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Consumer Warranty Law: 12.3.6 Failure to Warn

In addition to liability for manufacturing defects and design defects, a manufacturer may be strictly liable if its failure to warn the buyers of defects renders the product unreasonably dangerous.156 The duty to warn extends to all reasonably foreseeable uses of a product.157 The court will evaluate the warning from the perspective of an ordinary user of the product, as opposed to someone completely unfamiliar with the product.158

Consumer Warranty Law: 12.3.7 Causation

Proximate causation is an element of any tort claim: was the defect the legal cause of the damage or was the damage caused by something else, such as the consumer’s improper maintenance or abnormal use, or an outside factor?163 Causation for strict liability is quite similar to causation for breach of warranty.

Consumer Warranty Law: 12.3.8 Use in a Normal or Foreseeable Manner

As a policy matter, the manufacturer cannot be held strictly liable for damage arising from abnormal, unforeseeable use of the product, such as using a rocking chair as a stepladder. Abnormal use is closely related to the issue of causation. Improper use can bar recovery, but only if it was not a foreseeable use by an ordinary consumer; it may be, and often is, foreseeable that a consumer will use a product improperly.170

Consumer Warranty Law: 12.4.1.2 Establishing the Standard of Normal Care

Proof of the standard of normal care—the skill and knowledge normally possessed in the trade or profession—often requires expert testimony.191 Nonetheless, three significant exceptions to this general rule exist. First, when the jurisdiction has already established a standard of conduct by case law, the court should rule as a matter of law whether the seller violated this duty.

Consumer Warranty Law: 12.4.1.4 Standard of Care As to Inspection for Defects and Preparation for Sale

As part of the duty to act reasonably in placing goods in the stream of commerce, a manufacturer has a duty to inspect the final product.202 This duty extends to inspecting component parts used in the finished product.203 Application of this holding to a manufactured home would mean the manufacturer would be liable in negligence for defects in the appliances or furnishings installed in the manufactured home if the manufacturer did not perform a reasonable inspection of those items before deliver

Consumer Warranty Law: 12.4.2 Failure to Act in Conformity with the Standard

To prevail in a negligence action, the consumer must show that the defendant breached the specific duty it had to the consumer. The consumer must establish what action or inaction on the defendant’s part was negligent. Problems of proving what the defendant actually did or did not do are quite similar to those of proving that a defect existed at the time of sale for UCC breach of warranty claims.229

Consumer Warranty Law: 20.2 Distinguishing Service Contracts from Warranties

Service contracts are distinct from written or express warranties, and legal requirements and consumer enforcement rights under the two are different. Under the Magnuson-Moss Warranty Act, a written warranty must be “part of the basis of the bargain.”4 Under the Federal Trade Commission’s Magnuson-Moss rules a written warranty is part of the basis of the bargain if it is provided at the time of sale and there is no extra charge for it.5

Consumer Warranty Law: 20.3.1 First Considerations

Whether a service contract is subject to state insurance regulations has a significant impact on a consumer’s legal claims. Insurance regulations may require the retailer selling the contract to be licensed to sell insurance and comply with other insurance agent requirements. The service contract owner may have to comply with insurance solvency requirements, unfair claims payment laws, rate and policy filing requirements, and unfair insurance practices laws.

Consumer Warranty Law: 20.3.2 Factors Indicating Whether a Service Contract Is Regulated As Insurance

A number of states have special laws regulating automobile service contracts or other forms of service contracts,17 and these statutes are sometimes explicit about whether service contracts are treated as insurance,18 are not to be treated as insurance, or are to be treated as insurance if they include certain characteristics and are not to be treated as insurance if they lack those characteristics.19 Other state pronouncements may perform a similar func

Consumer Warranty Law: 20.4.2 Computing the Contract’s Time Period

Service contracts are limited in time, and motor vehicle contracts may also be limited as to mileage driven. Read the contract language carefully to see how time and mileage are to be computed. For example, one company sold a five-year contract on a used car, starting from the date the contract was purchased, but the contract stated elsewhere that it began to run on the same day as the new vehicle warranty.33 Such conflicting provisions should be interpreted against the drafter.

Consumer Warranty Law: 20.4.4 When the Contract Is at Variance with Prior Representations

Even if a claim denial is consistent with the written contract, the consumer still may have various legal claims when the contract is at variance with prior representations concerning that contract. Review advertising claims, brochures available at the retailer, internet-based representations, and the preliminary paperwork given the consumer concerning the service contract. Explore all oral representations the retailer made to the consumer.

Consumer Warranty Law: 20.4.5 Disputing the Accuracy of the Obligor’s Product Inspection

Service contract claims can be denied not just on the basis of a disputed interpretation of the contract, but also based on the disputed accuracy of the obligor’s inspection of the defective product. Some service contracts deny responsibility for repair if one of the many non-covered parts contributes to the damage to a covered part. For example, a service contractor may claim that a defective automobile gasket not covered by the service contract caused the engine damage, and therefore the service contractor is not responsible.

Consumer Warranty Law: 20.4.6 Failure to Obtain Prior Approval for Repairs

Service contract coverage may be denied when the consumer did not obtain prior approval for repairs, as required by the agreement. But this denial has been found to be unfair and deceptive when the service contract administrator had a practice of not responding to consumer requests for prior approval.53

Consumer Warranty Law: 7.7.2.3 Assumption of Risk

The voluntary and unreasonable disregard of a known and appreciated risk, while sometimes called contributory negligence, is more serious buyer conduct than mere negligent failure to discover or protect against a defect. Although the buyer’s negligence may be reasonably contemplated by the warranty, disregarding a known and appreciated risk usually is not and generally is considered unreasonable conduct.

Consumer Warranty Law: 7.7.2.4 Misuse of the Product

Misuse or abnormal use of the product is generally recognized as a defense to warranty claims, either because the buyer’s misuse is the intervening cause of the damage or because the warranty does not extend to abnormal use.519 If a buyer uses a passenger car for drag racing, the seller will claim that it was the buyer’s abnormal use of the product that caused the damage and/or that the abnormal use is beyond the scope of the warranty.520 In addition to causation, the seller may have to show tha

Consumer Warranty Law: 7.7.2.5 Failure to Abide by Directions for Use

A seller will often direct the buyer to use or maintain the product in a particular fashion. “Inflate tire to 23–28 pounds only,” and “Do not use near open flame” are typical. The directions can be on the product, in the warranty, in the user’s manual, or even given orally. Failure to abide by these directions will be raised as a defense by the seller as failure to comply with a condition precedent, misuse of the product, contributory negligence, or the proximate cause of the malfunction and damage.533

Consumer Warranty Law: 7.7.3 Noncompliance with Conditions to Warranty Coverage

Warranties often expressly condition coverage on performance by the buyer of some duty, such as “Warranty applies only if product is returned postage prepaid to manufacturer” or “Warranty void unless buyer returns ‘warranty card’ to manufacturer within 15 days.” Conditions such as these are not merely instructions on proper maintenance or use of the product,541 although warranty conditions and use instructions may overlap, as in “Product not covered by warranty unless Grade X oil is used.”

Consumer Warranty Law: 7.7.4.1 Determining When Warranty Expires

Many express warranties have a specific duration, such as one year or thirty days. In a suit for breach of the warranty, the seller may claim that the express warranty period already expired before the defect was discovered and brought to the warrantor’s attention.