Skip to main content

Search

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: Section 2-724. Admissibility of Market Quotations.

Whenever the prevailing price or value of any goods regularly bought and sold in any established commodity market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of such market shall be admissible in evidence. The circumstances of the preparation of such a report may be shown to affect its weight but not its admissibility.

Official Comment

Consumer Warranty Law: MICHIGAN

Mich. Comp. Laws §§ 445.903a, 500.125

Service contacts as defined excluded from insurance regulation (§ 500.125). Home appliance service contract terms shall be extended while the contract is interrupted because of a strike or work stoppage at the company’s place of business (§ 445.903a).

Consumer Warranty Law: MONTANA

Mont. Code Ann. §§ 30-14-1301 to 1304, 33-1-102(10)(b)

Requires measures to ensure financial solvency sufficient to meet obligations; exempts service contracts from insurance regulations; and specifies required disclosures; applies to service contracts as defined in § 33-1-102.

Consumer Warranty Law: NEW YORK

N.Y. Gen. Bus. Law § 198-b (McKinney)

The statute distinguishes between service contracts (provided at extra charge beyond the price of the used vehicle), repair insurance (regulated by the insurance department) and warranties (provided at no extra cost) (§ 198-b(a)(4)–(6)). Warranties are extended by any time during which a used vehicle is in possession of the dealer for repair under the service contract or when repair service is not available because of war or natural disaster (§ 198-b(c)(3)–(4)).

N.Y. Ins. Law §§ 7901 to 7913 (McKinney)

Consumer Warranty Law: NORTH DAKOTA

N.D. Cent. Code §§ 26.1-40-18 to 26.1-40-22

Automobile service contract issuers must obtain an insurance policy backing their obligations (§ 26.1-40-18). Violation of the statute is a misdemeanor (§ 26.1-40-22).

N.D. Cent. Code § 9-01-21

Property service contracts and vehicle theft protection product warranties are not subject to the provisions of N.D. Cent. Code tit. 26.1 (insurance).