Warranties in the Sale of Goods (Part 2)
D. Warranties in Motor Vehicle Sales
For a detailed discussion of warranties involved in the sale of new and used motor vehicles by manufacturers, manufacturers’ agents, or automobile dealers, see section C of Regulation of Trade Practices in the Sale of Motor Vehicles (Part 2), which details the seller’s obligations under the Motor Vehicle Quality Assurance Act.
E. Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act is a federal law that sets minimum standards for written warranty disclosures. The Act can be found at 15 U.S.C. §2301 et seq. and regulation 16 C.F.R. §700. Generally, the Act requires accurate and conspicuous disclosure of standard information in written product warranties.
1. When does the Magnuson-Moss Warranty Act Apply?
The Act applies only to consumer products (i.e. any personal property that is distributed commercially and that is normally used for personal, family or household purposes), when:
- the product cost more than $15.00; and
- the item was accompanied by a written affirmation promising that the item was free from defect, or met a specified level of performance, or came with a written promise to remedy any defects; and
- the warranty became part of the basis of the bargain; and
- the item was distributed in commerce.
The Magnuson-Moss Warranty Act does not cover sales of services, sales in which the seller does not choose to provide a written warranty, or purchases for business or investment purposes.
2. Contents Required in a Written Warranty under the Act
The Act requires that a written warranty contain the following information:
- The identity of the party or parties who may enforce the written warranty, if the warranty is limited to the original purchaser or is otherwise limited to certain parties;
- A clear description of the product, or parts, or components covered by or excluded from the warranty;
- A statement explaining what the warrantor will do in the event of defect, malfunction, or failure of the product, including the items or services the warrantor will provide;
- The starting date or event for the warranty term;
- A step-by-step explanation of the procedure the consumer should follow in order to obtain performance under the warranty;
- Information regarding the way in which disputes may be settled informally;
- Any limitations on the duration of implied warranties;
- Any limitations on remedies, such as a limitation on the award of consequential damages; and
- A statement that informs the consumer that the warranty gives him or her specific legal rights.
3. The Magnuson-Moss Warranty Act Limits Disclaimers of Implied Warranties
A seller may not disclaim or modify any implied warranty where:
- the sale comes with a written warranty, or
- the sale is covered by a service contract within 90 days after purchase.
However, the implied warranty may be limited in duration to the same time period of the written warranty, if the limitation is reasonable and prominently displayed on the face of the warranty.
4. Consumer Remedies Under the Magnuson-Moss Warranty Act
A consumer may bring suit against the seller for a seller’s failure to act in accordance with the requirements of the Magnuson-Moss Warranty Act. If the consumer wins the case, he or she may be awarded monetary damages to cover the consumer’s losses from the breach of warranty, as well as costs for bringing the suit and attorney’s fees.