Practice Consumer Law

Warranties

Match the words on the left with the correct definition on the right:

Warranty	be informed.
Breach	how long it lasts.
Be aware	break.
Duration	promise or guarantee made by a seller concerning
	the quality or performance of goods offered for sale.
Scope	what you get under the warranty and what you
	must do to get it.
Remedy	a statement–written, oral, or by demonstration –
	concerning the quality or performance of goods of-
	fered for sale that becomes a part of the bargain be-
	tween the parties.
express	a warranty that covers some defects or problems
warranty	and not others.
limited	what parts or problems are covered or excluded.
warranty

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UNIT 18.

Implied Warranties

Read and translate the text

Many consumers believe they have no protection if a new product without express warranties does not work. In many cases, however, consumers are protected – even though they may not realize it – by an implied warranty. An implied warranty is an unwritten promise, created by law, that a product will do what it is supposed to do. In other words, the law requires products to meet certain minimum standards of quality and performance, even if no express promise is made. Implied warranties apply only to products sold by dealers; they do not apply to goods sold by casual sellers. For example, if a friend sells you her bike, no implied warranties are involved. The three types of implied warranties are (1) warranty of merchantability, (2) warranty of fitness for a particular purpose, and (3) warranty of title.

A warranty of merchantability is an unwritten promise that the item sold is of at least average quality for that type of item. For example, a radio must play, a saw must cut, and a freezer must keep food frozen. This warranty is always implied unless the seller expressly disclaims it. Be especially wary of goods marked with disclaimers such as “as is” or “final sale.”

A warranty of fitness for a particular purpose exists when a consumer tells a seller before buying an item that it is needed for a specific purpose or will be used in a certain way. A salesperson who sells an item with this knowledge makes an implied promise that the item will fulfill the stated purpose. For example, suppose you tell a salesperson you want a waterproof watch and the salesperson recommends a watch, which you then buy. An implied warranty of fitness has been created. If you go swimming and water leaks into the watch, the warranty has been breached.

A warranty of title is a seller’s promise that he or she owns the item being offered for sale. Sellers must own the goods and be

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able to transfer title or ownership to the buyer. If a person sells stolen goods, the warranty of title has been broken.

Consumers who are harmed by products may be able to sue for damages because the manufacturer or seller has breached a warranty. Consumers may also be able to recover damages based either on the negligence of the manufacturer or seller or on a legal theory called strict liability.

You should remember that if you fully examine goods (or have the opportunity to do so) before making a purchase, the implied warranty may not apply to those defects you should have discovered during the inspection. Therefore, carefully inspect for defects any goods you buy. Be especially careful with used cars. It is wise to have a mechanic you trust examine the car before you purchase it.

Be sure to carefully read all instructions that come with a product. If you fail to use the product properly, or if you use it for an improper purpose, you may cancel the warranty.

Find the equivalents of the following words and expressions in the text.

Соответствовать определенным стандартам качества; не- официальный продавец; гарантия товарного состояния; быть осторожным; гарантия соответствия конкретной цели исполь- зования; гарантия правового титула; халатность производите- ля; обязанность граждан возмещать ущерб, причиненный в результате какого–либо недоразумения другим лицам; ис- пользовать товар не по назначению.

Answer the questions:

1.Is there any protection if a new product without express warranty does not work?

2.What is an implied warranty?

3.What deal do these implied warranties apply to?

4.What are the three types of implied warranties? Characterize these warranties.

5.What can consumers do if they are harmed by products?

6.Why should you carefully inspect for defects any goods you buy?

7.What happens if you fail to use the product properly or use it for an improper purpose?

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Problem–solving:

Is a warranty created in any of the following situations? If so, what type of warranty? Has the warranty been broken?

a.Juan sells Terri his used car. As Terri drives home, the car breaks down. The cost of fixing the car is greater than the sale price.

b.Deitra buys a dress after telling the sales clerk that she plans to wash it in a washing machine. The clerk replies, “That’s fine. This material is washable.” Deitra washes the dress in her washing machine and the dress shrinks.

c.A salesperson tells Suzanne, “This is the finest camera on the market. It will last for years.” Eight months later, the lens breaks.

d.Mike steals a diamond ring from a jewelry store and sells it to Maria after telling her his mother has given it to him.

e.Sandy orders a baseball bat from a catalog. The catalog reads, “31–inch baseball bat, $7.95,” and includes a picture of a wooden bat. Two weeks later, Sandy receives an aluminum bat in the mail.

f.Ned buys a new sofa from a furniture store. One of the legs falls off two weeks after delivery.

Match the words on the left with the correct definition on the right:

Implied warranty	unwritten promise that the item sold is of at
	least average quality for that type of item.
Casual sellers	when a consumer tells a seller before buy-
	ing an item that it is needed for a specific
	purpose or will be used in a certain way.
Warranty of mer-	seller’s promise that he or she owns the
chantability	item being offered for sale.
Warranty of fit-	unwritten promise, created by law, that a
ness for a particu-	product will do what it is supposed to do.
lar purpose
Warranty of title	unofficial seller.
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Disclaimers

UNIT 19.

Disclaimers

Read and translate the text The Guitar That Quit

Sherry buys a new guitar for $300. On the sales receipt is a clause that reads, “This writing is the “exclusive statement of the terms of agreement between the parties. Seller makes no warranties either express or implied with respect to this product.” The third time Sherry plays the guitar, one of the strings snaps. Can she return the guitar?

A disclaimer is an attempt to limit the seller’s responsibilities should anything go wrong with a product. The clause quoted in the Case of the Guitar That Quit is a disclaimer. It is an attempt by the

store to avoid responsibility for anything that goes wrong with the guitar. The quoted clause makes it clear that an express warranty is not being offered. But does the clause disclaim the implied warranty?

Sellers can usually disclaim the implied warranty of merchantability by using such expressions as “with all faults” or “as is” Unless these or other easily understood words are used, the seller must actually use the word merchantability in disclaiming the implied warranty of merchantability. In addition, to be effective, the disclaimer must be written so as to be easily seen by the consumer. Because the sales receipt for the guitar did not say “as is,” “with all faults,” or “merchantability,” it is probably not effective as a disclaimer of the implied warranty of merchantability. Sherry should be protected if she returns the guitar.

Under the Magnuson–Moss Warranty Act, sellers offering a written warranty may not disclaim or modify any implied warranty during the effective period of the written warranty.

Sellers sometimes use disclaimers to limit the consumer’s remedy. For example, a contract may read, “It is expressly understood and agreed that the buyer’s only remedy shall be repair or

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replacement of defective parts. The seller is not liable in damages for injury to persons or property.” Suppose the warranty limits the remedy to “repair or replacement of defective parts” and this remedy does not work (that is, after repeated attempts at repair, the product still does not work). In such cases, the buyer can usually seek other remedies. But courts will require that the buyer give the seller a reasonable opportunity to repair the product.

Find the equivalents of the following words and expressions in the text.

Отказ; ограничить ответственность продавца; неполадки с товаром; «как есть» (выражение, используемое в текстах официальных соглашений; означает, что покупаемый или по- ставляемый товар принимается приобретающей стороной ровно в том состоянии, в каком находится на момент покупки, со всеми ошибками, неполадками, недоделками или какими– либо другими дефектами); гарантийный период; ограничить возмещение убытка покупателю; быть ответственным; искать другие возможности возмещения ущерба.

Answer the questions:

1.What is a disclaimer?

2.How do sellers usually disclaim the implied warranty of merchantability?

3.Why must the disclaimer be written?

4.Can sellers disclaim or modify any implied warranty during the effective period of the written warranty?

5.How can sellers use disclaimers to limit the consumer’s remedy?

6.Where can the buyer seek other remedies?

7.Have you ever come across a disclaimer?

Problem–solving:

Mock Trial:

James Phillips v. The Radio Shop

FACTS

In this case, James Phillips purchased a radio/cassette player from The Radio Shop and later attempted to exchange it because it did not work. The date of the sale was November 14; the return

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was made 10 days later. The sales slip has the following language printed at the bottom: “This product is fully guaranteed for 5 days from the date of the purchase. If defective, return it in the original box for credit toward another purchase.”

The store refused to make the exchange, and James brought this action in small claims court.

EVIDENCE

James has (1) the sales slip for $79.95 plus tax paid to The Radio Shop and (2) the broken radio/cassette player. He claims to have thrown away the box.

WITNESSES

For the plaintiff:

1.James Phillips

2.Ruby Phillips, James’s sister. For the defendant:

1.A1 Jackson, the salesperson

2.Hattie Babcock, the store manager

COURT

The judge should provide an opportunity for James to make his case and should give the representatives of the store a chance to tell the court why the money should not be returned. Both sides should call their witnesses. At the end, the judge should decide the case and provide the reasons for the decision.

WITNESS STATEMENT: James Phillips

“I went into The Radio Shop to buy a battery–operated, portable radio/cassette player. I looked at a few different models, but the salesperson talked me into buying the Super Electro X–15. I paid the $79.95 price, and he gave me the radio in a cardboard box. When I got home, I found that it didn’t work. I went back to the store to get my money back, but the salesperson wouldn’t return it. He said I should have brought it back right away. I explained to him that my mother had been sick and I’d been busy. Here are the broken radio/cassette player and the receipt as proof. I want my money back!”

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WITNESS STATEMENTS: Ruby Phillips

“All I know is that when James got home the other day, he was excited and wanted to show me something. He called me into the kitchen to show me his new radio/cassette player. I said, ‘Let’s hear how it works.” He turned it on and nothing came out but static. He moved the dials around but couldn’t get it to play. Was he ever mad! I told him that he ought to take it back to the store and demand his money back.”

WITNESS STATEMENT: Al Jackson

“I sold the kid the radio, but as far as I know it worked OK. All the table models worked well enough, so why shouldn’t the one boxed and straight from the factory? I’ll bet what really happened is that he dropped it on his way home. Or maybe he broke it during the 10 days he had it. That’s not my fault, is it?”

WITNESS STATEMENT: Hattie Babcock

“As Jackson said, all the other X–15s have worked fine. We’ve never had a single complaint about them. We have a store policy not to make refunds unless the merchandise is returned within 5 days in the box we sold it in. Also, the guarantee on the product says that it must he returned in the original box. That’s the reason Jackson didn’t give the kid his money back. Otherwise, we’d have been more than happy to give him credit toward a new purchase. After all, pleasing our customers is very important to us. Personally, I agree with Jackson. The kid probably didn’t bring back the box because it was all messed up after he dropped it.”

What do you think the decision of the judge was?

Match the words on the left with the correct definition on the right:

Disclaimer	validity.
As is	cease to function properly.
Effective period	attempt to limit the seller’s responsibilities
	should anything go wrong with a product.
Go wrong	faulty.
Sales receipt	with all faults.
Defective	a written acknowledgment by a receiver of
	goods that payment has been made.
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Credit

UNIT 20.

Credit

Read and translate the texts.

Using credit means buying goods or services now in exchange for a promise to pay in the future. It also means borrowing money now in exchange for a promise to repay it in the future. People who lend money or provide credit are called creditors. People who borrow money or buy on credit are called debtors. Debtors usually pay creditors additional money over the amount borrowed for the privilege of using the credit. This additional money owed to the creditor is called the finance charge. It is based on the interest charged plus other fees.

General Types of Credit

The two general types of credit are unsecured and secured. Unsecured credit is credit extended in exchange for a promise to repay in the future. The buyer is not required to pledge property in order to obtain the credit. Most credit cards and store charge accounts are examples of unsecured credit.

Secured credit is credit for which the consumer must put up some property of value, called collateral, as protection in the event the debt is not repaid. A borrower who does not make the required payments is said to default on the loan. If a borrower defaults, the lender can take the collateral.

For example, a person who buys an automobile may be required by the lender (often a bank) to post the car as collateral until the debt is paid off. If the buyer fails to pay off the loan, the lender can repossess and sell the car, using the proceeds of this sale to pay off the debt.

The Cost of Credit

The cost of credit includes interest and other finance charges. Because there are different methods for calculating interest rates, always ask lenders for the annual percentage rate (APR). This

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number is calculated the same way by all lenders, so you can use it to compare rates.

Interest Rates. Each state sets limits on the amount of interest that can be charged for various types of credit. Charging any amount above the legal limit is called usury. Lenders who charge interest rates above the legal maximum may be liable for both civil and criminal penalties.

Interest rate ceilings vary from state to state. Generally, however, loans from banks or finance companies carry interest rates of 10 to 30% per year. Credit card companies and department stores often charge 1.5% per month (18% per year), but these rates can vary widely depending on the lender and the economic conditions at the time. Installment contracts for consumer goods such as new cars or furniture also vary widely.

Some companies now offer variable interest rates. For example, such a rate may be described as “2% over the prime rate” or a “10% variable annual percentage rate”. With a variable rate, the amount of interest you are charged changes from time to time and is computed based on financial market indicators. That means your rate can go up or down with changing economic conditions. Carefully review the information provided by the lender to determine how often the rate can change and how much it can change at each adjustment as well as over the entire term of the loan. When the rate changes, your payments will change. While your payments may start out low, they could increase over time if the rate goes up.

Other Charges. Besides the interest paid on a credit sale, there are sometimes other charges that may be added onto the basic price. These include:

•Credit property insurance – insures the purchased item against theft or damage.

•Credit life/disability insurance – guarantees payment of the balance due if the buyer should die or become disabled during the term of the contract.

•Service charge – covers the seller’s cost of bookkeeping, billing, and so on.

•Penalty charge – covers the seller’s inconvenience in case of late payments. May include court costs, repossession expenses, and attorney’s fees.

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