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Magnuson-Moss Warranty-Federal Trade Commission Improvement Act
The Magnuson-Moss Warranty Act is a federal Law that protects the buyer of any product
which costs more than $25 and comes with an express written warranty. This law applies to
any product that you buy that does not perform as it should.
The Magnuson-Moss Act is a federal law giving consumers considerable rights in dealing
with manufacturers and car-dealers of lemon automobiles. This law guarantees a car buyer
that certain minimum requirements of warranties must be met, and provides for disclosure
of warranties before purchase.
Regarding "lemon cars", this law greatly affects the rights of car buyers. For
any product which has a written warranty, if any part of the product, or the product
itself is considered defective, the warrantor must permit the buyer the choice of either a
refund or replacement of the product.
We have argued successfully to juries that the lemon manufacturers and car-dealers should
be given three (3) attempts to fix the defect. Continued attempts to repair beyond the
initial three (3) should not be allowed. We call this the "three strikes and you're
out" principle.
A consumer may pursue legal action in any court of general jurisdiction in the United
States to enforce his rights under the Magnuson-Moss Act. Attorney's fees based on actual
time spent will be covered if the consumer prevails.
Due to this particular condition, there is quite a bit of financial pressure on the
manufacturer to settle consumer disputes before going to court, as this would keep their
expenses down.
UNIFORM COMMERCIAL CODE
TARR BABY-The Uniform Commercial Code or UCC has been enacted in all 50 states and some of
the territories of the United States. It is the primary source of law in all contracts
dealing with the sale of products. The “TARR” refers to Tender, Acceptance,
Rejection, Revocation and applies to different aspects of the consumer's
"relationship" with the purchased goods.
TENDER-The tender provisions of the Uniform Commercial Code contained in Section 2-601
provide that the buyer is entitled to reject any goods that fail in any respect to conform
to the contract. Unfortunately, new cars are often technically complex and their innermost
workings are beyond the understanding of the average new car buyer. The buyer, therefore,
does not know whether the goods are non-conforming.
ACCEPTANCE-The new car buyer accepts the goods believing and expecting that the
manufacturer will repair any problem he has with the goods under the warranty.
REJECTION-The new car buyer may discover a problem with the vehicle within the first few
miles of his purchase. This would allow the new car buyer to reject the goods. If the new
car buyer discovers a defect in the car within a reasonable time of inspecting the
vehicle, he may reject the vehicle. This period is not defined. On the one hand, the buyer
must be given a reasonable time to inspect and that reasonable time to inspect will be
held as an acceptance of the vehicle. The courts will decide this reasonable time to
inspect based on the knowledge and experience of the buyer, the difficulty in discovering
the defect, and the opportunity to discover the defect.
REVOCATION- What happens when the consumer has used the new car for a lengthy period of
time? This is the typical lemon car case. The UCC provides that a buyer may revoke his
acceptance of goods whose non-conformity substantially impairs the value of the goods to
him when he has accepted the goods without discovery of a non-conformity because it was
difficult to discover or if he was assured that non-conformities would be repaired. Of
course, the average new car buyer does not learn of the non-conformity until hundreds of
thousands of miles later. And because quality is job one, and manufacturers are competing
on the basis of their warranties, the consumer is always assured that any non-conformities
he does discover will be remedied.
STATE LEMON LAWS
State Lemon Laws have some differences from state to state, nevertheless, there are basic
guidelines they do share.
1) The laws define what a lemon car is and often require that the manufacturer, not the
dealer, takes care of the defects. If a number of attempts have been made to repair a
defect that significantly impairs the use, value or safety of a car and the car continues
to have this defect, the car is than considered to be a "lemon".
2) Most statutes set up a warranty rights period of either 12 to 24 months or 12,000 to
24,000 miles. The defect(s) must occur sometime during this period.
3) Many of the state laws contain specific guidelines as to what constitutes a sufficient
number of attempts to repair, and whether these attempts entitle the consumer to a refund
or replacement. These are:
a. If the defect is a serious safety defect involving brakes and or steering, the
manufacturer is granted one attempt to repair.
b. If there is a safety defect that is not considered a serious safety defect,the
manufacturer has two attempts to repair.
c. For any other defect, the manufacturer is usually given three or four chances to repair
the same defect.
d. If at any time the vehicle is in the shop for a cumulative total of 30 days in a one
year period, with at least one of those days occurring the first 12,000 miles.
If any one of these of these guidelines can be satisfied, the consumer is usually given
the right to require repurchase or replacement of his/her vehicle.
4) Most lemon laws do allow an offset for use of the vehicle by the consumer. Oftentimes,
a reduction in the consumer's purchase price return is used in relation to the number of
miles he/she had put on the car. One law spells out the reduction in refund for use as
follows:
(miles at time of refund X purchase price)/100,000
The consumer can often argue that he/she should not be charged for miles that were put on
the vehicle after the first try to fix the defect. For example, what if the consumer
allows a dealer many attempts to repair a defect over a period of several thousand miles?
Should the manufacturer be allowed to reduce his refund for the period of time he was not
unsuccessful in fixing the defect? Our answer is no. The above formula should be used to
compute the mileage at the time of the repair attempt. This can often make a difference of
several hundred dollars to the consumer.
5) Only about one half of the lemon laws allow the consumer to recover attorney's fees in
his/her action. Those states that do allow attorney's fees provide for a greater
likelihood of success and representation in warranty disputes.
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