Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act, passed by Congress in 1975, is often cited as a protection against vehicular lemons. That citation is half correct. The purpose of the Act is to make manufacturer warranties more easily understood and enforceable, giving the Federal Trade Commission (FTC) the means to protect consumers against defective products. The Act does not require every consumer product to carry a warranty, but if a product provides a warranty, it has to comply with the Act. As in most federal legislation, Congress attacks issues with broad strokes and the states fill in the details.
Unfortunately, our system of laws is complex and often requires lawyers to draw accurate conclusions. If you love the complexity of the English language, you’ll love this section. The main reason we’ve included a brief outline of federal laws is to provide a broad understanding of your right to replace or refund your lemon.
We will try to simplify the law. If you think you may have a case under either state or federal lemon laws, consultation with a lawyer or arbitrator well-versed in legalese and loop holes may be the only way to determine if your case is valid.
Some of the definitions and requirements of the Magnuson-Moss Act, pertinent to lemon cars, include:
- Written warranty (or express warranty) is any written promise made by a supplier to a consumer in connection with the sale of a product that relates to the material and/or workmanship of the product and ensures it is defect-free or will meet a certain standard of performance over a specified time.
- Full warranty meets the federal minimum standards:
- Warranty service is provided to anyone owning the product during the warranty period—coverage is not limited to first purchasers.
- Warranty service is free of charge.
- At the consumer’s choice, a replacement or full refund, after a reasonable number of repair attempts, is provided if the product cannot be repaired.
- The consumer cannot be required to perform any duty (unless it can be demonstrated that duty is “reasonable”) as a condition for receiving service. All the consumer should have to do is request service.
- Limited warranties do not meet federal requirements.
- Service contractsdo not guarantee the quality or workmanship of a product. They are not the same as warranties, simply agreements to perform service. If service contracts are sold or regulated as “contracts of insurance” they do not come under the Magnuson-Moss Warranty Act.
- Minimum standards for full warranties are waived if it can be shown that the “defect” or problem was caused by damage while in the possession of the consumer or by unreasonable use including a failure to provide necessary maintenance.
Now, you can see why we made that suggestion to consult a lawyer. Each definition hangs on terms that may, themselves, need defining.
Remedies Under Magnuson-Moss
The intent of the Act is to give consumers access to reasonable remedies for a breach of warranty. These remedies are in the form of informal dispute settlement procedures and action brought by either the government or private parties. Some remedial procedures are found in FTC rules (and you thought this would be simple) and may require mediation or arbitration as the first step in settling disputes. The Act allows consumers to bring lawsuitsfor Magnuson-Moss Act violations in state court if the amount in dispute is between $25 and $50,000. It also allows for class action suits in state court for cases where the number of plaintiffs is less than 100. In cases that exceed either the amount or number of plaintiffs, it can be brought in federal district court. The teeth in the law is the ability of plaintiff to recover court costs and attorney fees.
Informal Dispute Resolution
While the Magnuson-Moss Act makes it easier for individuals to sue for breach of warranty, it encourages manufacturers to establish informal dispute resolution mechanisms to resolve negotiations that have come to a standstill. Dispute resolution can be run by an independent third party, like the Better Business Bureau or company employees whose only job is to administer the dispute system. If a manufacturer requires this step in the process of resolving a dispute, the resolution system has to adhere to the FTC’s rule on Informal Dispute Settlement Procedures.
Uniform Commercial Code
Since products can be manufactured in one state and distributed for sale in another, the Uniform Commercial Code was created to harmonize sales and commercial transactions across the country. That’s about the only simple concept in the code. Elements contained in the Code article “Tender, Acceptance, Rejection and Revocation,” address lemon vehicles but not as specifically as more recent state laws. The problem is not so much the language, but the complexity of automotive systems in the 21st century. If you buy an electric can opener, take it home and it doesn’t open a can, you can “reasonably” reject it and get your money back or be given a different can opener. If a 2008 automobile is driven off the dealer’s lot with an irreparable defect, it may take a while for that defect to show itself. Despite the general applications of the Code, there are some pertinent areas, all dealing with the contract of sale:
Tender provisions allow the buyer to reject goods that fail to conform to the contract.
Acceptance implies that the buyer accepts the product expecting that the manufacturer will repair any problem under the warranty.
Rejectionallows the buyer to reject the product if he discovers a defect in a reasonable time. The courts have defined “reasonable” but rather narrowly. If you’re relying on the UCC to protect you from a lemon, you’re better off with the Magnuson-Moss Act or state laws.
Revocation is much closer to today’s lemon laws, allowing the car buyer to actually use the vehicle as part of the “inspection” process.
- A number of relatively minor defects whose cumulative total adds up to a substantial impairment. This concept is called the “Shaken Faith” Doctrine, based on a new buyer’s assumption that the car is dependable and safe. If that faith is shaken, the vehicle loses its real value in their eyes “and becomes an instrument whose integrity is substantially impaired and whose operation is fraught with apprehension.” Anyone who’s ever driven a clunker understands shaken faith.
- A substantial nonconformity may include a failure or refusal to repair the vehicle under the warranty.
So there you have it, or not. If you come away with anything from this section, it should be the idea that you are protected at the federal level from products, including the family sedan, that do not work.
If you suspect your vehicle is a lemon, contact us using the form on the right and we’ll help you locate a lemon lawyer.
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