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Consumer Warranty Law: 8.2.4 Buyer’s Acceptance by Acts Inconsistent with Seller’s Ownership

Section 2-606(1)(c) provides that acceptance occurs when the buyer “does any act inconsistent with the seller’s ownership.” Whether an act is inconsistent with the seller’s ownership depends on the context, and especially on whether the buyers knew of the nonconformity beforehand.84 Although payment alone is not acceptance,85 payment after the buyer knows of the defects may show acceptance.86

Consumer Warranty Law: 8.2.5.1 Notice Must Be Timely

To properly reject, the buyer must not only inspect and decide to reject within a reasonable time, but must also give the seller seasonable99 notification of the rejection.100 While courts tend to merge the time for inspection and the decision to reject with the time for communication of that decision to the seller,101 rejection communicated to the seller within a few days after discovery of nonconformity will almost always be seasonable.

Consumer Warranty Law: 8.2.5.2 Form of Notice of Rejection

The Code does not prescribe any particular method of notification of rejection.104 Notice may be written, oral,105 or by telephone.106 Conduct, such as returning the license plate and car keys to a car dealer, coupled with refusal to pay may also constitute proper notice of rejection.107 The seller does not even have to receive the notice as long as it was sent properly.

Consumer Warranty Law: 8.2.5.3 Content of Notice of Rejection

The notice, whatever its form, must inform the seller that the buyer is canceling the sale.114 It need not use the word rejection. Any statement or conduct that apprises the seller that a nonconformity exists and that the buyer wishes to return the goods is sufficient.115 A buyer who has purchased several items from the seller should make clear which of the goods is being rejected.116

Consumer Warranty Law: 8.4.5.2 When Has Buyer Made Payments or Incurred Expenses?

Rarely, if ever, will the buyer not have a security interest. Signing a negotiable instrument, making a cash down payment, and giving a trade-in all constitute payments on the price, giving the buyer a security interest. In addition, the buyer who cancels a sale is likely to incur expenses in inspecting, receiving, transporting, holding, or caring for the goods.446 For example, the buyer may have a mechanic inspect the car, perhaps leading to storage or towing expenses at the mechanic’s shop.

Consumer Warranty Law: 8.4.5.3 Advantages of Selling the Goods

Reselling the goods provides a major advantage to the buyer because it allows the buyer to receive cash in hand soon after canceling the sale. Holding the goods, while preserving some leverage against the seller, requires waiting until litigation is final.

Consumer Warranty Law: 8.4.5.4 Applying the Sale Proceeds

A buyer who resells the goods to enforce a security interest can keep as much of the proceeds as is necessary to cover the money already paid on the purchase price, including any outstanding negotiable note, in addition to the expenses of inspecting, transporting, holding, and reselling the goods. The buyer must give an accounting to the seller of the proceeds and expenses of the resale.452

Consumer Warranty Law: 8.2.7.1 Introduction

An important Code limitation on a buyer’s right to reject is the seller’s statutory right, under section 2-508, and under certain circumstances, to cure nonconforming goods by making a conforming tender at no cost to the buyer.129 The seller must take the initiative to cure and cannot shift any part of the burden to the buyer.130

Consumer Warranty Law: 8.2.7.2.2 Determining whether time for performance has expired

The key to determining which subsection of section 2-508 applies is determining whether the time for performance under the contract has expired. The time for performance under a contract can be determined from the written contract, the oral agreement of the parties, or their conduct.146 When the written contract specifies a performance date, the time for performance is that date. When a date is not specified in the written contract, the parties may have orally agreed on a date, and that date should control.

Consumer Warranty Law: 13.4.8 Class Arbitration

When an arbitration clause prohibits classwide relief, an arbitrator will not allow such relief, and a court would almost certainly overturn an arbitrator’s decision to pursue such classwide relief in the face of such a prohibition. In addition, three Supreme Court decisions make it very difficult to challenge as unconscionable such a prohibition against classwide relief.

Consumer Warranty Law: 13.5.1 Document Requests

Documents are the key to many warranty cases. Even for documents already in the consumer’s possession, request the originals from the dealer and manufacturer. Sometimes the dealer’s copy of a repair order, for example, will have critical handwritten information on the back.

Consumer Warranty Law: 13.5.2 Interrogatories

Interrogatories are useful as a means of identifying witnesses in warranty cases.303 There is high turnover of personnel in the automotive industry, and obtaining the last known addresses of any employees who were involved in the transaction but who are no longer employed by the seller can lead to excellent, forthright witnesses.

Consumer Warranty Law: 13.5.4 Deposition of the Consumer

The opposing party will usually want to take the consumer’s deposition. Not only is this an occasion to pin down the facts, but it is also a time when the opposing side sizes up the consumer’s appearance, demeanor, credibility, and potential effect upon the jury. Prepare the client for the experience of being under oath, listening, waiting until objections are resolved, and responding to the questions.

Consumer Warranty Law: 13.6.1.1 Timing of the Inspection

An important early step is to arrange for the product to be inspected by a competent expert.308 This step should be taken as early as possible, especially if the condition of the product may be subject to change due to continued use, normal deterioration over time, or repairs and maintenance.309 Have an expert inspect the vehicle even before the complaint is filed.

Consumer Warranty Law: 13.6.2 Inspection by the Seller

UCC § 2-515 provides that “either party on reasonable notification to the other and for the purpose of ascertaining the facts and preserving evidence has the right to inspect, test and sample the goods,” including goods in the possession or control of the other party. Discovery rules generally allow parties a similar opportunity to have the goods produced for inspection and testing.

Consumer Warranty Law: 13.7.1 First Considerations

Preparation for settlement should start with the initial client contact and continue throughout the case.324 The client’s expectations should be probed at the initial contact. Both overly high and overly low expectations create problems. The client’s non-pecuniary goals should be explored and clearly understood. The client’s expectations should be documented in writing following the initial meeting. Some attorneys record the initial meeting with the client’s permission.

Consumer Class Actions: Introduction

California’s operative general class action statute, Code of Civil Procedure § 382, was enacted in 1872 as part of California’s Field Code and has remained essentially unchanged.12 California’s second class action statute, the Consumer Legal Remedies Act, is found at Civil Code §§ 1750, et seq., and lists 23 prohibited acts, violations of which form the basis for class actions seeking damages and a wide variety of other remedies.

Consumer Credit Regulation: 13.2.2 Which Laws Apply to RTO and Which to LTO Transactions?

Because they are structured as short-term, renewable leases with a purchase option, RTO transactions fall outside the scope of several important consumer protection statutes. But most of those statutes do apply to LTO transactions. In addition, some statutes and common law doctrines apply to both.

The following chart summarizes what statutes apply to which type of lease transactions. However, this chart does not capture all the nuances, and advocates should refer to the more detailed discussions of these issues elsewhere in this book.

Consumer Credit Regulation: 13.3.5.2 New and Used Price Differentials

RTO dealers usually charge the same periodic payment whether the item is used or new but adjust the total number of weekly or monthly payments required to achieve ownership of the used item. This means that the weekly amount that rental consumers are paying for used goods is the same as for new goods. For example, a low-end new stereo may be priced at $15.99 a week for seventy-eight weeks for a total of $1,247.22, while a low-end used stereo may also be $15.99 a week but only for sixty weeks, for a total of $959.40.

Consumer Warranty Law: J.1 Sample Complaints

This treatise’s digital edition contains over thirty warranty-related sample complaints, available in Microsoft Word format. To locate complaints in the digital edition, go to “Contents” in the left pane, and select Pleadings and Discovery > Initial Pleadings, Forms and Notices > Complaints. Another approach, in addition to using the standard search function, is to use the advanced pleadings search and select Complaints under “Filter by Pleading Type.” To further narrow the search, select either a subject, a legal claim, or both in the other fields on that page.