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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.

Consumer Warranty Law: 1.8.2.2 Privity of Contract

An important restriction on consumer warranty rights is the outdated concept of privity, that a consumer can enforce a warranty remedy against the manufacturer or other seller only if the consumer has a direct contractual relationship with the seller. A consumer is said to lack vertical privity when the consumer attempts to sue a manufacturer or other party in the distribution chain with whom the consumer has not dealt directly.

Consumer Warranty Law: 1.8.2.3 Contractual Limitations on Buyer’s Remedies

Limitations on remedies are different from disclaimers of warranties. The disclaimer of warranty attempts to prevent a warranty right from being created. A contractual limitation on remedies attempts to limit the recovery a consumer can seek when an existing warranty has been breached. Common limitation of remedies clauses limit the consumer’s remedy to repair or replacement, and waive any right to consequential or even direct damages.

Consumer Warranty Law: 1.8.2.4 Notice of Breach

In most cases the consumer must provide prompt notice to the seller of any breach of warranty, as a condition of recovering damages because of that breach.462 The notice need not be formal. The buyer need only communicate to the seller that the transaction is troublesome.

Consumer Warranty Law: 1.8.3 Proving Breach of Warranty

If the buyer has accepted the goods, the buyer has the burden of proving a warranty breach. If the buyer rightfully rejects the goods before legally accepting the goods, then the seller has the burden of proving that the goods conformed to all warranties.465

Federal Deception Law: 10.10.1 Relation of State and Federal False Claims Acts

Over half of all states, as well as the District of Columbia, have enacted false claims acts. Many of these statutes are textually similar to the federal statute while others are not. Thus, claims based upon differing state false claims acts, even when brought upon the same theory of fraud, may achieve diametrically different outcomes.149

Federal Deception Law: 10.10.2 Who May File a State False Claims Act Case

The majority of state false claims acts allow—as does the federal False Claims Act—private individuals to bring an action as a relator. Certain states, however, have enacted false claims acts that entirely lack such qui tam provisions.154 That is, though the state itself may bring suits based upon false claims, the private individual is not empowered to bring suit on behalf of the state.

Federal Deception Law: 10.10.3 Claims Covered and Exemptions Provided

State false claims acts with qui tam provisions often closely mimic the federal statute, allowing actions that broadly cover most types of fraud upon the state.157 In certain cases, state acts expand upon the federal act and allow relators to bring additional claims—for example, based upon tax violations.158 This is, however, the exception. More often, state acts introduce greater limitations upon potential claims than does the federal act.

Federal Deception Law: 10.10.4 State Procedural Requirements

The majority of state acts closely mimic the procedural requirements of the federal False Claims Act. Relators, for example, must file suit under seal. The suit remains under seal for a period of time—ranging most often from sixty to 120 days163—by which time the government must determine whether it will intervene in the matter. As with the federal False Claims Act, in most states, the relator may continue to pursue the action even if the state declines to intervene.

Repossessions: 1.5.1 Overview

This section provides a list of notable subjects which may arise in automobile sales and finance transactions, pinpointing the subsections where such topics are discussed in this and other NCLC treatises. It is recommended that users view this checklist in the treatise’s digital version, which provides live weblinks to these related subsections.