John purchased for cash a Revenge automobile manufactured by Japanese Motors, Ltd., from an authorized franchised dealer in the United States. The dealer told John that the car had a “24-month, 24,000-mile warranty.” Two days after John accepted delivery of the car, he received an eighty-page fine print manual that stated, among other things:
The warranties herein are expressly in lieu of any other express or implied warranty, including any implied warranty of merchantability or fitness, and of any other obligation on the part of the company or the selling dealer.
Within nine months after the purchase, John was forced to return the car for repairs to the dealer on thirty different occasions, and the car has been in the dealer’s custody for more than seventy days during these nine months. The dealer has been forced to make major repairs to the engine, transmission, and steering assembly. The car is now in the custody of the dealer for further major repairs, and John has demanded that it keep the car and refund his entire purchase price. The dealer has refused on the ground that it has not breached its contract and is willing to continue repairing the car during the remainder of the “24-24” period. What are the rights and liabilities of the dealer and John?
The implied warranty of merchantability has been breached because the dealer failed to conduct the repair in a reasonable time. Based on Section 2-316(2) of the Uniform Commercial Code, the exclusion or modification of the implied warranty of merchantability is possible only if the term "merchantability" is mentioned and is noticeable, if it is in writing. As this has not been done, it is not applicable against Person J. Also, the warranty of consumer goods in written form does not have the power to deny any implied warranty.
However, this is not a case of strict liability as neither the loss incurred is covered under Section 402A nor the product is of an extremely dangerous nature.
Person J has the right to revoke the acceptance of the vehicle and the dealer has the liability to compensate Person J with the buying price since the dealer has failed to provide timely service and quality product. This decision is on the account of the breach of the implied warranty of merchantability by the dealer.
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