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A Better Partnership
September 26, 2016

COA holds that remedial promises for defective goods are not warranties and nave separate statutes of limitation

Promises to “repair or replace” identify specific remedies available to purchasers should a product defect arise and are considered contractual promises under Article 2, and are distinct from warranties, held the Court of Appeals in Grosse Pointe Law Firm, PC v Jaguar Land Rover North America, No 326312. As such, the statute of limitations for claims involving these separate contractual promises accrues at the time of breach of the remedial promise, not at the product’s delivery.
 
Plaintiff purchased a vehicle in 2005, which required extensive repairs over the course of its ownership. Defendant supplied a warranty document at the time of sale referencing the Defendants’ willingness to “repair and replace” defects provided the defect developed through proper operation of the vehicle. As a result of failed attempts to negotiate for Defendants’ repurchase of the vehicle, Plaintiff traded in the vehicle and filed an action for breach of warranty in violation of the Magnuson-Moss Warranty Act (MMWA), 15 USC 2301 et seq. Defendants moved for summary disposition arguing that Plaintiff’s breach of warranty claims were barred by the statute of limitations under MCL 440.2725(2). 
 
The trial court granted summary disposition.  Under Michigan’s Uniform Commercial Code, MCL 440.1101 et seq., the statute of limitation for breach of contract on the sale of goods is limited to four-years. Warranty breaches accrue “when tender of delivery is made, except . . . where a warranty explicitly extends to future performance of the goods . . . .” MCL 440.2725(2).   The trial court held that Plaintiff’s claims were time-barred under MCL 440.2725.  While the trial court acknowledged that other jurisdictions had a separate repair warranty that accrues at the time of repair, because there was no such precedent in Michigan, Plaintiff’s claims accrued on tender of delivery.
 
The Court of Appeals reversed.  It held the promise to “repair or replace” fell outside the bounds of an express warranty under MCL 440.2313(1), and instead only provided a remedy for a product that breaks. Holding the remedial promise of “repair and replace” not to be a warranty, the statute of limitations for plaintiffs action did not begin to accrue at the product’s tender of delivery, but “accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach.” MCL 440.2725(2). The Michigan Court of Appeals held the trial court erred in dismissing Plaintiff’s claim MMWA claim under similar reasoning.
 
In a concurring opinion, Judge Beckering provided a separate analysis on how the same result could be achieved through a different means via the MMWA.

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