Term Paper: Magnuson-Moss Warranty Act: A Purposeful

Pages: 8 (2202 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Business - Law  ·  Buy This Paper

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[. . .] The Act enables warrantors to include a provision also stating that a consumer agrees they will attempt to resolve a dispute through informal dispute resolution prior to going to court over a matter (Grimes, 2002). One stipulation however, of this allowance is that the dispute resolution mechanism must meet requirements outlined by the FTC. The FTC rule regulating this process has several stipulations, outlined in the Dispute Resolution Rule, which include that the warrantor/dispute resolution party be the following: (1) Adequately funded and staffed to resolve disputes quickly, (2) be available free of charge to consumers, (3) be able to settle disputes independently, (4) gather and investigate quickly and inform parties (Grimes, 2002). There are additional related requirements, all insuring the integrity of the system. Each party if offered the opportunity to present their case.

In certain circumstances, such as mediation, the decision offered by the third party is not binding. Should the consumer not be satisfied with the decision, they may then proceed to court. However, in the case of arbitration, the decision made by the third party is legal and binding. More and more warrantors are including provisions for arbitration as a mechanism for dispute resolution under this provision. Keep in mind that warrantors are not required to provide a provision for dispute resolution.

Some people may feel that the provision for dispute resolution is a con. It may in the case of arbitration prevent a consumer from seeking out justice in the court system. The use of a provision for arbitration however, may be complicated. Many cases have been brought to court in recent years challenging such provisions and the legality of arbitration terms. In one such case, a case was brought before the courts in Texas in 1997 by a family named the Van Blarcums. They had purchased a manufactured home from a housing company, which they subsequently found to be defective. The family had a written warranty with a provision for arbitration, but took the case to court. Naturally, the warrantor pointed out the provision for arbitration, legally binding. The Van Blarcums however, subsequently argued that in fact the Magnuson act prohibits the use of binding arbitration as a dispute mechanism. However, ultimately the Texas Supreme Court supported the housing manufacturer, stating that federal regulation enacted by the FAA (Federal Arbitration Act) in fact supercedes the Magnuson act making arbitration binding. (Patton, 2002)

Some see this provision for informal dispute resolution as a con or negative provision of the act. The provision for an arbitration agreement may unwittingly trick consumers who don't understand the terms into thinking they may go to court over an issue.

Others may also argue that the government already plays to much role in the regulation of a free trade market. Manufacturers and Sellers might fight for the freedom to market their product and warranties without such provision. However, it is important to remember that a written warranty is not mandated by the act. Rather, the Magnuson-Moss Warranty Act simply governs the process of those companies that choose to offer a written warranty for their product. Still, many would oppose the regulation.

The reality however, is that the provisions detailed in the Magnuson-Moss Warranty Act are overall, very favorable to consumers and merchants. The Act ensures the legality of written warranties. It ensures that customers are fully informed about the functioning and coverage of a product before purchase. Informal dispute resolution is actually a very effective method of maintaining a system of checks and balances, and should be touted as such. If a consumer purchases a product with a one-year warranty, they should be aware that the product may last but a year. This is inherent in a free society as the one in which we live today.

Works Cited

Grimes, Kevin and Reese, Spencer. "Magnuson-Moss Warranty Act" 2002. February 29, 2003 http://www.mlmlaw.com/library/guides/ftc/warranties/undermag.htm

Dr. Performance. "Understanding the Magnuson Moss Warranty Act" 2002. March 1, 2003 http://drperformance.com/performance_warranty.html

Understanding the Magnuson Moss Warranty Act" Dr. Performance, 2002

Patton, Stewart. "Consumer Disputes Under the Magnuson Moss Warranty Act are Subject to Arbitration Provision" 2002. http://www.jtexconsumerlaw.com/Magnuson.pdf

Primer on the Magnuson-Moss Warranty Act" 2002. February 28, 2002, http://www.kingston.com/china/policy/link2mma.asp

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"Magnuson-Moss Warranty Act: A Purposeful."  Essaytown.com.  March 1, 2003.  Accessed April 20, 2019.
https://www.essaytown.com/subjects/paper/magnuson-moss-warranty-act-purposeful/3049019.