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Texas Bar Exam: Essays > Consumer Law > Flashcards

Flashcards in Consumer Law Deck (68)
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1

The DTPA applies to ____________.

Consumers.

2

T/F - The DTPA is to be liberally construed in favor of the consumer.

True.

3

What is the purpose of the DTPA?

Protect consumers from FALSE, MISLEADING, AND DECEPTIVE ACTS OR PRACTICES. Also, to provide efficient and economical procedures to secure such protection.

4

What damages are recoverable under the DTPA?

1) Money Damages: ECONOMIC DAMAGES.

2) If the plaintiff can show knowing or intentional conduct, then the DTPA permits additional remedies in addition to economic damages. These include mental anguish and discretionary additional damages called treble damages.

3) ATTORNEY'S FEES ARE MANDATORY IN EVERY DTPA CLAIM FOR A PREVAILING PLAINTIFF.

5

What are the elements of a private cause of action under the DTPA?

1) The plaintiff is a CONSUMER;

2) The defendant is CONNECTED with the consumer transaction;

3) The defendant committed either: (a) a violation of the DTPA's laundry list; (b) a breach of warranty; (c) an unconscionable action or course of action; (d) a violation of the Insurance Code Chapter 541; OR (e) violation of a tie-in statute;

4) The defendant's violation was a PRODUCING CAUSE; AND

5) Damages to the plaintiff.

6

Who has standing to bring a DTPA claim?

Must be a CONSUMER.

A consumer is someone who SEEKS OR ACQUIRES, by purchase or lease, GOODS OR SERVICES for use.

7

Can corporations be consumers?

Yes. "Consumer" is not limited to natural persons.

8

T/F - Privity is required for a DTPA claim.

False

9

T/F - The State of Texas and any political subdivision or state agency can be consumers.

True

10

Is payment of consideration required to have DTPA protection?

No. As long as a consumer has a good faith intention of completing the purchase and the objective ability to complete the transaction, the consumer has standing.

11

How are "goods and services" defined under the DTPA? Does a pure loan transaction fall under the DTPA?

Broadly

Goods includes both tangible goods as well as real estate. It does not cover intangible goods like stocks, bonds, or pure loan transactions.

Services includes labor and repair services.

A pure loan transaction does not gain DTPA protection. However, if a person goes to the bank to get a loan in order to purchase a good, such as a car, then the person will have consumer status.

12

What does "for use" mean?

Any use, even if you are going to resell the goods.

13

What does the DTPA not apply to?

1) Certain business consumers with assets in excess of $25 million;

2) Professionals giving advice, judgments, or opinions;

3) Media or publishers unless they have actual knowledge of the falsity of their act or practice;

4) Transactions over $500,000 (not including the consumer's residence); OR

5) Transactions over $100,000 if the consumer is represented by an attorney (also excluding the consumer's residence).

14

Are personal injury claims covered under the DTPA?

Generally, the DTPA does NOT give way to personal injury claims. Damages solely under the DTPA are limited to economic damages.

EXCEPTIONS:

1) Medical expenses incurred or any lost earnings or wages suffered as a result of the personal injury are considered economic damages and can be recovered under the DTPA; AND

2) Mental Anguish damages are recoverable when the deceptive act or practice is committed knowingly or intentionally.

15

What is considered to be a part of the DTPA laundry list?

The DTPA imposes liability on a defendant who commits conduct specifically defined as trade practices which are FALSE, MISLEADING, OR DECEPTIVE. THE MOST COMMON ARE:

MISREPRESENTATION OF GOODS OR SERVICES. Most commonly:

1) Representing goods or services to have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have;

2) standard, quality, or grade, or goods that are of a particular style or model if they are actually of another;

3) agreement confers rights, remedies, or obligations which it does not have.

None of the above require knowing or intentional

4) Failing to disclose information concerning goods or services which was KNOWN at the time of the transaction if such failure to disclose was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed. REQUIRES KNOWLEDGE AND INTENT.

MISREPRESENTATION OF REPAIRS: Knowingly making false or misleading statements of fact concerning the need for parts, replacement, or repair services.

WARRANTY FRAUD: Representing that a guarantee or warranty confers or involves rights or remedies which it does not have or involve.

MISREPRESENTING WORK PERFORMED: Representing that work or services have been performed on, or parts replaced in, goods when the work or services were not performed or the parts were not replaced.

NOTE: FOR ALL LAUNDRY LIST VIOLATIONS, THERE IS A SPECIFIC REQUIREMENT OF RELIANCE TO THE CONSUMER'S DETRIMENT.

16

What is "mere puffery?"

Descriptions of quality, a characteristic, use, or benefit, such as "perfect condition," "top quality," and "like new," are NOT actionable under the laundry list.

17

What is required to bring a claim for "unconscionability?"

Unconscionable action or course of action is conduct that takes advantage of a consumer's LACK of knowledge, ability, experience, or capacity to a GROSSLY UNFAIR DEGREE.

Gross unfairness - Glaring, noticeable, flagrant, complete, and unmitigated.

18

T/F - A deceptive act or practice can be a violation of a laundry list provision, an unconscionable action, AND a breach of warranty.

True.

19

How is a claim brought under the DTPA through a "tie-in" statute? What damages are available? Personal injury?

The DTPA makes it actionoable conduct for a defendant to have violated a "tie-in" statute.

A tie-in statute allows for ACTUAL DAMAGES, which is broader than economic damages.

Mental anguish can be recovered WITHOUT showing the conduct was committed knowingly or intentionally.

PERSONAL INJURY CAN BE AWARDED THROUGH A TIE-IN STATUTE!

Examples:

1) The Debt Collection Act;

2) Business Opportunities Act;

3) Health Spa Act;

4) Manufactured Housing Standards Act;

5) Home Solicitations Act;

6) Telemarketing Disclosure and Privacy Act;

7) Timeshare Act; and

8) Telephone Solicitations Act.

20

How is a claim under the Insurance Code brought under the DTPA?

Insurance Code Chapter 541 prohibits unfair methods of competition and unfair or deceptive acts or practices in the business of insurance as specifically defined in Chapter 541.

Status Required: The DTPA only gives a CONSUMER the right to seek relief under the DTPA for violation of Chapter 541.

CUMULATIVE REMEDY: Recovery under the DTPA would be cumulative with any recovery under any other act or statute, including 541.

21

How is a breach of warranty claim brought under the DTPA?

The DTPA does not create any warranties. The DTPA takes existing warranty law in Texas and brings it into the DTPA. The source of warranty law is the UCC. The breach of an EXPRESS OR IMPLIED warranty will allow a consumer to bring a cause of action under the DTPA.

Any conditions or defenses in the underlying warranty law will apply when the breach of warranty serves the basis of a DTPA claim.

THE UCC DOES NOT APPLY TO SERVICES, BUT THE COMMON LAW RELATED TO EXPRESS WARRANTIES FOR SERVICES GENERALLY FOLLOWS THE UCC.

22

How are express warranties created? Can they be modified?

An affirmation of fact or promise to the consumer which becomes the basis of the bargain.

Can be created by a description of the goods or by a sample of the goods. The words "warranty" or "guarantee" are NOT necessary to create an express warranty.

Modification: Only if the limiting language can be harmonized with the express warranty. If it contradicts the express warranty, then it will not be effective.

23

What are the implied warranties actionable under the DTPA? Can they be disclaimed?

1) Implied warranty of Merchantability - Arises in the sale of NEW goods by a MERCHANT. The goods must be FIT FOR THE ORDINARY COMMERCIAL USE for which the goods are used. Can be disclaimed IN WRITING by specifically mentioning the IWOM, and must be CONSPICUOUS (AS IS / WITH ALL FAULTS). Cannot disclaim as to personal injury if a tort is involved.

2) Implied Warranty of Fitness for Particular Purpose - NOT LIMITED TO MERCHANTS. Arises when the seller has reason to KNOW a consumer has a SPECIFIC PURPOSE for the goods, and the consumer is RELYING on the seller's SKILL OR JUDGMENT to select or furnish suitable goods. Can be modified or disclaimed IN WRITING AND CONSPICUOUSLY.

3) Implied Warranty of Title - defendant warrants that he owns the goods he is selling.

If the result of disclaiming any of the above is that there is no breach of the warranty because it was effectively discaimed, then the DTPA will NOT provide a remedy for breach of warranty.

24

What about warranties with respect to services?

There CAN BE EXPRESS WARRANTIES.

Implied Warranties:

1) Services will be performed in a GOOD AND WORKMAN LIKE MANNER. This warranty is NOT implied for professional services. THIS WARRANTY CANNOT BE DISCLAIMED OR MODIFIED.

2) New Home Construction: Implied warranty of HABITABILITY. Can be disclaimed or modified in writing in LIMITED CIRCUMSTANCES.

25

What damages are recoverable under the DTPA?

ECONOMIC DAMAGES normally.

ACTUAL DAMAGES FOR TIE-IN STATUTES.

Medical damages and lost wages.

Mental anguish possibly.

Possible treble damages if intentional or knowingly.

MANDATORY ATTORNEY'S FEES FOR PREVAILING PLAINTIFF.

26

What are some measures of economic damage?

1) Benefit of the bargain (difference between value represented and value delivered);

2) Out of pocket damages (difference between price paid and value delivered);

3) Cost of Repair Damages (cost to make the goods or services as warranted or represented); AND

4) Loss of Use damages (cost to rent replacement / don't actually have to rent replacement goods in order to have loss of use damages).

27

Can lost profits be recovered under the DTPA for economic damages?

Yes, but must be shown with REASONABLE CERTAINTY (hard to do).

28

How is mental anguish recovered under the DTPA?

Must first have conduct committed knowingly or intentionally. The consumer must present DIRECT EVIDENCE showing NATURE, DEGREE, and SEVERITY of the mental anguish which causes a SUBSTANTIAL DISRUPTION in the CONSUMER'S DAILY ROUTINE.

29

How are treble damages recovered under the DTPA?

Must show intentional or knowing conduct. Amount is determined by a judge or jury.

If KNOWINGLY - limited to 3 times the amount of economic damages.

If INTENTIONALLY - limited to 3 times the amount of economic AND mental anguish damages combined.

30

Explain the mandatory attorney's fees under the DTPA.

A consumer who PREVAILS (not necessary to recover) in a claim under the DTPA is entitled to recover MANDATORY REASONABLE AND NECESSARY ATTORNEY'S FEES.