even if the seller’s statements do not amount to express warranties because of the parol evidence rule,85 or if the contract contains an “as is” or similar clause.86 Nondisclosure of defects may also be a UDAP violation.87 Some UDAP statutes explicitly require disclosure that g

Consumer Warranty Law: 11.1.9 Violation of Other Warranty Statute

Substantial authority holds that a violation of another consumer protection statute is a UDAP violation.90 Using this theory, consumers have successfully argued that a violation of the Magnuson-Moss Act91 or the Federal Trade Commission’s Used Car Rule92 entitles the consumer to UDAP remedies.

Consumer Warranty Law: 11.1.10 UDAP Violations Involving Service Contracts

A breach of a service contract may be an automatic UDAP violation.96 While there is little UDAP precedent in this area, case law in two related areas is relevant. First are cases holding that a breach of any contract is a UDAP violation, at least if there are aggravating circumstances such as repeated breaches, deception, or taking advantage of the consumer’s vulnerability. Second are cases holding that failure to pay an insurance claim is a UDAP violation.

Consumer Warranty Law: 11.2.2 Overview and Scope of Section 2-302

UCC § 2-302(1) provides:

If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.106

Consumer Warranty Law: 11.2.4 Unconscionable at Time Contract Is Made; Contract’s Commercial Setting

Section 2-302 allows the court to strike an unconscionable clause if it was unconscionable at the time it was made.121 The section does not apply to clauses which are reasonable when agreed to, but which become burdensome because of changed circumstances. As comment 1 to section 2-302 explains, the intent is not to disturb risk allocation merely because the burdens happen to fall on one party with unexpected force.

Consumer Warranty Law: DELAWARE

Del. Code Ann. tit. 18, §§ 917, 918

Defines service contract, maintenance agreement, warranty, and vehicle theft protection product warranty (§ 918). None of these are insurance, unless the insurance laws are “made expressly applicable thereto” (§ 917).

Consumer Warranty Law: HAWAII

Haw. Rev. Stat. § 431:1-209(14)

Included in definition of casualty insurance and thus subject to insurance regulations is any contract of warranty or guaranty which promises service maintenance, parts replacement, repair, money, or any other indemnity in the event of loss of or damage to a motor vehicle or any part thereof, if made by a party conducting an insurance business; provided that service contracts, as defined and meeting the requirements of Haw Rev. Stat. ch. 481X, shall not be subject to Haw Rev. Stat. ch. 431.

Consumer Warranty Law: INDIANA

Ind. Code §§ 27-1-43.2-1 to 27-1-43.2-19

These provisions are effective November 26, 2018. A service contract is not insurance (§ 27-1-43.2-10(a)). Other than for a motor vehicle service contract, the contract company must provide proof of financial solvency (§§ 27-1-43.2-11(a), 27-1-43.2-14). For any contract, the contractor must make disclosures to the consumer (§ 27-1-43.2-12).

Consumer Warranty Law: KENTUCKY

Ky. Rev. Stat. § 304.5-070(1)(p)

Establishes certain service contracts as not regulated as insurance, as long as the contractor has purchased reimbursement insurance or is an automobile manufacturer or distributor.

Consumer Warranty Law: 11.2.7.2 Ruling Only the Offensive Term Unenforceable

Voiding the entire contract is the most drastic of the remedies, and courts may be reluctant to grant it. Frequently, the same result for the consumer can be achieved by striking out only the offensive clause.160 This remedy is useful when the unconscionable clause is not essential to the purpose of the agreement. Examples are warranty disclaimers and limitations of remedies.

Consumer Warranty Law: 11.2.7.3 Limiting the Effect of the Offensive Term

Limiting the effect of an unconscionable term or clause is generally most appropriate for excessive price cases. In such cases, the courts can limit the price to a reasonable amount or to the amount already paid. Limiting the effect of a limitation of remedy clause might involve allowing the consumer to obtain direct or incidental damages, but not consequential damages.

Consumer Warranty Law: 11.2.7.4 Availability of Monetary Damages

Monetary damages are not available under section 2-302.162 Monetary relief is, however, available in the form of restitution, an equitable remedy, when complete rescission is ordered or in certain cases when the offensive clause is struck.163 Or the court can award the damages under other UCC sections,164 under the Magnuson-Moss Act, or under a UDAP or tort claim.

Consumer Warranty Law: 11.3.2 Good Faith Applies to Conduct Initiating the Sale and to Contract Terms

Good faith is not limited to post-sale conduct. It is most useful in protecting the buyer against unreasonable seller conduct occurring before the contract is signed. For example, a seller who fails to inform the buyer of known material defects before the contract is signed breaches the duty of good faith.179 This view is explicitly supported by comment 3 to section 2-314, which states in part that “[the seller’s] knowledge of any defects . . .