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Consumer Warranty Law: 4.3.2.4.3 Case law finding ordinary purpose cannot be particular purpose

Most courts that have passed on the question, however, look narrowly to the language of section 2-315 rather than to the policy of the section, and conclude that particular purpose must mean a purpose that is special in some way.187 Courts following this line of cases have held, for example, that buying a car for driving on the highway,188 tires for the same purpose,189 a boat to go on the water,190 o

Consumer Warranty Law: 4.3.2.4.5 Re-characterization of ordinary use as particular use

To protect the buyer best against the possibility that the court will not apply an implied particular purpose warranty to an ordinary purpose, the transaction should be scrutinized for some purpose that is not entirely ordinary. The purchase of a manufactured home for a residence is an ordinary purpose; if, however, the buyer lives in a cold climate, poor insulation or an inefficient heating system may render the manufactured home unfit for the buyer’s particular purpose of living in it comfortably during a cold winter.200

Consumer Warranty Law: 13.3.11.2 Jurisdictional Issues

The jurisdictional grant in the Magnuson-Moss Warranty Act allows class actions to be filed in federal court only if there are one hundred or more named plaintiffs, each individual claim equals $25 or more, and the total amount in controversy is at least $50,000.203 State court class actions can raise Magnuson-Moss claims without meeting these requirements, however.204

Consumer Warranty Law: 13.4.1 Introduction

Mandatory arbitration differs from many dispute resolution mechanisms put in place to help resolve state lemon law and Magnuson-Moss Act disputes. The rulings made in those mechanisms are typically not binding on the consumer, and the consumer is still allowed to bring an action in court. Mandatory arbitration clauses require the consumer to give up the right to go to court and instead submit the dispute to a binding arbitration proceeding.

Consumer Warranty Law: 13.4.3.1 General

The federal Truth in Lending Act (TILA) limits arbitration requirements in manufactured-home loan documents.235 TILA and its implementing Regulation Z require that no residential mortgage loan include an arbitration requirement.236 This provision applies to manufactured-home loans because residential mortgage loans are defined to include a consumer credit transaction that includes a security interest in a dwelling.237 Dwelling is defined as includi

Consumer Warranty Law: 13.4.3.3 When Originating Creditor Is Not the Dealer

The Truth in Lending Act (TILA) provision prevents arbitration agreements from being inserted into the documents for a direct loan from a third-party lender that is secured by the manufactured home. But in such a case, as the dealer did not extend the credit, the TILA provision does not prohibit the insertion of an arbitration clause in the contract for sale between the dealer and the buyer. Nevertheless, the limit on arbitration in the third-party lender’s loan documents has important implications for the consumer’s ability to raise warranty claims in court.

Consumer Warranty Law: 13.4.4.1 General

Written warranties and service contracts must comply with the disclosure requirements set out in the Magnuson-Moss Warranty Act.247 While the Federal Arbitration Act may preempt state disclosure requirements,248 it does not preempt federal disclosure requirements.

Consumer Warranty Law: 13.4.4.2 Significance of Disclosure of Arbitration Requirement in Written Warranty

Manufactured home manufacturers and other warrantors often avail themselves of arbitration agreements found in dealers’ contracts. Cunningham and cases that follow it require that such an arbitration requirement also be included in the manufacturer’s written warranty. It may not be sufficient for the manufacturer to disclose in its warranty the bare fact that the consumer is bound by an arbitration clause that is found elsewhere.258 The actual arbitration requirement must be disclosed in the written warranty.

Consumer Warranty Law: 13.4.5 Does Magnuson-Moss Prohibit Merchant’s Designation of Arbitration Service Provider?

The Magnuson-Moss Warranty Act states that the warrantor cannot “condition his written or implied warranty of such product on the consumer’s using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name.”264 Congress was concerned that warrantors would diminish the “free” aspect of a warranty by conditioning its coverage on the consumer’s use of a designated product or service, whose price would be in

Consumer Warranty Law: 13.4.6.3 Case Law Interpreting the Magnuson-Moss Warranty Act and Arbitration

Initially, federal court decisions unanimously held that the Magnuson-Moss Warranty Act prohibits binding arbitration of written warranty disputes.282 But in 2002, notwithstanding the FTC’s rule, the Fifth and Eleventh Circuits ruled to the contrary.283 A number of state and federal district court decisions follow this result as well.284 In general, these courts do not treat arbitration as an informal dispute resolution mechanism but instead treat

Consumer Warranty Law: 13.4.7.1 No Arbitration of Self-Help Remedies

Arbitration agreements require consumers to submit “claims,” “disputes,” or “controversies” to arbitration. When a consumer rightfully rejects or revokes acceptance of the goods, or withholds payments because of a breach of contract, the consumer is not making a claim, disputing anything, or engaging in a controversy. The consumer has a right to take these actions and is exercising that right, despite any enforceable arbitration requirement.

Consumer Warranty Law: 13.4.7.2 Does Consumer’s Cancellation of the Contract Invalidate the Arbitration Requirement?

When a consumer revokes acceptance or rejects the goods, the UCC allows the consumer to cancel the contract.289 If the contract is canceled, then the rights and obligations of the parties as spelled out by the contract are canceled. Instead, the parties’ rights and obligations are determined only by UCC Article 2. The arbitration clause is canceled with the rest of the contract and is no longer binding on the consumer.

Federal Deception Law: 5.1.1 Topics Covered in This Chapter

The FTC Telemarketing Sales Rule1 (“TSR”) imposes important restrictions on unwanted or fraudulent telemarketing calls. It applies not only when telemarketers call a consumer, but also when the consumer calls the seller in response to an advertisement or direct solicitation by mail, email, or fax related to:

Federal Deception Law: 5.2.2 Partial Exemption for Customer-Initiated Calls

While the TSR’s general coverage includes telephone sales whether initiated by the telemarketer or the customer, there are four major exceptions that eliminate most (but not all) customer-initiated calls from the TSR’s scope. First, the TSR does not apply when the customer initiates a call that is not in response to any form of solicitation by the seller or telemarketer.36 For example, the customer may call a seller after the customer’s friend recommends the seller.