WarrantyVIII

Warranties VIII--The Magnuson-Moss Warranty Act

This page will summarize the purposes and major provisions of the Magnuson-Moss Act ("Act") and then say a word about the Soldinger case (p. 378).

Background and Purposes. The Act is a federal law, codified at 15 USC ss 2301-2312, designed to protect consumers when sellers have given written warranties of their products. It emerged in the context of mounting consumer complaints in the late 1960s and early 1970s regarding the quality of new American automobiles. Many states passed "lemon laws" at the same time, meant to give consumers protections especially when buying defective automobiles. However, the Act applies to any purchase of a consumer good. Note, however, that it does not apply to transactions between merchants or between entities above the purchaser on the vertical ladder of privity.

The purposes of the Act are listed in ss 2302: 1) to improve the adequacy of information available to consumers; 2) to prevent deception; and 3) to improve competition in the marketing of consumer products. The Act did not require that sellers offer warranties to purchasers; it only became applicable once a written warranty was provided.

Provisions. The central substantive provision of the Act was to require merchants who offered a written warranty to "fully and conspicuously disclose in simple and readily understood language the terms and conditions of such warranty." s 2302(a). The remainder of that section of the statute lists several ways that this general statutory directive can be fulfilled. The Federal Trade Commission is charged with developing rules to implement the Act.

If a written warranty is given, it either must be designated a "Full" or "Limited" warranty. My reading of s 2303 is that the "Full" warranty is the default condition, since the warranty must comply with minimum federal standards (s 2404) unless "Limited" is conspicuously displayed ( 2303(a)(2)), but the Act also lets the FTC define the issue more precisely (s 2303(c)).

In any case, the provisions of s 2304 state the federal minimum standards for written warranties, and s 2310 describes the remedies available to parties where breach is in view. With respect to the latter, the Act provides that if a warrantor establishes a dispute resolution procedure in the warranty, the consumer may not commence a civil action unless the warranty procedure has been followed.

One other point, not mentioned in class, is that the Act does not permit the disclaimer of implied warranties unless the merchant offers a "limited" warranty. If this is the case, the Act permits the merchant to include a provision that restricts the duration of the implied warranty to the durantion of the limited warranty.

Case. The case assigned in class, Soldinger (p. 378), deftly reviews several provisions of the Act. In order to have gotten full credit on the quiz for the Soldinger question, you would have needed to discuss the 2304(d) claim, regarding reasonable number of repairs, and the implied warranty claim in Count II (whether the Act overrides state law in defining whether privity of contract is needed in order to bring a claim of implied warranty of merchantability). The court took great pains to evaluate whether the Act provides substnatially greater protection against defective goods than Article 2, and concluded that the legislative history of the Act as well as the Act itself, in 2301(7), deferred to state law on whether contractual privity is a prerequisite for recovery under a theory of breach of implied warranty. The court concluded such privity was required. The court also referred to the remedy provision (s 2310(d)(1)) to allow a revocation of acceptance claim to go forward.