Hump Day Grab Bag #3: Extended Warranty Service Contract
Small plate #3: Retailer's Extended Warranty/Service Agreements
I'm tickled pink (pun intended) to report a decision out of the People's Republic of Minnesota that actually enforces the terms of a contract and uses them as a defense to an unfair competition claim. Really. See Baker v. Best Buy Stores, LP, 2012 WL 539196 (Minn. Ct. App. Feb. 21, 2012).
In Baker, plaintiff bought a TV that had a one-year manufacturer's warranty. In addition, she bought Best Buy's four-year service contract. The service contract provided that if the TV failed during the duration of the contract, Best Buy would either repair or, at its discretion, replace the TV. In the next paragraph, it provided that "[o]ur obligations under this Plan will be fulfilled in their entirety if we replace your product." Again, in the "Limits of Liability" paragraph, the contract provided that "[i]n the event . . . we replace the product, we shall have satisfied all obligations under the Plan."
Plaintiff's TV stopped working nearly two years after purchase. Best Buy took the return and determined that it could not or should not be repaired, so Best Buy replaced the TV with a comparable model. It also told plaintiff that the service contract did not cover this new TV, and encouraged her to buy a new four-year service contract, which she did. Then, she sued, claiming that she originally had bought a TV with four years of service, and thus she should not be robbed of two years of service just because she returned the TV because it failed to work properly.
The court failed to credit plaintiff's argument and affirmed the trial court's decision in favor of Best Buy:
[A]ppellants purchased a television set and a service contract from Best Buy. The set subsequently malfunctioned after the expiration of the manufacturer's warranty, and Best Buy replaced it pursuant to the terms of the contract. Although the service contract was purchased for a four-year term, the plain language of the contract contains specific language limiting the length of the contract if certain events occur. This unambiguous language provided that the service contract is fulfilled if the television is replaced. The district court correctly concluded that appellants received the benefit of the bargain with Best Buy.
Slip op. at 3. The court rejected plaintiff's argument that the contract was really one for insurance, rather than a service contract. And it rejected the notion that the contract was unfair because it gave Best Buy sole discretion to terminate the contract by providing a new TV. As the court observed, that was the exact bargain spelled out in the contract, and the plaintiff agreed to its terms by signing the contract.
Plaintiffs then argued that the service contract was fraudulent and deceptive under Minnesota's Consumer Fraud Act and its False Statements in Advertising Act. The court rejected these claims as well, primarily for the reasons stated in its "breach of contract" section of the opinion, and because of plaintiff's failure to identify with particularity a single advertisement that she claimed was false and misleading. Slip op. at 4-5.
