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Consumer Warranty Law: Question for Judge or Jury?

Typically the court as a matter of law determines whether the parties intended the writing as a final (or as a complete and exclusive) statement of their agreement.321 The court rules on the proffered parol evidence before the evidence can be heard by the trier of fact.

Consumer Warranty Law: General

Unless the parties intended the contract to be not only final, but also a complete and exclusive statement of the terms of the agreement, parol evidence is admissible to supplement the writing by establishing additional terms that are consistent with the written terms.326 If the written terms and the parol evidence can be construed harmoniously, the parol evidence is admissible. Just because a writing is intended to be final on some terms does not mean that it is also intended to be complete and exclusive.327

Consumer Warranty Law: Effect of Parol Evidence Rule on Oral Promises When Contract Includes a Disclaimer

Courts often find disclaimers not to be inconsistent with oral promises. Disfavored by the law, disclaimers are to be construed narrowly.340 In Killion v. Buran Equipment Co.,341 for example, a used truck buyer was allowed to show that a seller had orally represented that the diesel engine was original equipment and had been given a major overhaul, despite a written disclaimer of express warranties.

Consumer Warranty Law: Admissibility

An important exception to the parol evidence rule allows evidence of usage of trade, the parties’ course of dealing, or their course of performance to be introduced to explain or supplement the writing.345 This evidence is always admissible, even if the court finds that the parties intended the writing not only as final but also as complete and exclusive.346 It is admissible regardless of whether the contract is ambiguous.347 It can be introduced not only to explain the contract, but also to

Consumer Warranty Law: Course of Dealing

Article 1 of the UCC defines “course of dealing” as “a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.”352

Consumer Warranty Law: Course of Performance

UCC Article 1 defines “course of performance” as “a sequence of conduct between the parties to a particular transaction that exists if: (1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and (2) the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.”359

Consumer Warranty Law: Trade Usage

“Usage of trade” is “any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question.”360 Trade usage can justify a broad reading of a contract description. Comment 5 to section 2-313 states: “Of course, all descriptions by merchants must be read against the applicable trade usages with the general rules as to merchantability resolving any doubts.”

Consumer Warranty Law: 3.7.5 Parol Evidence Rule Does Not Apply to Statements Made After the Writing

The UCC parol evidence rule applies only to “any prior agreement” and to “any contemporaneous oral agreement.”364 Thus, by its own terms, it does not apply to oral or written statements made after the writing was made.365 Evidence of seller statements or conduct occurring after the writing was made may be admitted either to show additional terms of the agreement or to explain existing terms.366 Such statements or conduct may be admitted even if the contract includes a merger clause stating th

Consumer Warranty Law: 3.7.6 Admissibility of Advertisements, Samples, or Models

The admissibility of evidence of warranties arising from advertising and promotional materials can be justified as part of the parties’ course of dealing or course of performance, both of which are always admissible to explain or supplement a writing.370 This evidence may also form part of the trade usages “that furnish the background and give particular meaning to the language used, and are the framework of common understanding” by the parties.371 These representations may also be among the “fundamental assumptions” on whic

Consumer Warranty Law: 3.7.8 Parol Evidence That Relates to Fundamental Assumptions and Conditions Precedent

Another line of cases creates an exception to the parol evidence rule for evidence of conditions precedent to the contract, fundamental assumptions underlying the contract, and inducements to the contract.390 Even the most complete written contract does not state all the terms, understandings, and assumptions of the parties’ agreement. For example, few modern contracts provide that the buyer’s payment must be in legal tender, yet any other form of monetary payment by the buyer would be a breach of contract.

Consumer Warranty Law: 3.7.9 Parol Evidence Rule Does Not Affect Fraud, Mistake, and UDAP Claims

Regardless of whether parol evidence is admissible to supplement, explain, or contradict a contract, it is admissible in support of other claims such as fraud,396 mistake,397 and deceptive practices.398 Even the traditional version of the parol evidence rule, as expressed by the Restatement (Second) of Contracts section 214, recognizes that agreements and negotiations prior to or contemporaneous with the adoption of a writing are admissible to establish “illegality, fraud, duress, mi

Consumer Warranty Law: 3.8.1 Any Disclaimer of Express Warranties Is Ineffective; Relation to Parol Evidence Rule

One of the reasons that express warranties are so important in consumer transactions is that, unlike implied warranties, they cannot be disclaimed. Comment 1 to UCC § 2-313 states: “ ‘Express’ warranties rest on ‘dickered’ aspects of the individual bargain, and go so clearly to the essence of that bargain that words of disclaimer in a form are repugnant to the basic dickered terms.” Accordingly, “as is” clauses and other disclaimers, no matter how conspicuous and clearly worded, have no effect on express warranties.

Consumer Warranty Law: 3.8.2 Nullification of Express Warranties Due to Buyer’s Pre-Sale Inspection

Except in mail order, internet, or catalog sale transactions, buyers usually have an opportunity to inspect either the goods, a model, or a sample before the sale is consummated. A mere opportunity to inspect has no effect on the existence or scope of any of the UCC warranties.401 Furthermore, as section 2-316(3)(b) refers only to the effect of inspection on implied warranties, it is reasonable to argue that express warranties are unaffected by inspection.402

Consumer Warranty Law: 3.9.2 When Are Warranties Consistent?

Although the Code does not define consistent, the sixth edition of Black’s Law Dictionary defines it as “harmonious; congruous; compatible; compliable; not contradictory.”422Contradictory is defined in Webster’s Dictionary as “a proposition so related to another that if either of the two is true the other is false and if either is false the other must be true.”423 Under these definitions, warranties are consistent unless a product cannot comply with both or all of them at once.

Consumer Warranty Law: 3.9.3 When Warranties Are Inconsistent

If it is unreasonable to construe warranties as consistent with each other and as cumulative, section 2-317 provides that “the intention of the parties shall determine which warranty is dominant.” To determine that intention, the section sets out general rules: the implied warranty of fitness for a particular purpose prevails over an inconsistent express warranty;433 an express warranty prevails over an inconsistent implied warranty of merchantability;434 and when express warranties conflict, the more specific controls.

Consumer Warranty Law: 15.1 The Chapter’s Scope and Organization

This chapter focuses on used car warranty issues. Other chapters cover topics relevant to used car warranties, and that discussion will not be repeated here. This chapter examines warranty issues of special relevance to used cars and details laws applicable only to used car sales.

Consumer Warranty Law: 15.2 Almost All Used Cars Carry a Warranty of Good Title

Every contract for sale carries a warranty by the seller that the title conveyed is good and its transfer rightful, and that the goods will be delivered free from any security interest or other lien or encumbrance, unless the buyer has actual knowledge (not just constructive knowledge) at the time of contracting of such encumbrance.2 The seller’s lack of knowledge of the title problem is irrelevant.3 Thus this warranty will be breached when a car does not have good title, as when the car has been stolen, the seller does not remove

Consumer Warranty Law: 15.3.1 General

Express warranties cannot be disclaimed.6 No matter how cautious a used car dealer is, any used car sale will come with a number of express warranties that can provide a basis to revoke acceptance, withhold payments, or pursue a damage claim, even in an “as is” used car sale. As with any other warranty breach, the consumer need not show the dealer’s intent or even knowledge of the breach, only that the express warranty is breached.

Consumer Warranty Law: Unexpired Original Manufacturer Warranties

Unless the manufacturer’s written warranty expressly limits itself to the first purchaser, any subsequent car owner has rights under the manufacturer’s original written warranty.12 If certain parts are covered for five years under the warranty, and a car is sold after four years, the subsequent owner has rights under the warranty’s final year.

Consumer Warranty Law: 15.3.4 Dealer Representations That Vehicle Is Certified

A dealer’s representation that a car is a “certified” used car is a dealer warranty that the car in fact meets the standards of, and is enrolled in, the manufacturer’s certified used car program or some other certified used car program.31 Such a statement is a description of the goods that is part of the basis of the bargain.32 As the dealer has to pay a fee to the manufacturer for each car enrolled in the certification program, sometimes the dealer will represent that a car is certified when in fact it is not.

Consumer Warranty Law: 15.3.5 Express Warranties by Description

Dealers make a number of express warranties that do not meet the Magnuson-Moss standards for a written warranty, but still provide a basis to cancel the sale or for a UCC damage action. The sales agreement or other dealer documentation will describe the car’s make, model and year, and the options purchased.