Your client has purchased a car or truck which does not meet their expectations because it has one or more defects. You want to know the client's rights to have the defect rectified, or to recover damages, or to cancel the sale.
Applicable substantive law
Illinois Commercial Code, 810 ILCS 5/2-312 through 5/2-318.
Includes Warranty of Title §2-312; Express Warranties §2-313; Implied Warranty of Merchantability §2-314; Implied Warranty of Fitness for Particular Purpose §2-315; Exclusion or Modification of Warranties §2-316; Cumulation and Conflict of Warranties §2-317; Third Party Beneficiaries of Warranties §2-318
New Vehicle Buyer Protection Act (Lemon Law), 815 ILCS 380/1 et. seq.
Magnuson-Moss Warranty Act, 15 U.S.C. §2301 et. seq., 16 C.F.R. §§700-703
Statutory Warranty, 815 ILCS 505/2L
Common Law Implied Warranties
Illinois Commercial Code
Remedies for breach of warranty
Where the buyer discovers a breach of warranty, he or she must, within a reasonable time, notify the seller of the breach or be barred from any remedy. 810 ILCS 5/2-607(3).
If the seller fails to correct the breach, the buyer may recover actual damages, measured as the difference between the value of the vehicle when accepted and the value as warranted, absent special circumstances. An acceptable measurement of this difference is the cost to repair the vehicle to attain the quality warranted. 810 ILCS 5/2-714.
Incidental and consequential damages
These may also be recovered, including injury to person or property proximately resulting from the breach of warranty. 810 ILCS 5/2-715.
The buyer must show that the breach of warranty was the proximate cause of the loss sustained.
Liquidated damages clauses
Under 810 ILCS 5/2-718, damages for breach by either party may be co-opted by a liquidated damages clause in the agreement but only at an amount which is reasonable in light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or non-feasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void.
Under 810 ILCS 5/2-719, the contract may provide for remedies in addition to or in substitution for those provided in the UCC and may limit the buyer's remedies, unless the limitation is unconscionable.
Cancellation of the sale
Differences between rejection and revocation
- Rejection is only available before acceptance of the vehicle
- Seller has a right to cure the defect before you can reject
- Rejection is available for any breach of warranty
- For rejection, the burden is on the seller to show no breach
- For rejection, do not have to show ignorance of defect or reasonable belief of repair
- Revocation is available only after acceptance
- Seller has no right to cure before you can revoke
- Can revoke only when the breach substantially impairs the value of vehicle to the buyer
- For revocation, the burden is on the buyer to show a breach
- To revoke, the buyer must show acceptance in justifiable ignorance of the nonconformity or knowing of it, but reasonably believing it would be fixed
Cancellation is a self-help remedy
Cancellation is exercised by the buyer notifying the seller and making the vehicle available to the seller to pick up. If all goes well, the seller takes back the car, returns any money paid toward the purchase price and cancels the buyer's outstanding obligations. If the seller fails to do any of these things, the buyer may seek judicial relief under the Code in the form of damages.
When rejection is available as a remedy
Since it is available only before acceptance, the key is whether the buyer accepted the car. Acceptance occurs when the buyer, by words, conduct, or silence, manifests an intention to accept the car.
810 ILCS 5/2-606 provides three methods by which the buyer can manifest the intent to accept: a) the buyer fails to reject after a reasonable opportunity to inspect; b) the buyer signifies acceptance or signifies that goods are conforming, after a reasonable opportunity to inspect, or c) the buyer performs any act inconsistent with the seller's ownership.
Important: The buyer does not accept goods merely because s/he has obtained title to them, has paid for them, or has possession of the goods. To properly reject the buyer must not only inspect and reject within a reasonable time, but must also give "seasonable" notification, that is notification of rejection to the seller within the time specified in the contract or, otherwise within a reasonable time. There is no prescribed method of notification in the Code, but merely returning the goods to the seller is insufficient.
When revocation is available as a remedy
Once the buyer has accepted the goods, s/he can cancel the sale only by revoking that acceptance. 810 ILCS 5/2-608 establishes five conditions: a) the defect must substantially impair the value of the car to the buyer; b) the buyer must have been justifiably unaware of the defect when acceptance occurred, or if known, reasonably assumed seller would cure; c) the revocation must occur within a reasonable time after the buyer discovers or should have discovered the defect; d) the car must be in essentially the same condition as when delivered, except for damage caused by the defect; and e) the buyer must notify the seller of the revocation.
Relief upon proper cancellation
810 ILCS 5/2-711 entitles the buyer to the return of all money paid toward the purchase price.
810 ILCS 5/2-715 specifies incidental and consequential damages, including expenses reasonably incurred in inspection, receipt, transportation, and care/custody of the car and any other reasonable expense incident to any delay or breach. Consequential damages include certain losses resulting from the particular needs of the buyer as well as injuries to the person or property proximately resulting from any breach of warranty.
The canceling buyer may also recover any extra cost incurred buying substitute goods. This remedy is called "cover" and is expressly authorized by 810 ILCS 5/2-712. The buyer is not penalized for failing to cover and may recover damages for the increased cost of the car under 810 ILCS 5/2-713.
If the seller refuses to return any payments made by the buyer, the buyer has a security interest in the goods to cover such fees and may sell the goods and keep the proceeds necessary to reimburse him. 810 ILCS 5/2-711(3).
The seller's refusal to discharge its UCC duties of recognizing the buyer's rightful rejection or revocation may also be actionable under the Consumer Fraud Act.
What creates an express warranty?
Express warranties by the seller are created, provided they are a part of the basis of the bargain, by:
- Any affirmation of fact or promise made by the seller to the buyer relating to the vehicle. The car must conform to the affirmation or promise;
- Any description of the vehicle. Car must conform to description; and
- Any model shown. Car must conform to model.
No formal words necessary
It is not necessary that seller use formal words such as "warrant" or "guarantee." Nor is it necessary that seller intend to make a warranty. However, expression of the seller's opinion or commendation of the car does not constitute a warranty, nor does mere "puffing."
"Part of the basis of the bargain."
This term is broadly interpreted. The term "bargain" encompasses the entire transaction and surrounding circumstances, and specific evidence of reliance on a statement is unnecessary. The customer must usually only show that s/he read or heard and believed the statement, but other circumstances or contractual disclaimers can make it unreasonable for the buyer to believe that statements or promises were part of the basis of the bargain.
Manufacturer or third party warranties
The statement need not be made by the actual car dealer but can be the manufacturer's statement or promise, or that of a third party that gets introduced into the bargaining process.
Implied warranty of title
Implied in every sale
Every contract for the sale of a vehicle implies a warranty by the seller that the title is good, and the vehicle is free of any security interest, lien, or other encumbrance.
The warranty extends to a buyer whether or not the seller was in possession of the vehicle at the time of sale.
Limits on exclusions or modifications
The warranty is not subject to exclusion or modification under §2-316 but may be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the seller does not claim the title.
Implied warranty of merchantability
Implied in every sale
Whenever the seller is a merchant concerning vehicles, a warranty that the vehicle shall be "merchantable" is implied in every sale.
What is merchantable?
To meet the test of "merchantable," the vehicle must at least:
- Pass without objection in the trade under the contract description,
- Be fit for the ordinary purposes for which a vehicle is used, and
- Conform to the promises or affirmations of fact made on the container or label, if any.
Can be excluded
This implied warranty can be excluded or modified under §2-316 with an "as is" clause. Without an "as is" clause, the warranty of merchantability can only be excluded or modified if the language specifically mentions merchantability, and is conspicuous.
Use in consumer fraud cases
Note that in consumer fraud cases, you may also have a breach of the implied warranty of merchantability.
Example: A vehicle sold with an odometer roll-back would not "pass without objection in the trade" and would thus be unmerchantable.
A used vehicle should be in reasonably safe condition and substantially free of defects that impair its operation. Overland Bond & Inv. Corp. v. Howard, 9 Ill.App.3d 348, 292 N.E.2d 168 (1st Dist. 1972). It should perform up to the level reasonably expected of a car of the same age, mileage, and price.
Implied warranty of fitness for a particular purpose
Reliance on seller's judgment
If the seller, at time of sale, has reason to know the particular purpose for which the car is required (e.g., cross-country trip), and that the buyer is relying on the seller's skill or judgment to select or furnish a suitable car, there is an implied warranty that the car shall be fit for such purpose.
Whether or not the car is sold for a "particular purpose" depends on whether the buyer is to put the car to a specific use peculiar to his business or circumstances. It is to be distinguished from ordinary or general use.
Can be excluded
This implied warranty can be excluded or modified under §2-316 with an "as is" clause. Without an "as is" clause, the warranty of fitness can only be excluded or modified if the exclusion/modification is in writing and conspicuous. The language need not mention "fitness" and is sufficient by stating, for example, "There are no warranties which extend beyond the description on the face hereof."
Exclusion or modification of warranties
A seller cannot successfully exclude or modify an express warranty by words or conduct which cannot be reasonably construed consistently with the words or conduct relevant to the creation of the express warranty.
Implied warranties/ "as is" sales
All implied warranties are excluded by expressions like "as is," "with all faults," or other language, which calls the buyer's attention to the exclusion of warranties unless circumstances indicate otherwise.
Note: An "as is" warranty disclaimer does not shield the seller from non-UCC fraud claims. Also, when you see an "as is" disclaimer, consider whether there were any express warranties.
No implied warranties for obvious defects
There are no implied warranties about defects which an examination before entering the contract ought to have revealed if the buyer has examined the goods as fully as desired or has refused to examine them.
Cumulation and conflict of warranties
The general rule is that warranties, whether express or implied, shall be construed as consistent with each other and as cumulative. If that construction is unreasonable, the intention of the parties determines which warranty is dominant. An express warranty (e.g., "I will replace defective parts") is superior to an inconsistent warranty of merchantability. An implied warranty of fitness is superior to an inconsistent express warranty.
Third party beneficiaries of warranties
Any of the above warranties, express or implied, extends to all family and household members of the buyer as well as to guests in his/her home if it is reasonable to expect that the family or household member or guest might use or be affected by the vehicle and who suffers harm by breach of the warranty.
Defenses to breach of warranty
Defenses include buyer's negligence, an assumption of risk, misuse of the product, non-compliance with conditions to warranty coverage, expiration of express warranty period, and the statute of limitations (4 years after the cause of action accrues).
The Illinois New Vehicle Buyer Protection Act (Lemon Law)
Persons who purchase a new vehicle for primarily personal, household or family purposes have a remedy against the seller where:
- The new vehicle fails to conform to all express warranties applicable to such vehicle; and
- That failure substantially impairs the use, market value or safety of that vehicle.
The Act provides a cause of action against the "seller," defined as the manufacturer, the manufacturer's agent or distributor, or that manufacturer's authorized dealer.
"New vehicle" defined
Means a passenger car, a second division vehicle having a weight under 8,000 pounds, and a recreational vehicle, all as defined in the Illinois Vehicle Code.
Requirement of written statement
The seller must provide the consumer with a written statement clearly and conspicuously set forth in full detail the consumer's rights under this Act. This statement must be provided upon delivery of the vehicle to the consumer.
The consumer must elect whether to proceed and settle under this Act or to bring a cause of action under the Illinois Commercial Code. Persons who elect the former are barred from the latter.
Conditions for any remedy under the Act
Seller's right to cure
The buyer must allow the seller a reasonable number of attempts to bring the new vehicle into conformance with the applicable express warranties.
Reasonable number of attempts
A presumption arises that a reasonable number of attempts have been undertaken where, within one year or 12,000 miles after delivery, whichever occurs first:
- The nonconformity has been subject to repair by the seller, its agents or authorized dealers, 4 or more times, and the non-conformity continues to exist; or
- The vehicle has been out of service to repair the non-conformities for a total of 30 or more business days.
Informal Dispute Procedures
If the manufacturer has established an informal dispute settlement procedure, the consumer must first resort to that procedure before claiming a remedy under this Act, provided that:
- The procedure conforms to 16 C.F.R. Part 703 (Magnuson-Moss Warranty Act regs); and
- The consumer has received from the seller adequate written notice of the existence of the procedure.
3. the procedure requires the seller to notify the consumer of the decision reached through such procedure, and of the customer's right to bring a civil action to enforce his rights under this Act, if the customer is dissatisfied with the decision reached in the settlement procedure.
Lemon law remedies
Replacement vehicle or refund
If the prerequisites have been met, the manufacturer must provide the consumer with a new vehicle of like model line, if available, or otherwise a comparable motor vehicle as a replacement, or accept the return of the vehicle from the consumer and refund to the consumer the full purchase price of the new vehicle, including all collateral charges, less a reasonable allowance for consumer use of the vehicle. (The Act defines "reasonable allowance.")
Refunds made shall be made to the consumer and lien holder if any exists, as their respective interests appeal.
Any replacement vehicle provided to the consumer under this Act is also accorded the same protection of the Act.
Seller's affirmative defenses
Where the nonconformity is the result of abuse, neglect or unauthorized modifications or alterations.
Where the action is brought beyond the statutory limitations period. Any action under this Act must be commenced within 18 months following the date of original delivery of the car to the consumer.
Illinois Statutory Used Car Warranty
For sales on or after July 1, 2017, Illinois will require a very limited mandatory warranty for used cars. 815 ILCS 505/2L has been amended by P.A. 99-768 effective July 1, 2017, to provide:
Sec. 2L. Used motor vehicles; modification or disclaimer of implied warranty of merchantability limited.
(a) Any retail sale of a used motor vehicle made after the effective date of this amendatory Act of the 99th General Assembly to a consumer by a licensed vehicle dealer within the meaning of Chapter 5 of the Illinois Vehicle Code or by an auction company at an auction that is open to the general public is made subject to this Section.
(b) This Section does not apply to vehicles with more than 150,000 miles at the time of sale. In addition, this Section does not apply to vehicles with titles that have been branded "rebuilt" or "flood".
(c) Any sale of a used motor vehicle as described in subsection (a) may not exclude, modify, or disclaim the implied warranty of merchantability prescribed in Section 2-314 of the Uniform Commercial Code or limit the remedies for a breach of the warranty before midnight of the 15th calendar day after delivery of a used motor vehicle or until a used motor vehicle is driven 500 miles after delivery, whichever is earlier. In calculating time under this Section, a day on which the warranty is breached and all subsequent days in which the used motor vehicle fails to conform with the implied warranty of merchantability are excluded. In calculating distance under this Section, the miles driven to obtain or in connection with the repair, servicing, or testing of a used motor vehicle that fails to conform with the implied warranty of merchantability are excluded. An attempt to exclude, modify, or disclaim the implied warranty of merchantability or to limit the remedies for a breach of the warranty in violation of this Section renders a purchase agreement voidable at the option of the purchaser.
(d) An implied warranty of merchantability is met if a used motor vehicle functions free of a defect in a power train component. As used in this Section, "power train component" means the engine block, head, all internal engine parts, oil pan and gaskets, water pump, intake manifold, transmission, and all internal transmission parts, torque converter, drive shaft, universal joints, rear axle and all rear axle internal parts, and rear wheel bearings.
(e) The implied warranty of merchantability expires at midnight of the 15th calendar day after delivery of a used motor vehicle or when a used motor vehicle is driven 500 miles after delivery, whichever is earlier. In calculating time, a day on which the implied warranty of merchantability is breached is excluded and all subsequent days in which the used motor vehicle fails to conform with the warranty are also excluded. In calculating distance, the miles driven to or by the seller to obtain or in connection with the repair, servicing, or testing of a used motor vehicle that fails to conform with the implied warranty of merchantability are excluded. An implied warranty of merchantability does not extend to damage that occurs after the sale of the used motor vehicle that results from:
- (1) off-road use;
- (2) racing;
- (3) towing;
- (4) abuse;
- (5) misuse;
- (6) neglect;
- (7) failure to perform regular maintenance; and
- (8) failure to maintain adequate oil, coolant, and other required fluids or lubricants.
(f) If the implied warranty of merchantability described in this Section is breached, the consumer shall give reasonable notice to the seller no later than 2 business days after the end of the statutory warranty period. Before the consumer exercises another remedy pursuant to Article 2 of the Uniform Commercial Code, the seller shall have a reasonable opportunity to repair the used motor vehicle. The consumer shall pay one-half of the cost of the first 2 repairs necessary to bring the used motor vehicle into compliance with the warranty. The payments by the consumer are limited to a maximum payment of $100 for each repair; however, the consumer shall only be responsible for a maximum payment of $100 if the consumer brings in the vehicle for a second repair for the same defect. Reasonable notice as defined in this Section shall include, but not be limited to:
- (1) text, provided the seller has provided the consumer with a cell phone number;
- (2) phone call or message to the seller's business phone number provided on the seller's bill of sale for the purchase of the motor vehicle;
- (3) in writing to the seller's address provided on the seller's bill of sale for the purchase of the motor vehicle;
- (4) in person at the seller's address provided on the seller's bill of sale for the purchase of the motor vehicle.
(g) The maximum liability of a seller for repairs pursuant to this Section is limited to the purchase price paid for the used motor vehicle, to be refunded to the consumer or lender, as applicable, in exchange for return of the vehicle.
(h) An agreement for the sale of a used motor vehicle subject to this Section is voidable at the option of the consumer, unless it contains on its face the following conspicuous statement printed in boldface 10-point or larger type set off from the body of the agreement:
"Illinois law requires that this vehicle will be free of a defect in a power train component for 15 days or 500 miles after delivery, whichever is earlier, except with regard to particular defects disclosed on the first page of this agreement. "Power train component" means the engine block, head, all internal engine parts, oil pan and gaskets, water pump, intake manifold, transmission, and all internal transmission parts, torque converter, drive shaft, universal joints, rear axle and all rear axle internal parts, and rear wheel bearings. You (the consumer) will have to pay up to $100 for each of the first 2 repairs if the warranty is violated.".
(i) The inclusion in the agreement of the statement prescribed in subsection (h) of this Section does not create an express warranty.
(j) A consumer of a used motor vehicle may waive the implied warranty of merchantability only for a particular defect in the vehicle including, but not limited to, a rebuilt or flood-branded title and only if all of the following conditions are satisfied:
- (1) the seller subject to this Section fully and accurately discloses to the consumer that because of circumstances unusual to the business, the used motor vehicle has a particular defect;
- (2) the consumer agrees to buy the used motor vehicle after disclosure of the defect; and
- (3) before the sale, the consumer indicates agreement to the waiver by signing and dating the following conspicuous statement that is printed on the first page of the sales agreement or on a separate document in boldface 10-point or larger type and that is written in the language in which the presentation was made:
"Attention consumer: sign here only if the seller has told you that this vehicle has the following problem or problems and you agree to buy the vehicle on those terms:
(k) It shall be an affirmative defense to any claim under this Section that:
- (1) an alleged nonconformity does not substantially impair the use and market value of the motor vehicle;
- (2) a nonconformity is the result of abuse, neglect, or unauthorized modifications or alterations of the motor vehicle;
- (3) a claim by a consumer was not filed in good faith; or
- (4) any other affirmative defense allowed by law.
(l) Other than the 15-day, 500-mile implied warranty of merchantability identified herein, a seller subject to this Section is not required to provide any further express or implied warranties to a purchasing consumer unless:
- (1) the seller is required by federal or State law to provide a further express or implied warranty; or
- (2) the seller fails to fully inform and disclose to the consumer that the vehicle is being sold without any further express or implied warranties, other than the 15 day, 500 mile implied warranty of merchantability identified in this Section.
(m) This Section does not apply to the sale of antique vehicles, as defined in the Illinois Vehicle Code, or to collector motor vehicles.
Any person who violates this Section commits an unlawful practice within the meaning of this Act.
Magnuson-Moss Warranty Act
Overview and scope
The Act does not create any new warranties. The Act has three purposes:
1. To promote better understanding for consumers purchasing products with written warranties through specific disclosures;
2. To make it easier for consumers to obtain court enforcement of a warranty by providing for attorneys fees and costs;
3. To stimulate the production of more reliable products by requiring clear disclosure of what the warranty promises.
The main features of the Act are disclosure in simple and readily understood language, minimum requirements for full warranties, prohibition of tie-ins, and recovery of attorneys fees.
The Act applies only to consumer products manufactured after July 4, 1975. 15 U.S.C. §2302(e). Consumer products are defined as any tangible personal property normally used for personal, family or household purposes. 15 U.S.C. §2301(1). Most of its provisions are restricted to products with written warranties. However, damages and attorneys fees for breach of both express and implied warranties are available.
The Act requires that for each written warranty within the scope of the Act, the terms of the warranty must be disclosed before the sale, clearly and conspicuously, in easily understood language, including the following information:
Basic disclosure provisions for written warranties
The Act requires that for each written warranty within the scope of the Act, the terms of the warranty must be disclosed before the sale, clearly and conspicuously, in easily understood language, including the following information:
Designation of the warranty
Must be described as "Full" or "Limited," as part of the caption or title.
Must explain what products, parts, characteristics or components are covered and which are excluded. Warranty duration, including commencement.
Warrantor's performance obligations
The obligations may vary considerably, e.g., repair, replace, refund, pay for parts only, etc.
These are preconditions to the warrantor's obligations. A step-by-step explanation of the procedures which a consumer must follow must be disclosed, including a statement of any expenses the consumer must bear, and including the identification of any person or class of persons authorized to do the warranty work.
Informal dispute settlement mechanisms
Must explain the availability of any informal dispute settlement procedure offered by the warrantor and a recital that the purchaser may be required to resort to such procedure before pursuing any legal remedies in the courts.
A brief, general description of the legal remedies available to the consumer.
Notice of State Rights
Each warranty must contain the following language: "This warranty gives you specific legal rights and you may also have other rights which vary from state to state."
When warranty need not be honored
The warrantor's obligations are not required if he can show that the defect or malfunction was caused by damage (not resulting from defect or malfunction) while in the possession of the consumer, or unreasonable use (including failure to provide reasonable and necessary maintenance).
Effect of Act on implied warranties
Whenever there is a written warranty, implied warranties cannot be disclaimed or modified. They may be limited in duration to the duration of a warranty, provided the limitation is both reasonable and conscionable. Any disclaimer, modification, or limitation violating this rule is ineffective under federal or state law. The same is true when there is a sale of a service contract as part of the sales transaction, or within 90 days. If a service contract is sold to the buyer, no implied warranty can be disclaimed or modified. Therefore, if the sales contract includes any written warranty or a service contract, all implied warranties exist. 15 U.S.C. §2308.
Act prohibits breach of implied warranties. The Act provides a remedy for a consumer who is damaged by any breach of an implied warranty. This remedy is available under the Act even where no written warranty was provided. This is an important and often overlooked Magnuson-Moss provision. It provides a federal cause of action for breach of virtually any implied warranty, permitting the plaintiff to recover damages and attorneys fees.
Requirements for "full" warranties
The Act provides a remedy for any breach of a written warranty. In addition, the Act requires that every warranty be labeled as full or limited. A warranty can be "full" without covering every product part, characteristic or component. If a written warranty meets the minimum standards in 15 U.S.C. §2304, as set forth below, it is a full warranty. Otherwise, it is a limited one. A warranty cannot be labeled as "FULL" unless, at a minimum, it complies with the following:
- It cannot restrict the warranty rights of a subsequent owner during its stated duration
- It must promise to remedy defects within a reasonable time without charge
- It cannot limit the duration of any implied warranty
- It cannot limit consequential damages unless such exclusion or limitation conspicuously appears on the face
- It must permit the consumer, after a reasonable number of attempts by the warrantor to remedy, to elect a refund or replacement of the defective product or part and
- It can require no duty of the consumer other than notification of the defect
- If the warrantor replaces a component part of a consumer product, such replacement must include installing the part in the product without charge
Prohibition of "tie-ins"
The Act prohibits a warrantor from tying the performance of a written or implied warranty to the buyer's use of a particular product or service. Example: It is unlawful for a car manufacturer to honor its implied or express warranty only if one of its dealers perform all maintenance and service work. 15 U.S.C. §2302(c).
Prohibited tie-ins include tying a warranty to the use of only authorized parts or to a certified product, and giving a longer warranty for a product when purchased with a tied-in product.
There are a number of less important prohibitions and restrictions applicable to all written warranties. First, the warrantor cannot grant itself the sole authority to determine a defect or nonconformity. Example: A warrantor cannot warrant a product against any defect in material or workmanship and then state that it alone shall determine what is and what is not a defect.
Other prohibitions cover subjects such as warranty registration cards, warranty extensions during repair efforts, and advertising and labeling.
Private right of action
A consumer has a private right of action and can sue, individually or as representative of a class, for violation of the Act. Possible violations of the Act arise when there is a failure to honor a written warranty, or to honor any implied warranty created by state law, or to comply with any requirement of the Act or regulations. 15 U.S.C. §2301(d).
Parties who are liable
A consumer has a claim against any supplier, warrantor or service contractor who fails to comply with any obligation under the Act, the regulations, or with any written or implied warranty or service contract.
Most suits under the Act will have to be brought in state court. 15 U.S.C. §2310(d) grants federal court jurisdiction only when the amount in controversy is $50,000 or more for an individual claim. In a class action, there is no federal court jurisdiction unless each individual claim is at least $25, the total amount in controversy is at least $50,000 and the class has at least 100 named plaintiffs, not just class members.
A consumer with a cause of action can sue for "damages and other legal and equitable relief." 15 U.S.C. §2310(d)(1). The word damages is not defined, but presumably it includes any monetary loss, including consequential and incidental damages, as well as personal or emotional injury. The measure of damages is not specified, but where appropriate, the Uniform Commercial Code will control. Punitive damages are not recoverable in Illinois. There are no statutory damages.
Attorneys fees and costs
A prevailing consumer may be awarded attorneys fees and costs. This provision is very important. It applies to the buyer who prevails on a claim for violation of the M-M disclosure rules or for breach of any "written warranty." Most significantly, the buyer who prevails on a UCC implied warranty claim can obtain attorneys fees.
Preconditions To filing suit under the Act
If the suit is for failure to comply with a warranty obligation, and the warranty requires use of a valid, informal dispute resolution mechanism, the consumer must use that mechanism before suing. The FTC has rules setting forth minimum requirements for any informal dispute settlement procedure which is incorporated into the terms of a written warranty.
The consumer must afford the warrantor a reasonable opportunity to cure.
Violations of Magnuson-Moss may be violations of the Illinois Consumer Fraud Act
Any person who violates any of the requirements or prohibitions of the Magnuson-Moss Act is deemed to have committed an unfair, deceptive practice in violation of the Federal Trade Commission Act, 15 U.S.C. §45(a)(1). Illinois courts must consider FTC Act violations when construing the CFA.
Common law implied warranties
Common law implied warranties are especially useful in sales transactions not governed by the UCC, such as contracts for labor, services, and real estate. Courts have implied warranties in contracts for labor and materials or for services. Courts applying Illinois law have held that one who contracts to perform construction work impliedly warrants to do the work in a reasonably workmanlike manner. Dean v. Rutherford, 49 Ill.App.3d 768, 364 N.E.2d 625 (4th Dist. 1977). Auto repair contracts are good examples of contracts in which warranties may be implied.
Application by analogy to the UCC
Many courts finding an implied warranty in the common law have analogized to the UCC implied warranty provisions. Although such provisions are limited to sales of goods, comments to §2A-213 make clear that this limitation was not intended to preclude common law evolution in other circumstances.
Nature of the warranty
Some cases imply a warranty that services be performed in a "workmanlike manner," where the consumer must show that the work was not done properly. This is similar to the UCC implied warranty of merchantability. When the common law implied remedy is one of reasonable fitness for the intended use, it is analogous to the UCC implied warranty of fitness for a particular purpose.
Updated: February 2018