Do Computer Purchasers Need Lemon
| Publication year | 2002 |
I. Introduction
Fifteen years ago, state legislatures around the country had either recently passed, or were considering, legislation to protect consumers from purchasing "lemon"1 cars. In 1985, "[d]isputes over automobile warranties constitute[d] some of the most intractable problems that [arose] between manufacturers and consumers."2 By 1993, all fifty states and the District of Columbia had passed lemon laws for cars.3 State legislatures passed these laws partially in response to considerable litigation over warranty disputes.4 Ten years later, the question of lemon aid resurfaces as at least three state legislatures5 consider whether computer purchasers, like car buyers, need protection.
Each year, millions of people purchase computers, and many of these consumers have difficulties with their new machines.6 Ron Mazur of Illinois spent $3,500 on a Dell computer in 1999. In less than a month, his personal computer (PC)7 was smoking.8 Mr. Mazur worked with Dell to have his power source repaired four or five times over the next six months.9 During Mazur's final telephone conversation with Dell representatives, the representatives decided that the trouble was due to Mazur's cats and possible faulty wiring in his apartment.10 Dell's technical support staff was not interested in the fact that none of Mazur's neighbors had experienced similar problems.11 Further, Mazur's backup PC continued to function throughout the same period.12
In a January 2001 survey, PC World found that almost one out of eleven respondents bought computers that did not work upon first use.13 Of the 13.6 million desktop PCs sold in 2002, Consumer Reports found that about 1.9 million of them had serious problems within the first month of ownership; an estimated 544,000 of them were inoperable when buyers started the machines; and approximately 150,000 were lemons.14 This means that almost fifteen percent of computer purchasers in 1999 had to return and/or repair a new computer.
Because computers have become such a common part of daily life,15 federal and state legislatures should safeguard consumers by providing "lemon aid" for computer purchasers. Until statutory protections are in place to protect consumers from lemon computers, consumers can take steps to help protect themselves from computer manufacturers.
This article first discusses existing consumer protection laws—the Uniform Commercial Code (UCC) and the Magnuson-Moss Warranty Act (MMWA)—and their shortcomings within the context of providing protection for computer purchasers dealing with a lemon. Next, the article examines legislation recently proposed in Pennsylvania, Illinois, and Tennessee—the Computer Lemon Act—and demonstrates that uniform passage of this type of law will better protect consumers from faulty computer products. Finally, the article suggests what consumers can do to protect themselves until state and federal legislators provide protective legislation.
II. Existing Laws
A. The UCC
The standard computer warranty is mystifying to the average consumer.16 Computer warranties are so difficult to read that many (if not most) consumers do not read them.17 Should a buyer be in the unusual and fortunate position to both read and understand the terms of the warranty, she nevertheless finds herself unable to bargain for additional protection; she must either accept the conditions of the warranty as written, or forego her computer purchase from large manufacturers and retailers.18
Article Two of the UCC governs the effect of warranties on actual warranty coverage.19 Under the UCC, there are two major protections offered to consumers: revocation of acceptance and breach of warranty.20 Although these sections of the UCC provide protection for purchasers of defective products, other sections diminish that protection by giving manufacturers the option of limiting their responsibilities through disclaimers and similar provisions.21
Under the UCC, there are two types of acceptances that are subject to revocation.22 First, there is the situation where "acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances."23 A typical scenario might involve a consumer who discovers a nonconformity immediately after purchase. Assume that someone bought a Compaq desktop computer system from an electronics store. After she returned home and plugged in her new PC, she discovered that the machine would not turn on because the power supply was defective. According to the UCC, Joan may take the PC back to the store because this defect reasonably induced revocation by substantially impairing the value of the machine.24
The second type of revocable acceptance occurs when acceptance is based on "the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured . . . ."25 This situation would arise, for instance, when a consumer attempts to have the computer repaired but, after repeated attempts at repair fail, decides to revoke acceptance. For example, assume Jeff purchased a laptop computer. A week after its arrival, he discovered that the sound card, which is part of the motherboard, did not work. He spent several hours on the phone with technical support and ultimately had to send the computer in for repairs. When the manufacturer returned the computer, Jeff discovered that the problem had not been corrected. He again contacted the manufacturer and repeated the entire process twice more. When the manufacturer returned his computer to him for the third time, the sound card still did not work. At this time, Jeff could revoke his acceptance of the computer because the manufacturer did not seasonably cure the nonconformity.
The remedy for revocation of acceptance is generally a refund of the purchase amount.26 The problem with invoking this remedy for computers is that a buyer can revoke acceptance only for defects existing at the time of purchase.27 Thus, if the defects arise after purchase, revocation is not an option.28 Moreover, computer manufacturers often include a "repair-and-replacement" clause, further limiting the consumer's ability to revoke acceptance.29 The consumer must then consider whether the UCC offers relief under a breach of warranty action.
The UCC recognizes three types of warranties: express warranties, implied warranties of fitness for a particular purpose, and implied warranties of merchantability.30 Unfortunately, these warranty protections are insufficient for computer purchasers.
Under UCC § 2-313(1), sellers may create express warranties in one of three ways:
(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
(c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.31
For a buyer to recover for breach of an express warranty, the seller must violate the actual terms of the contract.32 Because most computer warranties specifically state that any defect with the machine will be remedied by repair,33 manufacturers have considerable leeway so long as they continue to make reasonable repair attempts. Thus, a manufacturer would not be in violation of the actual terms of the warranty so long as it attempts to repair the machine.34 Because the consumer purchased the computer intending to use it, this remedy proves insufficient because it deprives the consumer of use while the manufacturer repairs the computer.
The implied warranty of fitness for a particular purpose is fairly specific in its requirements. This warranty requires that the goods must be fit for a particular purpose when "the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods."35 The drafters of this section explain that a "particular purpose" is different from an ordinary purpose "in that it envisages a specific use by the buyer which is peculiar to the nature of his business whereas the ordinary purposes for which goods are used are those envisaged in the concept of merchantability and go to uses which are customarily made of the goods in question."36
There are several elements that the buyer must demonstrate in order to prove breach of the warranty of fitness. First, she must demonstrate that the seller knew of her special purpose. Next, she must show that she actually relied upon the seller's "skill or judgment,"37 meaning that the implied warranty is available only against the direct seller. 38 Finally, a breach occurs only when the computer is not suitable for the specific purpose.39 For instance, a breach of the warranty of fitness might arise if the consumer sought to purchase a computer to play a game,40 if this intention was communicated to the seller, if the seller recommended a particular PC, and if the PC could not then be used to play the game.41 Alternatively, if the problem were something that affected ordinary computer use,42 then the implied warranty of merchantability would be breached.
A warranty of merchantability, requiring that a product perform as expected and described, is much more important to consumers, particularly in the computer purchase context, because it is more likely to provide some form of relief.43 Specifically, the goods must:
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, [be] of fair average quality within the description; and (c) [be] fit for the ordinary...
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