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Repossessions: 1.4.7 Did the Creditor Afford the Consumer the Right to Reinstate or Redeem and Notify the Consumer of the Repossession Sale?

After repossessing collateral, Article 9 allows the creditor to sell it and apply the proceeds to the outstanding balance. But first the creditor must comply with several important duties. The creditor must send the consumer a notice of the intended disposition of the collateral, including the date after which a private sale will occur or the time and place of a public sale.

Repossessions: 1.4.9 Has the Creditor Correctly Computed and Informed the Consumer of the Deficiency or Surplus?

After disposing of the collateral, the creditor applies the proceeds of the sale to the outstanding balance due. The outstanding balance must be reduced by rebates for unearned insurance premiums and finance charges. The creditor can also charge the consumer the costs of repossession and sale. If an amount is still owed after these calculations, the creditor is entitled to seek the remaining balance (the deficiency) from the debtor, but if the sale of the collateral brings in more than the outstanding balance the creditor is required to pay the surplus funds to the debtor.

Consumer Warranty Law: 1.8.1.1 General

The basis of warranty law under the Magnuson-Moss Warranty Act, Uniform Commercial Code (UCC) Article 2, and UCC Article 2A is that goods sold carry with them certain warranties as to their quality and performance, and that if the goods do not meet these standards, then the buyer has a remedy. The seller’s good faith, ignorance of the product defect, or best efforts in making or selling the goods are not defenses.413 If the goods do not meet the promised warranty standard, the buyer has remedies as specified by various warranty laws.

Consumer Warranty Law: 1.8.1.2 Express Warranties

Express warranties can arise through the seller’s or manufacturer’s affirmation of fact or promise, description of the goods, or a sample or model.425 The express warranty is that the product will meet these representations.

Consumer Warranty Law: 1.8.1.3 Implied Warranty of Merchantability

The implied warranty of merchantability is not created by the seller’s statements or conduct, but is implicit in the sale of new or used goods whenever the seller is a merchant with respect to the goods (in other words, not an isolated sale by a consumer to another consumer).435 The implied warranty is created by the UCC and not by the seller.

Consumer Warranty Law: 1.8.1.4 Implied Warranty of Fitness for a Particular Purpose

Implied warranties of fitness for a particular purpose arise in sales even when the seller is not a merchant. The buyer must purchase the product for some particular purpose, the buyer must rely on the seller to provide the right product to satisfy this particular purpose, and the seller must have reason to know the buyer’s purpose, and that the buyer was relying on the seller to provide the right product.440

Consumer Warranty Law: 1.8.1.5 Statutory Warranties

A few states by statute create minimum warranties for used car sales.444 About half the states have also enacted manufactured home warranty statutes that establish minimum warranties for manufacturers and, in some cases, for manufactured home dealers.445 In addition, a number of states have enacted statutory warranties for new homes or condominiums.446

Consumer Warranty Law: 1.8.1.6 Extended Warranties, Service Contracts, and Mechanical Breakdown Insurance

Extended warranties, service contracts, and mechanical breakdown insurance are functionally equivalent to each other. The consumer pays an additional amount to the seller or a third party for protections against product defects beyond those offered by the express and implied warranties. Service contracts and extended warranties are technically not warranties and not covered by the UCC Article 2 warranty provisions.