Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2 (Tek) 9/28/84 based on 9/17/84; site tekecs.UUCP Path: utzoo!watmath!clyde!burl!ulysses!mhuxr!mhuxt!houxm!vax135!cornell!uw-beaver!tektronix!orca!tekecs!Michael From: Michael@tekecs.UUCP Newsgroups: net.legal Subject: Re: Question on incidental/consequential damages Message-ID: <5348@tekecs.UUCP> Date: Wed, 22-May-85 16:38:05 EDT Article-I.D.: tekecs.5348 Posted: Wed May 22 16:38:05 1985 Date-Received: Fri, 24-May-85 03:23:34 EDT Sender: mikei@tekecs.UUCP Organization: Tektronix, Wilsonville OR Lines: 105 > From: wales@ucla-cs.UUCP > I have two questions -- somewhat interconnected, and both (fortunately) > strictly hypothetical: > > (1) Suppose I lived in one of the seven or eight states which ban the > exclusion of incidental/consequential damages, and my car (with said > alarm system installed) were stolen. > > Would the warranty's disclaimer of guarantee/insurance against the > theft of my car -- point #2 above -- be rejected as an impermissible > attempt to exclude liability for consequential damages? > It may be rejected, but that does not mean you will prevail. In Products Liability there are three theories of recovery currently in vogue: (1) negligence, (2) warranty, and (3) strict liability. Since the question pertains to warranty liability I'll discuss only that. However, it should be pointed out that in states which permit limitations/exclusions on warranties, the fact a warranty is expressly limited does not preclude recovery based upon theories (1) or (3). Recovery based upon the warranty theory lies at the intersection of "Tort" and "Contract" law. It is, consequently, not clearly one or the other, but shares certain characteristics of both. Where exclusions/limitations on warranties are prohibited the limitations/exclusions may be supplied by the legislature in the form of statutes or by the courts in the form of case law. All of the 50 states except Louisianna have adopted, in general form, the Uniform Commercial Code (UCC) which has several sections which deal directly with the problem of disclaimers. Section 2-719 (3) states: "Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not." Other sections of the UCC of interest are 2-302 and 2-316. California passed a separate Consumer Warranties Act, Cal.Civ.Code Tit. 1.7, secs. 1790-1797.5. The fact that a states laws prohibit certain limitations/exclusions (or the fact that a seller failed to make them) does not mean that a seller is therefore liable for whatever happens with the product. What the prohibition against exclusions/limitations means is that the state wants the question "what is warranteed?" to remain open to judical decision. What the consumer gains through this is not necessarily a recovery, but the right to be heard on the facts of a particular case. Without the prohibition, in a lawsuit the defendant need only move for summary judgement based upon the pleadings or upon the fact that the plaintiff has failed to state a claim upon which relief may be granted. My knowledge of Products Liability law was never very deep, but it shouldn't be very hard for anyone to bone up on. A few references which might be useful to that end are: Prosser, Wade, Schwartz, "Torts - Cases and Materials", 7th Ed., chapter XV. R. Hursh and Bailey, "American Law of Products Liability", (1974). L. Frumer and Friedman, "Products Liability", (Rev. ed. 1974). Commerce Clearing House (CCH) Products Liability Reporter. >(2) The requirement that the system be installed by a pro in order for > defects in the alarm unit to be covered by the warranty seems very > strange to me. It has been pointed out (and rightly so) that a car > alarm system is of little value in protecting your car unless it is > installed by a competent technician -- but since the warranty al- > ready specifically excludes coverage for theft of the car anyway, > this doesn't seem to be a relevant concern. > > Is the real explanation, perhaps, that the alarm company has no way > of protecting itself against damage claims if a car was stolen in a > state prohibiting the exclusion of consequential damages, and that > they are therefore taking the next best step of demanding profes- > sional installation -- so that they will at least know that the sys- > tem was put in right and will thus PROBABLY prevent the theft of the > car? Your explanation sounds reasonable to me. It may perhaps be extending the coverage to theft of items on/in your auto and injury to someone because of improper installation of the unit as well. Mike IsBell ..!tektronix!tekecs!mikei Tektronix, Inc. Wilsonville Industrial Park P.O. Box 1000 Wilsonville, Oregon 97070 (503) 685-2990 (The preceding opinion is that of a laymen and consequently should not be relied upon for anything other than passing the time of day. The author makes no warranties either express or implied (except where prohibited by law (-: ).