Federal Lemon Law

As established by the Magnuson-Moss Warranty Act of 1975, all written warranties require a title of either “full” or “limited” and be specific as to coverage. In some states, the limited warranty is required to have an “as is” disclaimer so as to be very clear to the buyer. Otherwise, the implied warranty of merchantability is applied. In the case study at hand, the sales contract between Raymond Smith and the new car dealer, assuming it was titled “limited”, did set specific limitations to the coverage. However, in many states, the Act does prohibit the seller from modifying or disclaiming implied warranties so that the consumer retains basic protection of the implied warranty of merchantability.

Consumer Protection and Warranties

Although there is a still a belief in the doctrine of caveat emptor, often thought of as the most important protection for a consumer, the government has recognized that consumers need greater protection and has passed several laws/acts to do just that. “Article 2 of the Uniform Commercial Code, adopted in whole or in part by all 50 states, establishes certain warranties that apply to the sale of goods.” (Cheeseman, 2013, p. 343).

Implied Warranty of Merchantability

The implied warranty of merchantability is essentially a merchant’s promise that the goods sold will do what they are promised to do and that there is nothing significantly wrong with them. Merchant, defined by the UCC, is a person who has experience and knowledge with the goods that he/she is selling. This law says that merchants make this promise every time they sell a product, e.g. a refrigerator merchant selling a refrigerator implies that the refrigerator will keep food cold to appropriate standards. The sales contract between Raymond Smith and the car dealer disclaimed liability for personal injuries caused as a result of defects in the car. Assuming the language included expressions such as “as is” or “with all faults”, the contract would negate the implied...