The federal Magnuson-Moss Warranty Act is the law that keeps manufacturers up at night, and rightfully so. The law is designed to provide a remedy to consumers for failure of manufacturers to abide by their warranties, but it provides an even heavier cudgel for attacking manufacturers than Congress may have intended. Regardless of its flaws, it pays to understand the outline of the law as it applies to manufacturers.
The basic elements of the Magnuson-Moss Warranty Act (“Magnuson-Moss”) are simple. To prevail under Magnuson-Moss, a plaintiff must show there is a valid warranty, the product was presented for repair during the warranty period, and the manufacturer failed to conform the product to the provisions of the warranty within a reasonable amount of time or number of repair attempts. The measure of damages for breach of warranty under Magnuson-Moss is determined by comparing the difference at the time and place that the party accepted the goods between the value of the goods accepted and the value they would have had if they had been as warranted. Basically, this is the purchase price of the goods minus what the value of the goods would have been had they had the defects alleged at the time of sale. This amount is usually expressed by a diminution in value, which is a percentage the goods are reduced from the purchase price.
The Big Headache
What should be the obvious limitation on the Magnuson-Moss Act is that it primarily covers breaches of express warranties. If you don’t offer a warranty, one may presume that Magnuson-Moss shouldn’t be quite as big of an issue (more on that in a minute). The stated purpose of the law is to protect consumers from misleading warranty claims, so it stands to reason that where there is no warranty, there is no harm to consumers from failure to honor a warranty.
The major caveat in the above thinking is that §2310(d) of Magnuson-Moss provides that, “[a] consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this title, or under a written warranty, implied warranty, or service contract, may bring suit for damages…” (emphasis added). Magnuson-Moss goes on to define “implied warranty” as a creature of state law, and Kentucky recognizes both “implied warranty of merchantability” and “implied warranty of fitness for a particular purpose.” All of this goes to say that Magnuson-Moss can extend beyond express warranties, which can be a headache for manufacturers, even before you include Magnuson-Moss’s biggest weapon: the fact that plaintiffs can recover attorney fees.
The Solution at the Start
The easiest way to defeat this troublesome beast is to create an express disclaimer of implied warranties under KRS 355.2-316, such as inclusion of language in your written warranty to the effect of “There are no warranties which extend beyond the description on the face hereof.” Where that language is included, Magnuson-Moss claims can be confined to the four corners of the express warranty. Additionally, manufacturers can create limitations on liability or damages at the time of the sale.
If it’s too late to disclaim implied warranties or limit liability at the outset, then it’s time to call in someone experienced in defending against Magnuson-Moss warranty claims.