A Businessperson's Guide to Federal Warranty Law

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A Businessperson's Guide to Federal

Warranty Law

Table of Contents

State law (the Uniform

Commercial Code).

Sections 2-314 & 2-315.

Section 2-313.

Introduction

Understanding Warranties

Implied Warranties Express Warranties

For the full legal texts

listed below, consult the

supplement to this

manual.

Understanding the Magnuson-Moss Warranty Act

What the Magnuson-Moss Act Does Not Require What the

Magnuson-Moss Act Requires What the Magnuson-Moss

Act Does Not Allow Disclaimer or Modification of Implied

Warranties "Tie-in-Sales" Provisions Deceptive Warranty

Terms How the Magnuson-Moss Act May Affect Warranty 

Disputes Consumer Lawsuits Alternatives to Consumer

Lawsuits The FTC's Dispute

Resolution Rule, 16

C.F.R. Part 703.

REQUIREMENT I: The

Magnuson-Moss

Warranty Act, Section

102.

Titling Written Warranties as "Full" or "Limited"

What the Terms "Full" and "Limited" Mean Examples of Full

Warranties, Limited Warranties, and Multiple Warranties

REQUIREMENT II: The

FTC's Disclosure Rule,

16 C.F.R. Part 701.

Stating Terms and Conditions of Your Written Warranty

Basic Information Required for All Warranties Specific

Information Required When Your Warranty Contains Certain

Optional Terms and Conditions

REQUIREMENT III: The

FTC's Pre-Sale

Availability Rule, 16

C.F.R. Part 702.

Making Warranties Available Prior to Sale

What Retailers Must Do What Mail Order Companies Must

Do What Door-to-Door Sales Companies Must Do What

Manufacturers Must Do

The FTC's Warranty

Advertising Guides.

Advertising Warranties

How to Advertise Warranties Covered by the Pre-Sale 

Availability Rule How to Advertise a Satisfaction Guarantee

How to Advertise a Lifetime Warranty or Guarantee

The Magnuson-Moss

Warranty Act, Section

106.

Offering Service Contracts

Statement of Terms and Conditions Disclaimer or Limitation

Facts for Business

About BCP Consumer Information Business Information Resources File a Complaint

Protección del Consumidor en Español
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of Implied Warranties

Additional Sources of Information

Introduction

This manual is intended as a businessperson's guide to the basic features of the Magnuson-Moss Warranty Act, the federal law governing

warranties on consumer products. The text provides citations to specific sections of the law—the Warranty Act itself, the Rules the Federal

Trade Commission (FTC) adopted under the Act, and the FTC's Warranty Advertising Guides. For reference purposes, a supplement to

this manual containing the Act, the Rules, and the Guides is available from the FTC's Consumer Response Center. See Additional

Sources of Information.

This manual also addresses some basic points of state law that you need to know to understand the requirements and prohibitions of the

Magnuson-Moss Act. However, because state law varies, you may need to contact a private attorney or the offices of the attorneys

general in the states where you do business to get specific state law information. The manual is intended as a tool for you to use in

consultation with your attorney, not as a substitute for your attorney's advice.

The names of the companies in the examples in this manual are fictitious; any resemblance between them and the names of actual

companies is completely coincidental.

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Understanding Warranties

Generally, a warranty is your promise, as a manufacturer or seller, to

stand behind your product. It is a statement about the integrity of your

product and about your commitment to correct problems when your

product fails.

The law recognizes two basic kinds of warranties—implied warranties and

express warranties.

Implied Warranties

Implied warranties are unspoken, unwritten promises, created by state

law, that go from you, as a seller or merchant, to your customers. Implied

warranties are based upon the common law principle of "fair value for

money spent," There are two types of implied warranties that occur in

consumer product transactions. They are the implied warranty

of merchantability and the implied warranty of fitness

for a particular purpose.

The implied warranty of merchantability is a merchant's basic

promise that the goods sold will do what they are supposed to do and that

there is nothing significantly wrong with them. In other words, it is an

implied promise that the goods are fit to be sold. The law says that

merchants make this promise automatically every time they sell a product

they are in business to sell. For example, if you, as an appliance retailer,

sell an oven, you are promising that the oven is in proper condition for

sale because it will do what ovens are supposed to do—bake food at

controlled temperatures selected by the buyer. If the oven does not heat,

or if it heats without proper temperature control, then the oven is not fit for

sale as an oven, and your implied warranty of merchantability would be

breached. In such a case, the law requires you to provide a remedy so

that the buyer gets a working oven.

The implied warranty of fitness for a particular purpose is a

promise that the law says you, as a seller, make when your customer

relies on your advice that a product can be used for some specific

purpose. For example, suppose you are an appliance retailer and a

customer asks for a clothes washer that can handle 15 pounds of laundry

at a time. If you recommend a particular model, and the customer buys

that model on the strength of your recommendation, the law says that you

have made a warranty of fitness for a particular purpose. If the model you

recommended proves unable to handle 15-pound loads, even though it

may effectively wash 10-pound loads, your warranty of fitness for a

particular purpose is breached.

Your warranty is a

contract that commits

you to stand behind your

product.

Section 2-314 of the

Uniform Commercial

Code, which is law in

every state but

Louisiana, covers the

implied warranty of

merchantability.

Basically, your product is

"merchantable" if it does

what it is supposed to

do.

Section 2-315 of the

Uniform Commercial

Code covers the implied

warranty of fitness for a

particular purpose.

Implied warranties deal

with the product at the

time it is purchased.

Generally, customers

have four years to

enforce an implied

warranty claim.

Merchants of used

goods also give implied

warranties.

You can sell without

implied warranties—"as

is"—in most states.

To sell "as is" you must

clearly and

conspicuously disclaim
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implied warranties,

generally in writing. Implied warranties are promises about the condition of products at the

time they are sold, but they do not assure that a product will last for any

specific length of time. (The normal durability of a product is, of course,

one aspect of a product's merchantability or its fitness for a particular

purpose.) Nor does the law say that everything that can possibly go wrong

with a product falls within the scope of implied warranties. For example,

implied warranties do not cover problems such as those caused by abuse,

misuse, ordinary wear, failure to follow directions, or improper

maintenance.

Generally, there is no specified duration for implied warranties under state

laws. However, the state statutes of limitations for breach of either an

express or an implied warranty are generally four years from date of

purchase. This means that buyers have four years in which to discover

and seek a remedy for problems that were present in the product at the

time it was sold. It does not mean that the product must last for four years.

It means only that the product must be of normal durability, considering its

nature and price.

A special note is in order regarding implied warranties on used

merchandise. An implied warranty of merchantability on a used product is

a promise that it can be used as expected, given its type and price range.

As with new merchandise, implied warranties on used merchandise apply

only when the seller is a merchant who deals in such goods, not when a

sale is made by a private individual.

If you do not offer a written warranty, the law in most states allows you to

disclaim implied warranties. However, selling without implied warranties

may well indicate to potential customers that the product is risky—low

quality, damaged, or discontinued—and therefore, should be available at a

lower price.

In order to disclaim implied warranties, you must inform consumers in a

conspicuous manner, and generally in writing, that you will not be

responsible if the product malfunctions or is defective. It must be clear to

consumers that the entire product risk falls on them. You must specifically

indicate that you do not warrant "merchantability," or you must use a

phrase such as "with all faults," or "as is." A few states have special laws

on how you must phrase an "as is" disclosure. (For specific information on

how your state treats "as is" disclosures, consult your attorney.)

Some states do not allow you to sell consumer products "as is." At this

time, these states are Alabama, Connecticut, Kansas, Maine, Maryland,

Massachusetts, Minnesota, Mississippi, New Hampshire, Vermont,

Washington, West Virginia, and the District of Columbia. In those states,

sellers have implied warranty obligations that cannot be avoided.

Federal law prohibits you from disclaiming implied warranties on any

consumer product if you offer a written warranty for that product (see

What the Magnuson-Moss Act Requires) or sell a service contract on it

(see Offering Service Contracts).

You should be aware that even if you sell a product "as is" and it proves to

be defective or dangerous and causes personal injury to someone, you

still may be liable under the principles of product liability. Selling the

product "as is" does not eliminate this liability.

Express Warranties

Express warranties, unlike implied warranties, are not "read into" your

sales contracts by state law; rather, you explicitly offer these warranties to

your customers in the course of a sales transaction. They are promises

and statements that you voluntarily make about your product or about

your commitment to remedy the defects and malfunctions that some

customers may experience.

Express warranties can take a variety of forms, ranging from advertising

claims to formal certificates. An express warranty can be made either

orally or in writing. While oral warranties are important, only written

warranties on consumer products are covered by the Magnuson-Moss

Warranty Act.

You cannot sell "as is" in

some states.

You cannot avoid

implied warranties if you

offer a written warranty

on a consumer product.

You cannot avoid

responsibility for

personal injury caused

by a defect in your

product, even if you sell

"as is."

Section 2-313 of the

Uniform Commercial

Code covers express

warranties.
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The Act improves consumers'

access to warranty

information.

The Act enables consumers to

comparison shop for

warranties.

The Act encourages warranty

competition.

The Act promotes timely and

complete performance of

warranty obligations.

The Act does not compel you

to give a written warranty.

Understanding the Magnuson-Moss

Warranty Act

The Magnuson-Moss Warranty Act is the federal law that governs

consumer product warranties. Passed by Congress in 1975, the Act

requires manufacturers and sellers of consumer products to provide

consumers with detailed information about warranty coverage. In

addition, it affects both the rights of consumers and the obligations of

warrantors under written warranties.

To understand the Act, it is useful to be aware of Congress' intentions

in passing it. First, Congress wanted to ensure that consumers could

get complete information about warranty terms and conditions. By

providing consumers with a way of learning what warranty coverage is

offered on a product before they buy, the Act gives consumers a way

to know what to expect if something goes wrong, and thus helps to

increase customer satisfaction.

Second, Congress wanted to ensure that consumers could compare

warranty coverage before buying. By comparing, consumers can

choose a product with the best combination of price, features, and

warranty coverage to meet their individual needs.

Third, Congress intended to promote competition on the basis of

warranty coverage. By assuring that consumers can get warranty

information, the Act encourages sales promotion on the basis of

warranty coverage and competition among companies to meet

consumer preferences through various levels of warranty coverage.

Finally, Congress wanted to strengthen existing incentives for

companies to perform their warranty obligations in a timely and

thorough manner and to resolve any disputes with a minimum of

delay and expense to consumers. Thus, the Act makes it easier for

consumers to pursue a remedy for breach of warranty in the courts,

but it also creates a framework for companies to set up procedures

for resolving disputes inexpensively and informally, without litigation.

What the Magnuson-Moss Act Does Not Require

In order to understand how the Act affects you as a businessperson,

it is important first to understand what the Act does not require.

First, the Act does not require any business to provide a written

warranty. The Act allows businesses to determine whether to warrant

their products in writing. However, once a business decides to offer a

written warranty on a consumer product, it must comply with the Act.

Second, the Act does not apply to oral warranties. Only written

warranties are covered.

Third, the Act does not apply to warranties on services. Only

warranties on goods are covered. However, if your warranty covers

both the parts provided for a repair and the workmanship in making

that repair, the Act does apply to you.

Finally, the Act does not apply to warranties on products sold for

resale or for commercial purposes. The Act covers only warranties on

consumer products. This means that only warranties on tangible

property normally used for personal, family, or household purposes

are covered. (This includes property attached to or installed on real

property.) Note that applicability of the Act to a particular product

does not, however, depend upon how an individual buyer will use it.

The following section of this manual summarizes what the MagnusonMoss Warranty Act requires warrantors to do, what it prohibits them
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There are three FTC Rules

under the Act.

Section 102 of the Act directs

how to title your warranty.

The Disclosure Rule {16

C.F.R. Part 701} directs what

you must include in your

warranty.

The Pre-Sale Availability Rule

{16 C.F. R. Part 702} directs

how to make your warranty

available before sale.

If you give a written warranty

on a consumer product,

Section 108 of the Act

prevents you from eliminating

or restricting implied

warranties.

from doing, and how it affects warranty disputes.

What the Magnuson-Moss Act Requires

In passing the Magnuson-Moss Warranty Act, Congress specified a

number of requirements that warrantors must meet. Congress also

directed the FTC to adopt rules to cover other requirements. The FTC

adopted three Rules under the Act, the Rule on Disclosure of Written

Consumer Product Warranty Terms and Conditions (the Disclosure

Rule), the Rule on Pre-Sale Availability of Written Warranty Terms

(the Pre-Sale Availability Rule), and the Rule on Informal Dispute

Settlement Procedures (the Dispute Resolution Rule). In addition, the

FTC has issued an interpretive rule that clarifies certain terms and

explains some of the provisions of the Act. This section summarizes

all the requirements under the Act and the Rules.

The Act and the Rules establish three basic requirements that may

apply to you, either as a warrantor or a seller.

1. As a warrantor, you must designate, or title, your written

warranty as either "full" or "limited."

2. As a warrantor, you must state certain specified information

about the coverage of your warranty in a single, clear, and

easy-to-read document.

3. As a warrantor or a seller, you must ensure that warranties

are available where your warranted consumer products are

sold so that consumers can read them before buying.

The titling requirement, established by the Act, applies to all written

warranties on consumer products costing more than $10. However,

the disclosure and pre-sale availability requirements, established by

FTC Rules, apply to all written warranties on consumer products

costing more than $15. Each of these three general requirements is

explained in greater detail in the following chapters.

What the Magnuson-Moss Act Does Not Allow

There are three prohibitions under the Magnuson-Moss Act. They

involve implied warranties, so-called "tie-in sales" provisions, and

deceptive or misleading warranty terms.

Disclaimer or Modification of Implied Warranties

The Act prohibits anyone who offers a written warranty from

disclaiming or modifying implied warranties. This means that no

matter how broad or narrow your written warranty is, your customers

always will receive the basic protection of the implied warranty of

merchantability. This is explained in Understanding Warranties.

There is one permissible modification of implied warranties, however.

If you offer a "limited" written warranty, the law allows you to include a

provision that restricts the duration of implied warranties to the

duration of your limited warranty. For example, if you offer a two-year

limited warranty, you can limit implied warranties to two years.

However, if you offer a "full" written warranty, you cannot limit the

duration of implied warranties. This matter is explained in Titling

Written Warranties as "Full" or "Limited".

If you sell a consumer product with a written warranty from the

product manufacturer, but you do not warrant the product in writing,

you can disclaim your implied warranties. (These are the implied

warranties under which the seller, not the manufacturer, would

otherwise be responsible.) But, regardless of whether you warrant the

products you sell, as a seller, you must give your customers copies of

any written warranties from product manufacturers.

"Tie-In Sales" Provisions

Generally, tie-in sales provisions are not allowed. Such a provision

would require a purchaser of the warranted product to buy an item or

service from a particular company to use with the warranted product
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With some exceptions,

Section 102 (c) of the Act

prohibits you from including a

tie-in sales provision in your

warranty.

These are examples of

prohibited tie-in sales

provisions.

This is an example of a

permissible warranty provision

to use instead of a tie-in.

Section 110(c) (2) of the Act

prohibits deceptive warranties.

in order to be eligible to receive a remedy under the warranty. The

following are examples of prohibited tie-in sales provisions.

In order to keep your new Plenum Brand Vacuum

Cleaner warranty in effect, you must use genuine

Plenum Brand Filter Bags. Failure to have scheduled

maintenance performed, at your expense, by the Great

American Maintenance Company, Inc., voids this

warranty.

While you cannot use a tie-in sales provision, your warranty need not

cover use of replacement parts, repairs, or maintenance that is

inappropriate for your product. The following is an example of a

permissible provision that excludes coverage of such things.

While necessary maintenance or repairs on your

AudioMundo Stereo System can be performed by any

company, we recommend that you use only authorized

AudioMundo dealers. Improper or incorrectly performed

maintenance or repair voids this warranty.

Although tie-in sales provisions generally are not allowed, you can

include such a provision in your warranty if you can demonstrate to

the satisfaction of the FTC that your product will not work properly

without a specified item or service. If you believe that this is the case,

you should contact the warranty staff of the FTC's Bureau of

Consumer Protection for information on how to apply for a waiver of

the tie-in sales prohibition.

Deceptive Warranty Terms

Obviously, warranties must not contain deceptive or misleading terms.

You cannot offer a warranty that appears to provide coverage but, in

fact, provides none. For example, a warranty covering only "moving

parts" on an electronic product that has no moving parts would be

deceptive and unlawful. Similarly, a warranty that promised service

that the warrantor had no intention of providing or could not provide

would be deceptive and unlawful.

How the Magnuson Moss Act May Affect

Warranty Disputes

Two other features of the Magnuson-Moss Warranty Act are also

important to warrantors. First, the Act makes it easier for consumers

to take an unresolved warranty problem to court. Second, it

encourages companies to use a less formal, and therefore less

costly, alternative to legal proceedings. Such alternatives, known as

dispute resolution mechanisms, often can be used to settle warranty

complaints before they reach litigation.

Consumer Lawsuits

The Act makes it easier for purchasers to sue for breach of warranty

by making breach of warranty a violation of federal law, and by

allowing consumers to recover court costs and reasonable attorneys'

fees. This means that if you lose a lawsuit for breach of either a

written or an implied warranty, you may have to pay the customer's

costs for bringing the suit, including lawyer's fees.

Because of the stringent federal jurisdictional requirements under the

Act, most Magnuson-Moss lawsuits are brought in state court.

However, major cases involving many consumers can be brought in

federal court as class action suits under the Act.

Although the consumer lawsuit provisions may have little effect on

your warranty or your business, they are important to remember if you

are involved in warranty disputes.

Alternatives to Consumer Lawsuits

Although the Act makes consumer lawsuits for breach of warranty
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Section 110(d) of the Act

makes breach of warranty a

violation of federal law, and

enables consumers to recover

attorneys' fees.

Dispute Settlement

Mechanisms use conciliation,

mediation, or arbitration to

resolve disputes. For more

information, an FTC

publication Handling

Customer Complaints, is

available from the

Government Printing Office.

If you require your customers

to use a dispute settlement

mechanism before suing

under the Act, your

mechanism must comply with

the FTC's Dispute Resolution

Rule {16 C.F.R. Part 703}.

A mechanism that does not

meet the standards of the

Dispute Resolution Rule may

still be a valuable tool for you.

easier to bring, its goal is not to promote more warranty litigation. On

the contrary, the Act encourages companies to use informal dispute

resolution mechanisms to settle warranty disputes with their

customers. Basically, an informal dispute resolution mechanism is a

system that works to resolve warranty problems that are at a

stalemate. Such a mechanism may be run by an impartial third party,

such as the Better Business Bureau, or by company employees

whose only job is to administer the informal dispute resolution system.

The impartial third party uses conciliation, mediation, or arbitration to

settle warranty disputes.

The Act allows warranties to include a provision that requires

customers to try to resolve warranty disputes by means of the

informal dispute resolution mechanism before going to court. (This

provision applies only to cases based upon the Magnuson-Moss Act.)

If you include such a requirement in your warranty, your dispute

resolution mechanism must meet the requirements stated in the

FTC's Rule on Informal Dispute Settlement Procedures (the Dispute

Resolution Rule). Briefly, the Rule requires that a mechanism must:

Be adequately funded and staffed to resolve all disputes

quickly;

Be available free of charge to consumers;

Be able to settle disputes independently, without influence from

the parties involved;

Follow written procedures;

Inform both parties when it receives notice of a dispute;

Gather, investigate, and organize all information necessary to

decide each dispute fairly and quickly;

Provide each party an opportunity to present its side, to submit

supporting materials, and to rebut points made by the other

party; (the mechanism may allow oral presentations, but only if

both parties agree);

Inform both parties of the decision and the reasons supporting

it within 40 days of receiving notice of a dispute;

Issue decisions that are not binding; either party must be free

to take the dispute to court if dissatisfied with the decision

(however, companies may, and often do, agree to be bound by

the decision);

Keep complete records on all disputes; and

Be audited annually for compliance with the Rule.

It is clear from these standards that informal dispute resolution

mechanisms under the Dispute Resolution Rule are not "informal" in

the sense of being unstructured. Rather, they are informal because

they do not involve the technical rules of evidence, procedure, and

precedents that a court of law must use.

Currently, the FTC's staff is evaluating the Dispute Resolution Rule to

determine if informal dispute resolution mechanisms can be made

simpler and easier to use. To obtain more information about this

review, contact the FTC's warranty staff.

As stated previously, you do not have to comply with the Dispute

Resolution Rule if you do not require consumers to use a mechanism

before bringing suit under the Magnuson-Moss Act. You may want to

consider establishing a mechanism that will make settling warranty

disputes easier, even though it may not meet the standards of the

Dispute Resolution Rule.

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Titling Written Warranties as "Full" or
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REQUIREMENT I: 

SECTION 102 OF THE

MAGNUSON- MOSS ACT.

Written warranties must be

titled "full" or "limited" As

explained on p. 5, this

requirement applies to

warranties on products

costing more than $10.

"Full Warranty" means the

coverage meets the

federal minimum standards

for comprehensive

warranties, while "Limited

Warranty" means the

coverage does not.

You must be able to

demonstrate that any

duties you impose are

reasonable. Requiring

customers to return a

registration card is an

unreasonable duty that is

not allowed in a full

warranty 116 C.FR.

§700.ó(b)}.

This is an example of a full

warranty. It specifies that

the customer has a right to

a replacement or a refund

if repairs are not possible.

Notice that this full

warranty does not cover

every type of defect in the

product.

"Limited"

The Magnuson-Moss Warranty Act requires that every written warranty

on a consumer product that costs more than $10 have a title that says

the warranty is either "full" or "limited" (The Act calls these titles

"designations.") The title is intended to provide consumers, at a glance,

with a key to some of the important terms and conditions of a warranty.

The title "full warranty" is a shorthand message to consumers that the

coverage meets the Act's standards for comprehensive warranty

coverage. Similarly, the title "limited warranty" alerts consumers that the

coverage does not meet at least one of the Act's standards, and that the

coverage is less than "full" under the Act.

What the Terms "Full" and "Limited" Mean

Determining whether your warranty is a "full" or a "limited" warranty is not

difficult. If each of the following five statements is true about your

warranty's terms and conditions, it is a "full" warranty:

1. You do not limit the duration of implied warranties.

2. You provide warranty service to anyone who owns the product

during the warranty period; that is, you do not limit coverage to

first purchasers.

3. You provide warranty service free of charge, including such costs

as returning the product or removing and reinstalling the product

when necessary.

4. You provide, at the consumer's choice, either a replacement or a

full refund if, after a reasonable number of tries, you are unable to

repair the product.

5. You do not require consumers to perform any duty as a

precondition for receiving service, except notifying you that

service is needed, unless you can demonstrate that the duty is

reasonable.

If any of these statements is not true, then your warranty is "limited".

You are not required to make your entire warranty "full" or "limited" If the

statements above are true about the coverage on only some parts of your

product, or if the statements are true about the coverage during only one

part of the warranty period, then your warranty is a multiple warranty that

is part full and part limited.

Examples of Full Warranties, Limited Warranties,

and Multiple Warranties

 Counterpoint Carpet Corp.

 Full Five Year Warranty

What is Covered This warranty covers any defects in materials or

workmanship, including installation, with the exceptions stated below.

How Long Coverage Lasts

This warranty runs for five years from the date your carpet is

installed.

What is not covered

This warranty does not cover fading or discoloration caused by

exposure to sunlight or chemicals such as ammonia, laundry

detergent, or household bleach. (For information on how to prevent

fading or discoloration, consult our manual "Care Tips From

Counterpoint Carpet," available free from your Counterpoint dealer.)

What Counterpoint Will Do

Counterpoint will repair any carpet that proves to be defective in

materials or workmanship. In the event repair is not possible,

Counterpoint will either replace your carpet with new carpet of similar
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This is an example of a

limited warranty. It is

limited because there are

requirements that the

customer pay labor and

postage charges, and that

the customer return a

registration card.

composition and price, or refund the full purchase price of your

carpet, whichever you prefer.

How To Get Service

Contact any Counterpoint dealer, listed in the Yellow Pages under

"Carpet,"or contact Counterpoint at 800-987-6543. A service

representative will come to your home and take any necessary

action to correct problems covered by this warranty.

How State Law Applies

This warranty gives you specific legal rights, and you may also have

other rights which vary from state to state.

When you decide on your warranty's terms and conditions, consider

eliminating unnecessary restrictions. Rather than adopting warranty terms

just because they are common in your industry, let your experience guide

you. For example, a limit on the duration of implied warranties may be the

only provision that would prevent your written warranty from being "full" If

your experience indicates that you do not really need this restriction, you

may wish to consult your attorney and eliminate it.

Also, remember that the distinctions between a "full'' and a "limited"

warranty are specified by law, and that the legal meanings of the words

"full" and "limited" in written consumer product warranties are far more

narrow and specific than they are in ordinary usage. Avoid confusing the

legal and ordinary meanings.

 Magnifisound Corporation

 Limited Warranty

What Does This Warranty Cover? This warranty covers

any defects or malfunctions in your new Magnifisound hearing aid.

How Long Does The Coverage Last? This warranty lasts

as long as you own your Magnifisound aid. Coverage terminates if

you sell or otherwise transfer the aid.

What Will Magnifisound Do? Magnifisound will replace any

defective or malfunctioning part at no charge. You must pay any

labor charges.

What Does This Warranty Not Cover? Batteries, or any

problem that is caused by abuse, misuse, or an act of God (such as

a flood) are not covered. Also, consequential and incidental damages

are not recoverable under this warranty. Some states do not allow

the exclusion or limitation of incidental or consequential damages, so

the above limitation or exclusion may not apply to you.

How Do You Get Service? In order to be eligible for service

under this warranty you MUST return the warranty registration card

attached below within 30 days of purchasing the aid.

If something goes wrong with your aid, send it postage paid with a

brief written description of the problem to:

Magnifisound Corp.

Box 10000

Auditory, Ohio

We will inspect your aid and contact you within 72 hours to give the

results of our inspection and an estimate of the labor charges

required to fix the aid. If you authorize repairs, we will return the

repaired aid to you COD within 72 hours. You must pay any labor

charges upon receipt of the repaired aid.

If you inform us that you wish us to provide necessary parts to you

but you wish to have repairs performed elsewhere, we will return the
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This is a multiple warranty

that is part full and part

limited. The initial two-year

full warranty spells out that

the customer has a right to

a refund or a replacement.

The remainder of the

warranty is limited

because it covers only

parts and not labor.

This part full and part

limited multiple warranty is

a pro rata warranty-- one

which provides a refund or

credit that decreases

during the life of the

product according to a

formula. Notice that the

formula is carefully spelled

out. The warranty specifies

that during the initial

period of full coverage the

customer has a right to a

replacement or a refund.

The remainder of the

warranty is limited

because the customer can

aid and replacement parts to you within 72 hours.

There is no charge for inspection.

How Does State Law Apply? This warranty gives you

specific legal rights, and you may also have other rights which vary

from state to state.

Full Two Year Warranty on The Black Star 2001

Clothes Washer

What is covered: Any defect in your 2001 Clothes Washer.

For How Long: Two years after the date you bought your 2001

Clothes Washer.

What Black Star Will Do: Repair, or if repair is not possible,

either replace your 2001 Clothes Washer, or refund the purchase

price, whichever you prefer.

Limited Warranty on Parts for the Third through

Fifth Years

What is covered: Any defect in your 2001 Clothes Washer.

For How Long: From the start of the third year after you bought

your 2001 Clothes Washer until the end of the fifth year.

What Black Star Will Do: Provide free new or rebuilt

replacement parts, but not labor to install the parts. Any servicer you

choose can do service during this period.

How to Get Service: Contact any Black Star Dealer or any

Authorized Black Star Service Center. See the Yellow Pages under

"Appliance Repair" for the name of a Black Star Servicer near you,

or call 800-111-1111.

Your Rights Under State Law: This warranty gives you

specific legal rights, and you may also have other rights which vary

from state to state.

Treadwell Tire Full Warranty During First 20%

of Usable Tread Life

If a defect in materials or workmanship appears in your Treadwell

Tire before 20% of the tread is worn away, Treadwell Corporation will

provide, at your choice, either free replacement of the same model

number Treadwell Tire or a complete refund of the original purchase

price.

Limited Warranty During Remaining 80% of

Usable Tread Life

If a defect in, materials or workmanship appears in your Treadwell

Tire after 20% of the tread is worn away and before the remainder of

the tread is worn away, Treadwell Corporation will provide you with a

credit good for the purchase of any Treadwell Tire of the same model

number. The credit will drop by 10% of the original purchase price for

each additional 10% of the tread that is worn away when the defect

appears.

How to Get Service 

Just bring the defective tire to any Treadwell Dealer. The address of
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get only a partial credit. the dealer near you is listed on the other side of this document

How State Law Relates to this Warranty

This warranty gives you specific legal rights, and you may also have

other rights which vary from state to state.

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REQUIREMENT II: THE

DISCLOSURE RULE {16

C.ER. PART 701}·

Written warranties must

include specified

information. As explained

on p. 5, this requirement

applies to warranties on

products costing more

than $15.

The five basic questions

about warranty coverage

can be used as headings

for organizing your

warranty.

Say what your warranty

covers.

State how long your

warranty lasts.

Tell what you will or will not

do.

Stating Terms and Conditions of Your

Written Warranty

The FTC's Rule on Disclosure of Written Consumer Product warranty

Terms and Conditions (the Disclosure Rule) requires a written warranty

on a consumer product that costs more than $15 to be clear, easy to

read, and contain certain specified items of information about its

coverage.

To help you comply with the law and to make your warranty clear and

easy to read, you may wish to refer to Writing Readable Warranties, an

FTC manual that is available from the Government Printing Office.

The information you must disclose in your warranty is explained in the

remainder of this chapter. This information includes basic information

about aspects of warranty coverage common to all written warranties,

and specific information that is required only when your warranty contains

certain optional terms and conditions.

Basic Information Required for All Warranties

Under the FTC's Disclosure Rule, there are five basic aspects of

coverage that your warranty must describe. It is useful to think of these

as five questions which your warranty must answer:

1. What does the warranty cover/not cover? Answering this

question is quite simple when the warranty covers every type of

malfunction or defect that may appear in all parts of the product.

However, if not all parts or not all types of defects are covered, as in the

"Counterpoint Carpet" example on page 11 you should clearly describe

the scope of coverage.

2. What is the period of coverage? If coverage begins at some

point in time other than the purchase date, your warranty must state the

time or event that begins the coverage. In the "Counterpoint Carpet"

example on page 11, warranty coverage begins when the product is

installed, which may be different from when the product is purchased.

Also, you must make it clear when coverage ends if some particular event

would terminate it. In the limited warranty example on page 12, coverage

lasts until the first purchaser transfers the product to someone else.

3. What will you do to correct problems? This requires an

explanation of the remedy you offer under the warranty. This could be

repair or replacement of the product, a refund of the purchase price, or a

credit toward subsequent purchases.

If necessary for clarity, you must also explain what you will not do. This

requires a description of the types of expenses, if any, that you will not

cover. These might include, for example, labor charges, consequential

damages (the costs of repairing or replacing other property that is

damaged when the warranted product fails, such as food spoilage when a

refrigerator breaks down), or incidental damages (the costs a consumer

incurs in order to obtain warranty service, such as towing charges,

telephone charges, time lost from work, transportation costs, and the cost

of renting a product tempo~arily to replace the warranted product).

4. How can the customer get warranty service? Your

warranty must tell customers who they can go to for warranty service and
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Give a step-by-step guide

to getting service.

Use the FTC "boilerplate"

disclosure about state law

rights in your warranty.

This disclosure about state

law must be included in

every written warranty on a

consumer product.

If you wish to impose other

conditions or limitations

that are not covered by the

five basic questions about

coverage, you must state

these conditions or

limitations in your

warranty.

Your limited warranty must

include this standard

disclosure if it limits the

duration of implied

warranties.

Your warranty must

include this standard

disclosure if it excludes or

limits consequential or

incidental damages.

You must disclose any

restrictions on who is

how to reach those persons or companies. This means that the warranty

needs to include the name and address of your company, and any

person or office customers should contact. If they can call you locally or

toll-free, you can give the telephone number instead of the address. If

you want customers to contact your local or regional service centers first,

explain how this should be done. See the examples on pages 11-13 and

18.

5. How will state law affect your customer's rights

under the warranty? Your warranty must answer this question

because implied warranty rights and certain other warranty rights vary

from state to state. Rather than require a detailed explanation about this

on a state-bystate basis, the FfC adopted the following "boilerplate"

disclosure to address this issue. It must be included in every consumer

product warranty:

This warranty gives you specific legal

rights, and you may also have other rights

which vary from state to state.

Specific Information Required When Your Warranty

Contains Certain Optional Terms and Conditions

Generally, if you wish to impose on your customers any obligations other

than notifying you that they need service, you must state these

obligations in your warranty. Also, if you wish to establish any other

conditions, limitations, or terms that you intend to enforce, you must state

them in your warranty; you cannot have "hidden" requirements. An

example of such a condition or limitation would be a provision voiding the

warranty if the serial number on the product is defaced.

There are also a number of other disclosures you must make in your

warranty if it contains certain optional terms and conditions. These

requirements are explained in the following paragraphs.

If your warranty contains a provision that restricts the

duration of implied warranties, the Disclosure Rule requires

you to include a statement that state law may override such restrictions.

This is required because some states prohibit any restrictions on implied

warranties. The requirement applies only to limited warranties, because

only in limited warranties can you restrict the duration of implied

warranties. This is discussed on page 10. To tell consumers that state

law may not permit such a restriction, the Disclosure Rule requires you to

use the following language:

Some states do not allow limitations on

how long an implied warranty lasts, so the

above limitation may not apply to you.

If your warranty contains a provision intended to restrict or

eliminate your potential liability for consequential or

incidental damages, explained on page 15, you must include a

statement that state law may not allow such a provision. To inform

consumers that state law may not permit such a restriction, the

Disclosure Rule requires that you use the following sentence:

Some states do not allow the exclusion or

limitation of incidental or consequential

damages, so the above limitation or

exclusion may not apply to you.

If your warranty contains a provision that restricts who has

rights under the warranty, you must include a statement

explaining specifically who is covered. For example, if your limited

warranty is valid only for the first purchaser, your warranty must state

that. Note that this applies only to limited warranties. A full warranty must

cover anyone who owns the product during the period of coverage, as

discussed on page 10.
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eligible for coverage under

a limited warranty.

You must

discloseinformation about

any informal dispute

resolution mechanism that

you require customers to

use.

This warranty includes all

the necessary disclosures

about an informal dispute

resolution mechanism that

you require your

customers to use before

taking a dispute to court.

If your warranty contains a provision that requires your

customers to use a dispute resolution mechanism

before suing under the federal Magnuson-Moss

Warranty Act for breach of warranty, you must include:

a statement informing consumers that they can sue under state

law without first using the mechanism, but that before suing under

the Magnuson-Moss Act, they must first try to resolve the dispute

through the mechanism; and

information and materials about the dispute mechanism, including

the name and address or a toll-free telephone number, or a form

for filing a claim.

Of course, if you include a dispute resolution requirement in your

warranty, the informal dispute resolution mechanism must comply with

the FTC's Dispute Resolution Rule. This is discussed on page 8.

The example below shows how to make the required disclosures about

an informal dispute resolution mechanism that you require customers to

use before taking a dispute to court.

Bauhaus Mobile Homes, Inc. Limited Warranty

What This Warranty Covers 

This warranty covers substantial defects in materials and

workmanship in your new Bauhaus Mobile Home, including the

heating, air conditioning, plumbing, and electrical systems, and all

original appliances installed in your Bauhaus Mobile Home.

What This Warranty Does Not Cover This warranty does not cover

any problems which result from improper transportation or set-up of

the home, abuse, accidents, or acts of God, such as hurricane or

floods.

How Long The Warranty Lasts

The coverage of this warranty lasts for two years after the date of

installation of your new Bauhaus Mobile Home.

How To Get Service

If something goes wrong, contact the Bauhaus dealer from whom

you purchased your home. Arrange a mutually convenient time for

the dealer's service representative to come to your home and, if

possible, correct the problem. In most cases, your dealer will be able

to correct the problem, but if he is not able to do so, you should

contact Bauhaus directly in writing at the following address:

Bauhaus Mobile Homes, Inc.

Customer Relations Dept.

10101 Factory Blvd.

Manufacturing City, CA.

Bauhaus will send a representative to your home to inspect the

problem and to correct it if possible. All service under this warranty

will be performed at your home site.

What To Do If You Are Not Satisfied With Service

We believe you will be fully satisfied by the service you receive from

your Bauhaus dealer and from Bauhaus. However, because our aim

is your complete and lasting satisfaction, Bauhaus adds another

feature to your warranty's protection. In the unlikely event that you

feel our response to a warranty service request is not satisfactory,

Bauhaus offers you an opportunity to air your complaint to an

impartial dispute-handling organization. The paragraph below

explains how this works.

If you believe your dealer and Bauhaus have not performed as stated

in this warranty, you may submit a request for further consideration

to the National Reconciliation Board of Home Owners and Producers

("NRBHOP"). You should make any such request by mailing the
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attached "Request for Dispute Resolution" form to NRBHOP, or by

sending a letter specifically demanding such dispute resolution and

identifying yourself, Bauhaus, the defect, and-the remedy you seek

to this address :

NRBHOP

Box 8613

Redress, OK

Upon receiving your "Request for Dispute Resolution,” NRBHOP will

notify Bauhaus and ask for a response to your complaint. If Bauhaus

disagrees with your complaint, NRBHOP will arrange for informal

dispute settlement between you and Bauhaus. See the section of

your Owners Manual entitled "The NRBHOP Program" for more

detailed information about how the informal dispute settlement

process works.

You may not file suit against Bauhaus under the Magnuson-Moss

Warranty Act until your claim has been submitted to NRBHOP for

informal dispute settlement and a decision has been reached, or you

have waited 40 days for a decision following your submission of a

Request for Dispute Resolution, whichever comes first. However, you

may be entitled to file suit under state laws without waiting.

How State Law Applies

This warranty gives you specific legal rights, and you may also have

other rights which vary from state to state.

[back to top]

REQUIREMENT III: THE

PRE-SALE AVAILABILITY

RULE {16 C.F.R. PART 702}.

Written warranties must be

available for customers to

read before buying. As

explained on page 5, this

requirement applies to

warranties on products costing

more than $15.

You can display warranties

any way you choose, or post

signs and have the warranties

ready to give customers when

they ask to see them.

Mail Order and Door-to-Door

companies have different

modes of compliance from instore retailers.

Making Warranties Available Prior to Sale

The FTC's Rule on Pre-Sale Availability of Written Warranty Terms

requires that written warranties on consumer products costing more

than $15 be available to consumers before they buy. The Rule has

provisions that specify what retailers, including mail order, catalog,

and door-to-door sellers, must do to accomplish this. The Rule also

specifies what manufacturers must do so that sellers can meet their

obligations under the Rule. These provisions are explained in this

section.

What Retailers Must Do

If you sell directly to consumers who come to your place of business

to buy, you must make written warranties available at the point of

sale. You must do this with all written warranties on the products you

sell warranties from manufacturers, as well as any written warranties

you extend.

The Pre-Sale Availability Rule requires that sellers make warranties

readily available to prospective buyers either by displaying them in

close proximity to the warranted products, or by furnishing them upon

request prior to sale and posting prominent signs to let customers

know that warranties can be examined upon request. The Rule does

not specify any particular method for fulfilling its requirements. For

example, an appliance retailer might post a refrigerator warranty on

the front of the appliance, or in the freezer compartment. Or, a retailer

of small products, such as watches or electric razors, might keep the

warranties readily available behind the counter, or keep them indexed

in a binder near the warranted products, and post signs stating their

availability. Any of these methods is acceptable.

What Mail Order Companies Must Do

If you accept orders for warranted consumer products through the

mail or by telephone, your catalog or other advertising must include

either the warranty or a statement telling consumers how to get a

copy. This information should be near the product description or
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Manufacturers must provide

warranty materials to their

retailers.

clearly noted on a separate page. If you choose the latter, you must

provide a page reference to the warranty statement near the product

description.

What Door-to Door Sales

Companies Must Do If you sell warranted products to consumers in

their homes, or in some place other than your place of business, you

must offer the customer copies of the written warranties before the

sale is completed.

What Manufacturers Must Do

If you are a manufacturer and offer written warranties, you must

provide retailers of your product with the warranty materials they will

need to meet their requirements as described above. There are any

number of ways to do this, including: providing copies of the warranty

to be placed in a binder; providing warranty stickers, tags, signs, or

posters; or printing the warranty on your product's packaging. As long

as you have provided retailers with the warranty materials they need

to comply with the rule, you are not legally responsible if they fail to

make your warranties available.

[back to top]

Deceptive warranty advertising

is unlawful.

The FTC's Guides for the

Advertising of Warranties and

Guarantees {16 C.FR. Part

239} can advise you on how to

advertise your warranty.

Advertisements for products

covered by the Pre-Sale

Availability Rule need only

state that the warranty can be

seen where the product is

sold. {16 C.F.R. 239.2}.

Advertising Warranties

The Magnuson-Moss Warranty Act does not cover the advertising of

warranties. However, warranty advertising falls within the scope of

the FTC Act, which generally prohibits "unfair or deceptive acts or

practices in or affecting commerce." Therefore, it is a violation of the

FTC Act to advertise a warranty deceptively.

To help companies understand what the law requires, the FTC has

issued guidelines called the Guides for Advertising Warranties and

Guarantees. To obtain a copy, see Additional Sources of Information.

However, the Guides do not cover every aspect of warranty

advertising, and cannot substitute for consultation with your lawyer

on warranty advertising matters.

The Guides cover three principal topics: how to advertise a warranty

that is covered by the Pre-Sale Availability Rule; how to advertise a

satisfaction guarantee; and how to advertise a lifetime guarantee or

warranty.

How to Advertise Warranties Covered by the

Pre-Sale Availability Rule

In general, the Guides advise that if a print or broadcast ad for a

consumer product mentions a warranty, and the advertised product is

covered by the Pre Sale Availability Rule (that is, the product is sold

in stores for more than $15) the ad should inform consumers that a

copy of the warranty is available to read prior to sale at the place

where the product is sold. Print or broadcast advertisements that

mention a warranty on any consumer product that can be purchased

through the mail or by telephone should inform consumers how to get

a copy of the warranty.

For advertisements of consumer products costing $15 or less, the

Guides do not call for the pre-sale availability disclosure. Instead, the

Guides advise that the FTC's legal decisions and policy statements

are the sole sources of guidance on how to avoid unfairness or

deception in advertising warranties. Consult your attorney for

assistance in researching and applying the FTC's case decisions and

policy statements.

How to Advertise a Satisfaction Guarantee
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"Satisfaction" and "Money

back" guarantees constitute an

offer of a full refund for any

reason.{16 C.F.R. §239.3}.

Clarify what you are talking

about when you advertise a

"lifetime" warranty. {16 C.F.R.

§239.4}.

The Guides advise that, regardless of the price of the product,

advertising terms such as "satisfaction guaranteed" or "money back

guarantee" should be used only if the advertiser is willing to provide

full refunds to customers when, for any reason, they return the

merchandise.

The Guides further advise that an ad mentioning a satisfaction

guarantee or similar offer should inform consumers of any material

conditions or limitations on the offer. For example, a restriction on the

offer to a specific time period, such as 30 days, is a material condition

that should be disclosed.

How to Advertise a Lifetime Warranty or

Guarantee

"Lifetime" warranties or guarantees can be a source of confusion for

consumers. This is because it is often difficult to tell just whose life

measures the period of coverage. "Lifetime" can be used in at least

three ways. For example, a warrantor of an auto muffler may intend

his "lifetime" warranty's duration to be for the life of the car on which

the muffler is installed. In this case, the muffler warranty would be

transferable to subsequent owners of the car and would remain in

effect throughout the car's useful life.

Or the warrantor of the muffler might intend a "lifetime" warranty to

last as long as the original purchaser of the muffler owns the car on

which the muffler is installed. Although commonly used, this is an

inaccurate application of the term "lifetime."

Finally, "lifetime" can be used to describe a warranty that lasts as

long as the original purchaser of the product lives. This is probably

the least common usage of the term.

The Guides advise that to avoid confusing consumers about the

duration of a "lifetime" warranty or guarantee, ads should tell

consumers which "life" measures the warranty's duration In that way,

consumers will know which meaning of the term "lifetime" you intend.

[back to top]

Section 106 of the Act deals

with service contracts.

Service contracts, unlike

warranties, are purchased

separately from a product.

Offering Service Contracts

A service contract is an optional agreement for product service that

customers sometimes buy. It provides additional protection beyond

what the warranty offers on the product. Service contracts are similar

to warranties in that both concern service for a product. However,

there are differences between warranties and service contracts.

Warranties come with a product and are included in the purchase

price. In the language of the Act, warranties are "part of the basis of

the bargain" Service contracts, on the other hand, are agreements

that are separate from the contract or sale of the product. They are

separate either because they are made some time after the sale of the

product, or because they cost the customer a fee beyond the purchase

price of the product.

The Act includes very broad provisions governing service contracts

that are explained in the following sections.

Statement of Terms and Conditions

If you offer a service contract, the Act requires you to list

conspicuously all terms and conditions in simple and readily

understood language. However, unlike warranties, service contracts

are not required to be titled "full" or "limited,' or to contain the special

standard disclosures. In fact, using warranty disclosures in service

contracts could confuse customers about whether the agreement is a

warranty or a service contract.
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Section 108 (a) of the Act

prohibits you from disclaiming.

warranties on a product if you

sell a service contract on it.

The company that makes the service contract is responsible for

ensuring that the terms and conditions are disclosed as required by

law. This is not the responsibility of the seller of the service contract,

unless the seller and the maker are the same company.

Disclaimer or Limitation of Implied Warranties

Sellers of consumer products who make service contracts on their

products are prohibited under the Act from disclaiming or limiting

implied warranties. (Remember also that sellers who extend written

warranties on consumer products cannot disclaim implied warranties,

regardless of whether they make service contracts on their products.)

However, sellers of consumer products that merely sell service

contracts as agents of service contract companies and do not

themselves extend written warranties can disclaim implied warranties

on the products they sell.

[back to top]

Additional Sources of Information

For a supplement to this booklet containing texts of the Magnuson-Moss Warranty Act, the related FTC Rules, and the FTC Warranty

Advertising Guides, write:

Federal Trade Commission 

Consumer Response Center 

Washington, D.C. 20580

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair practices in the marketplace and to provide information to

businesses to help them comply with the law. To file a complaint or to get free information on consumer issues, visit ftc.gov or call tollfree, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraudrelated complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies

in the U.S. and abroad.

Your Opportunity to Comment

The National Small Business Ombudsman and 10 Regional Fairness Boards collect comments from small businesses about federal

compliance and enforcement activities. Each year, the Ombudsman evaluates the conduct of these activities and rates each agency's

responsiveness to small businesses. Small businesses can comment to the Ombudsman without fear of reprisal. To comment, call tollfree 1-888-REGFAIR (1-888-734-3247) or go to www.sba.gov/ombudsman.

December 2006

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