Member of:
New Jersey State Bar Association Badge
LawLine Online Faculty

Breach of warranty and warranty fraud





In New Jersey there are many rules for selling and marketing warranties such as disclosing all terms and conditions to customers. The law says all terms and condition must be disclosed to all consumer and the failure to do so violated New Jersey Law on this issue.

The conduct in the current case also violates the New Jersey Consumer Fraud Act based on the dealer’s statutory violation of the said Act.According to the New Jersey Consumer Fraud Act, the dealer is required to disclose all the relevant terms of the warranty and/or the service contract.See N.J.S.A. 56:8-68.

This issue was directly addressed in Cannon v. Cherry Hill Auto Mall,161. F. Supp. 2d 363.In Cannon,the selling dealer sold the plaintiff a service contract and kept a portion of the proceeds.The Federal Court in Cannon held that the dealer’s failure to properly and honestly disclose the retention of funds kept by the dealer and forwarded to the third party constitute a violation of both the Truth in Lending Act and the New Jersey Consumer Fraud Act.The Court specifically held that ‘Cherry Hill’s failure to correctly disclose its profits on the MBH buy instead indicating the entire amount was paid to interstate is a violation of N.J.S.A. 56:8-67(g)’.

Although it was specifically service contract in Cannon v. Cherry Hill, the statutory reference previously set forth also covers warranties.This is a statutory violation (PER SE) violation of the CFA.The damages are the amount of money collected and paid to the manufacturer.

Consumer fraud related to the sale of warranties is rampant in the state of New Jersey. This is one of the most common areas for fraud and consumer fraud with regard to the sale of used and new vehicles. It is not a comment for a specific dealerships or salespeople to misrepresent the terms and conditions of a lease when the sale of a vehicle and a warranty occurs.

The same principles that are applicable to affirmative misrepresentations of material omissions of fact are applicable to the sale and marketing of warranties by use the new car dealers. It is imperative that the seller of these products or services must make accurate and complete representations as to the nature and extent of the product which is being sold. The consumer would have a claim or cause of action if the consumer has sustained a loss for an ascertainable loss associated with the purchase or acquisition of the subject product. An example would be if a consumer was lied to about coverage on the specific warranty then needed repairs associated with that specific area and the repairs were denied. The consumer might have a claim for an ascertainable loss associated with the repairs of the automobile.

The New Jersey Consumer Fraud Act should be liberally construed to demonstrate a claim against those that misrepresent the terms and conditions of the warranty and those that sell warranties that are deceptive with inherently deceptive limitations and waivers of various rights which are not permitted under New Jersey law.

A warranty cannot be sold that is in essence worthless or has a significant limitation. Under which a claim can be made. An ascertainable loss was associated with these deceptive practices then there would be a claim.

Sometimes a discovery dispute arises pertaining to documents which were requested as part of a lawsuit.this is very common in the context of a lawsuit where alleged breach of warranty is asserted. To pursue a breach of warranty claim you must obtain the proper information from either the selling dealer or the Manufacturer. You sent discovery requests and they sent responses. Usually they do not provide all the information which is requested so you have to sent a follow-up letter to obtain the information which you need to prove your case.

Many times the information from the manufacturers directly relevant as to the nature and extent of what the selling dealer was aware of when the vehicle was sold. If you are asserting that the selling dealer was aware of a defect which might been subject to a warranty claim this is a solid way to prove that the dealership was aware of the warranty claim and that the dealership might have engaged in a deceptive practice.

The following is a letter which was sent to an attorney in an actual case which refused to provide the relevant information which was requested including recalls and technical service bulletins.

I have reviewed your responses to the plaintiff's demand for documents and demand for interrogatories and at this time I do not feel as though I can withdraw the motion. In many instances which I will address you failed to provide the most basic responses to the basic questions including but not limited to failing to provide a copy of the certified preowned warranty and the guidelines for approval. This is but one example of the numerous items which have not been provided which were simply requested as part of discovery.
4. You have failed to provide a single name of an individual with any knowledge was employed by your client. This suit has been pending for significant period of time, you have reviewed and attached the repair orders in the service history, but you have failed to list a single name, or individual employed by your client has any knowledge of anything pertaining to this lawsuit. This is the most basic information which must be provided and you have failed to do so.
14. You have failed to provide and attach a copy of the technical service bulletins and the recalls.
16. You failed to provide a copy of the certified preowned warranty as this vehicle sold as a certified preowned vehicle. You have failed to attach any of the procedures or requirements to have a used vehicle certified.
17. You have failed to answer how much money received with regard to the sale of the vehicle and the sale of the certified preowned warranty.
18. You failed to indicate how much was paid for the warranty.
21. You failed to provide any materials which provided to the selling dealer as part of the sales and marketing process with regard certified preowned vehicles. This is unacceptable in light of the allegations in the late of the complaint the plaintiff is at the subject automobile.
23. You failed to answer this question in any way which only asks what actions were taken by your client when warranty claims were received. There's actually no answer and the plaintiff is alleging breach of warranty among other allegations. Your client must answer this question.
24. This question asks for the reasons for any denial of any warranty claims and specifically states do not see attached repair orders. Your answer says see attached repair orders as this is inappropriate and we are asking for specific reason why any and all warranty claims were repaired. This is consistent with the failure to provide any individuals with knowledge of this claim should include those who decided to deny any and all warranty claims.
25. If you are asserting that the warranty was limited in any way please state the specific page of the warranty guide upon which you are relying upon you have attached an unknown warranty warranty and make the plaintiff search for the specific limitations is inappropriate.
26. You failed to provide evidence of communications between my client, your client and the selling dealership which would in clue computer notes, computer notations or any other document or electronic evidence which your client my referral. You can simply print out and attach a copy of the log however you failed to do that to the plaintiff is left guessing that's what communications occurred.
27. You have failed to indicate why certain claims are denied or even if any claims were denied. You simply say see attached documents. Please provide the specifics of each claim whether it was denied or accepted and the reasons for denial. Consistent with the plaintiff's prior request please indicate those responsible for any denial and or communications with the plaintiff or the selling dealer. Your answers to interrogatories and response documents have left the plaintiff guessing.
28. This interrogatory not duplicative but only request that a copy of the warranty specifically the certified preowned warranty be attached. You have failed to do so.
29. You have failed to indicate any communications with the selling dealer and only attached the repair orders pertaining to evidence of communication between your client and the selling dealer. This is an appropriate and clearly not accurate since numerous warranty claims are submitted to your client and the claims either accepted or denied and the dealership would have been given appropriate instructions on the acceptance or denial from your client. You have said nothing, and you have failed to provide a copy of the computer log pertaining to communications in this particular instance. This is unacceptable please provide this information immediately.
30. See response to number 29.
31. I have reviewed the documents and cannot determine whether or not you are blaming the plaintiff for not following the proper procedure with regard to submission warranty claims. Either specify in writing or provide reference to a certain page within the documents which you have provided. This is unclear, and the plaintiff demands immediate clarification on this issue.
32. The plaintiff has requested all facts and legal authority underlying any affirmative defense. The stated nothing. Please provide an immediate response. The plaintiff has spell that the case and interrogatories and the complaint. The plaintiff is unclear as to what the defendants defense will be in this matter.
33. You have failed to provide a copy of the technical service bulletins for the recalls which were specifically requested. The plaintiff experienced numerous defects with this vehicle and the plaintiff is entitled to discern the nature and extent of any technical service bulletins are recalls which might corroborate the plaintiff's claims for breach of warranty. The failure to provide this most basic information and also the documents underlying this operation render your answers noncompliant.
34. You failed to provide and indicate any of the communication between the defendant and the selling dealer pertaining to number 33. For the same reasons as set forth above immediately provide this information.
36. Please indicate when and where all recalls are performed on the plaintiff's automobile new have failed to specify this in your answer.
39. You have failed to provide any information pertaining to all the warranty claims which were serviced by your client on this car including but not limited to the warranty claims a predated the plaintiff's purchase. The plaintiff makes specific claims with regard to warranty claims which predated the purchase in your failing to provide this information is not permitted and is not a proper objection.
43. Attach a copy of all communication with the selling dealer pertaining to certification of the subject automobile. The failed to produce the warranty checklist which was required to be performed by the selling dealer as part of the certification process. You failed to provide and attach a copy of the terms and conditions, you have failed to provide and attached the guidelines for certifying a used vehicle. Please provide immediately.

Response to demand for documents

Response to demand for documents is equally deficient including not limited to items 2, 3, 4 which requested the technical service bulletins the service history and recalls for the subject automobile both before during and after the plaintiff's purchase. You failed to do this as set forth in the above description. Please provide immediately.

You have failed to respond to item number six and failed to produce and supply a copy of the CPO warranty AND the manuals or any other indication was provided to the selling dealer with regard to the certified preowned process. Your responses are noncompliant.

You have failed to provide any and all computer notes associate with the communication on this particular file between the plaintiff, the defendant and the codefendant.

The plaintiff is a pending motion is entitled to discern the nature and extent of the documents the defendant intends to use at trial include but not limited to the support any affirmative defenses. Number 16 requested this documentation and the defendant said they will supply same. The defendant has had the plaintiff's discovery demands for significant period of time the plaintiff was forced to file a motion and the defendant should be directed to provide responsive questions.