When drafting a written warranty, a warrantor must fully and conspicuously disclose in simple and readily understood language its terms and conditions. 15 U.S.C.S. § 2302(a) (1994).
Appellee warrantor refused to honor its new car warranty that was issued to appellant buyer when appellant purchased a car from the dealer. Appellee's motion for summary judgment was granted based upon the express language in the warranty that excluded repairs that resulted from damage done to the car before it was placed in-service, and appellant's suit for violation of the Magnuson-Moss Warranty - Federal Trade Commission Improvement Act, 15 U.S.C.S. §§ 2301-2312 (1994) (MMWA), and the Vermont Consumer Fraud Act, Vt. Stat. Ann. tit. 9, §§ 2451-2480(g) (1993) (VCFA), was dismissed. The court reversed the order that granted appellee warrantor's motion for summary judgment.
Whether damage caused to Appellant’s car before it was listed as in-service was excluded from the warranty.
Appellee's warranty commenced on the date the car was placed in-service. The court observed that the commencement language was ambiguous because in-service could mean either when the buyer put the car in use or the dealer did. The MMWA, by requiring any warrantor to draft clear warranty terms and conditions, incorporates the well-established contract principle of contra proferentum by which a drafting party must be prepared to have ambiguities construed against it. Consequently, the warranty violated the MMWA, and its requirement that warranty terms be fully and conspicuously disclosed. Thus, granting appellee's motion based solely upon the warranty's accident exclusion was error and the case was remanded for trial.