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Consumer Warranty Law: 6.3.5 Privity Unnecessary If Buyer Is Agent for Ultimate User

In the alternative, it may be possible to show that the buyer was only the consumer’s agent. For example, if the person who handled the purchase was acting as an agent for the eventual user, then this user is actually the buyer, avoiding any horizontal privity issue.281 This theory is useful for a consumer whose spouse, parent, child, sibling, or friend bought the goods at the consumer’s request.

Consumer Warranty Law: 6.3.6 Asserting Warranty Rights As a Third-Party Beneficiary

Even when horizontal privity would otherwise be a bar, a nonbuyer user of the goods may be able to sue the seller for economic loss or property damage as a third-party beneficiary of the warranties given by the seller to the buyer.282 The nonbuyer is a third-party beneficiary if the buyer purchased the goods at least in part for the benefit of the nonbuyer.283

Consumer Warranty Law: 19.1 Introduction

Automobile repairs, home improvements, and other service transactions may only incidentally involve the sale of goods, and thus raise issues as to the applicability of Uniform Commercial Code (UCC) Article 2 and the Magnuson-Moss Warranty Act.

Consumer Warranty Law: 19.2.1 Magnuson-Moss Applicability

The Magnuson-Moss Warranty Act applies to “consumer products,” defined as tangible personal property.1 Consequently, the Act does not apply to services.2 Warranties which relate solely to the quality of a repairer’s work in performing repairs, such as a warranty on the rebuilding of an automobile engine, are not covered.3

Consumer Warranty Law: 19.2.2 UCC Article 2 Applicability

Pure service transactions are not covered by Uniform Commercial Code (UCC) Article 2 because no goods are involved.5 A medical check-up6 or a contract to mow a lawn or to provide legal services, for example, usually involves only services. Health spa7 and buyers’ club8 memberships have been ruled to be services, not goods.

Consumer Warranty Law: 19.3.1 Introduction

Courts differ in how they analyze whether the UCC applies to mixed goods and services transactions. Most courts treat the contract as a whole, and apply the UCC to either all or none of it12 after determining the predominant purpose. The UCC applies to the whole transaction if the predominant purpose is the sale of goods, but not at all if the predominant purpose is services.

Consumer Warranty Law: When the Contract Is Predominantly for Services

When a contract is predominantly for services, many courts analyze it as a whole, and apply non-UCC law to both the goods and the services components.28 This approach is particularly common when goods were provided as part of medical treatment.29 Nevertheless, courts are less prone to analyze contracts as a whole when services predominate, holding that the UCC should apply to the goods component regardless of whether the services component predominates.30 Some courts even apply the UCC to the

Consumer Warranty Law: Finished Product As Determining Predominant Purpose

Instead of attempting to ascertain the parties’ intent, an alternative test asks whether the goods involved are already finished products or are to be made from raw materials, specifically for that contract.65 Thus the sale and installation of overhead doors was within Article 2, even though the installation was a lengthy process, because the doors were already a finished product.66 Most consumer transactions are for finished products, such as cars, appliances, or storm windows, so that the finished product test may more lik

Consumer Warranty Law: 19.4 UCC Applicability by Analogy

Some courts apply UCC Article 2 to service transactions by analogy. The theory is that state legislatures, by enacting the UCC, embellished the common law of warranties, and abandoned the outmoded 19th-century common law principles of caveat emptor or “buyer beware.”

Comment 2 to section 2-313 states that Article 2’s limitation to goods was not intended to preclude common law evolution in other contractual circumstances. Comment 1 to section 1-103 also indicates:

Consumer Warranty Law: 19.5.1 Introduction

If the UCC does not apply to all or part of a transaction, an alternative rule of law must be found. No other statute comprehensively regulates warranty rights in service transactions. The UCC can be applied by analogy, as described in § 19.4, supra.

Consumer Warranty Law: 19.5.2 Common Law Express Warranties

Even without Article 2, consumers should have little difficulty enforcing an express warranty provided in a service or repair transaction.73 The express warranty is akin to an express contract, although privity may not be required for breach of a common law warranty.74 The express warranty is a contract term, and its breach is remedied as a breach of contract.

Consumer Warranty Law: 19.5.3 Common Law Implied Warranties

Courts generally find both the common law implied warranties of fitness for an intended purpose80 and that the service will be performed in a workmanlike manner81 applicable to services. For example, a repair shop makes implied warranties of skilled workmanship when it repairs a consumer’s car.82 Courts may analogize to the UCC and use public policy to restrict limitations on damages and disclaimer of these warranties.83

Consumer Warranty Law: 19.5.4 Damages for Breach of Common Law Warranties

To recover damages, a causal relation between the breach of a common law warranty and the damages must be shown, and the damages must be proved with a reasonable degree of certainty.96 Expectancy damages place the consumer in as good a position as if the contract had been performed,97 preserving the consumer’s bargain.

Consumer Warranty Law: 19.6.3 Parties Liable

Servicers are liable for their own faulty work and, under the doctrine of respondeat superior, for work done by their employees or by a subcontractor.139 A subcontractor is also liable for its own negligence.140 The manufacturer can be liable in negligence if the repair parts are defective. A franchisor may be liable for faulty repair by its franchisee if the franchisee is the franchisor’s agent.141

Consumer Warranty Law: 19.6.4 Proving Damages

Proof of damages in a negligent services case is generally the same as in any negligence action,142 except that, unlike negligence actions involving goods, courts may allow recovery of economic losses in negligence actions involving services.143 This subsection examines special proof issues related to negligent automobile repair, which should also be available by analogy in negligence claims involving other services.

Consumer Warranty Law: 19.7 Breach of Bailment Contract

Breach of a bailment contract is a potential claim when a repair shop damages property it agreed to repair. A bailment contract, express or implied, is created when personal property is delivered into the possession of another person in trust for a specific purpose, under an agreement that the property will eventually be returned to the owner.149 Delivery of property to a repair shop thus creates a bailment.150

Consumer Warranty Law: 19.8 UDAP and Fraud Claims

Unfair and deceptive acts and practices (UDAP) claims are especially relevant to service transactions. UDAP statutes apply equally to goods and services.155 A number of UDAP regulations and cases deal specifically with automobile repair, home improvement, and other services.156 UDAP statutes’ stronger remedies and deception and unfairness standards often match well with the more egregious home improvement and automobile repair practices.