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Consumer Warranty Law: 7.7.4.2 Defects Reported But Not Repaired Before Period Expires

There are several different scenarios in which a seller may attempt to defend against a warranty claim on the ground that the warranty period has expired. When a defect within the scope of the express warranty is discovered and brought to the warrantor’s attention before expiration of the express warranty period, the warrantor must remedy the defect or be liable for breach of the warranty.

Consumer Warranty Law: 12.4.3 Proximate Cause

The consumer must prove that the defendant’s negligence was proximate cause of the consumer’s injury.239 Proximate cause refers to both causation-in-fact and the policy considerations involved in determining the limits of responsibility for the results one causes.240 Causation-in-fact means that the damage the buyer or other party suffered resulted from the goods’ nonconformity to the standard of care.241

Consumer Warranty Law: 20.1.1 Introduction

Service contracts, extended warranties, and mechanical breakdown insurance have become a fixture in the sale of new and used cars and other consumer products. This chapter focuses on enforcement of the consumer’s bargain under the contract:

Consumer Warranty Law: 20.1.2 Relationship of Service Contracts to Extended Warranties and Mechanical Breakdown Insurance

Service contracts, extended warranties, and mechanical breakdown insurance are functionally equivalent. The consumer receives, for a price, protection beyond that indicated in any applicable written warranty. If the parties involved in offering a written warranty also offer (for a price) the added protection, it may be called an extended warranty. If an insurance company offers the protection, it may be called mechanical breakdown insurance or vehicle breakdown insurance.

Consumer Warranty Law: 19.10.3.1 General

Most states have enacted some special statute or regulation dealing with repair services in general or automobile repairs in particular.262 These statutes or regulations are of three basic types:

Consumer Warranty Law: 19.10.3.2.1 Scope

General repair or motor vehicle repair disclosure and regulation laws often restrictively define the type of work or the type of repair establishments that are covered. They may exclude body work or simple maintenance typically done by service stations (for example, replacement of windshield wipers, fan belts, spark plugs, or lubricating), or the law may specifically include certain work. The law may apply to certain establishments (for example, car dealers and repair shops), but not others (for example, service stations).

Consumer Warranty Law: 11.1.1.1 Introduction

Every state has enacted a “UDAP” statute, a statute of general applicability prohibiting deceptive trade practices, and, in most instances, unfair or unconscionable practices. UDAP is an acronym for “unfair and deceptive acts and practices” and is used here to apply to any general statute proscribing abusive practices against consumers, even if the statute only prohibits deception.

Consumer Warranty Law: 11.1.1.2 Advantages of a UDAP Claim

The advantages of a UDAP claim in a warranty action are quite dramatic. Virtually any Uniform Commercial Code (UCC) warranty problem can be viewed as involving deception, the failure to disclose material facts, or unfairness.2 Moreover, sales and leases of consumer goods are almost always within the scope of a UDAP statute. (In a few states, the UDAP statute does not apply to the sale of service contracts regulated as insurance, manufactured homes when treated as realty, or certain practices occurring after the sales transaction.

Consumer Warranty Law: 11.1.1.3 Advantages of a UCC Claim

Despite a UDAP claim’s superior remedies and minimal technical requirements, it is still important in many cases to allege both UDAP and warranty claims. Because Magnuson-Moss Act claims can provide attorney fees for breach of a written or implied warranty in the sale of goods, this nullifies one of the main advantages of a UDAP claim. In fact, a number of states’ UDAP statutes do not provide attorney fees, and thus a Magnuson-Moss Act claim provides superior remedies to the UDAP claim in those states.

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: 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.