Consumer Law Flashcards
TX Deceptive Trade Practices Act: Construction, Application and Waiver
DTPA shall be liberally construed and applied to promote its underlying purposes which are to “protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty and to provide efficient and economical procedures to secure such protection.”
DTPA: Waiver
Waiver is generally void and unenforceable. Act may only be waived if:
- Waiver is in writing and signed by consumer
- Consumer is not in a significantly disparate bargaining position, and
- Consumer is represented by legal counsel in seeking or acquiring the goods or services
DTPA: Applicability
Applies to an entity who seeks or acquires by purchase or lease, any goods or services
Does not include a business consumer with assets of $25 million or more, or one owned by a corporation or entity with assets of $25 million or more
Who is a consumer?
An entity is a consumer if it seeks in good faith to purchase goods or services.
Does not require transfer of consideration.
When does a consumer acquire goods or services?
Any purchaser acquires, as does any intended beneficiary.
No contractual relationship with seller required
Incidental beneficiaries do not acquire
What is considered a purchase or lease?
Goods must be sought to be acquired by purchase or lease.
Truly free services not subject to DTPA, but purchase is broadly defined and consumer doesn’t have to be the one who pays
Test: Did person claiming to be consumer acquire goods or services by a purchase?
What are goods or services?
Defined by the act.
Goods - Tangible chattels or real property purchased or leased for use (excludes money and intangibles)
Inventory purchased for resale are goods
Services - Work, labor, or service purchased or leased for use, including services furnished in connection with the sale or repair of goods (excludes pure loan, unless loan was essential part of transaction from consumer’s perspective)
DTPA Exemptions
- Business Consumers - generally covered, but BCs with assets greater than $25 million are not. Defendant has burden to prove the business consumer exception as an affirmative defense
- Statutory Exemptions
- 1995 Exemptions
a) Professional Services - Based on the rendering of a professional service, the essence of which is the providing of advice, judgment, opinion, or similar professional skill (e.g., lawyers, accountants, doctors, and engineers)
b) Personal Injury - Claims not specifically provided for under 1750 (b) or (h)
* all damages arising out of personal injury recoverable under 1750(h) for violation of a tie-in statute*
- Large Transactions - Signed, written contract worth more than $100,000 (consumer needs atty, does not apply to residence
- Transactions, projects, or sets of transactions relating to the same project involving more than $500,000 (does not apply to residence)
Exceptions to DTPA Professional Exemption
- Express misrepresentation of material fact
- Failure to disclose information in violation of 1746(b)(24)
- Unconscionable action or course of action
- Breach of an express warranty
Who may be sued?
Immediate Parties - Those that deal directly with consumer
Remote Parties - Conduct must be in connection with consumer’s transaction
No privity required.
Ask: Did misrepresentation directly reach consumer?
Claims Under the DTPA
Four claims, but only a single recovery
- Use of a false, misleading, or deceptive act or practice that is a) Specifically enumerated in the Laundry List; and b) relied upon by the consumer to the consumer’s detriment
- Breach of an express or implied warranty
- Any unconscionable action or course of action
- Use or employment of an act or practice in violation of Ch. 541 of Ins. Code
The Laundry List
List of more than 30 acts deemed to be false, deceptive, or misleading under the DTPA. Most common include:
- General misrepresentations
- Misrepresentations about legal rights
- Failure to disclose
No requirement of privity or culpable mental state for misrepresentation unless the subsection requires
Unconscionability
Defined as an act or practice, which to a consumer’s detriment takes advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree
Grossly Unfair - Glaringly noticeable, flagrant, complete, unmitigated
No need to show culpable mental state
Breach of Warranty
Any breach of warranty is actionable under the DTPA
Warranties may be disclaimed. Analyze claim as if there is no DTPA. If warranty and no disclaimer or limitation, and a breach, look to DTPA for damages
Consumer may not assert implied warranty claim against remote manufacturer
Common Warranties
- Express and implied warranties under Ch. 2 of Business and Commerce Code
- Implied Warranty of Suitability in Commercial Leaseholds
- Implied Warranty of Good and Workmanlike Performance in Service Contracts (but no implied warranty for professional services)
- Implied Warranty of Good and Workmanlike Performance and habitability in Sale of a New Home
Defenses
Common law defenses do not apply, few statutory defenses
Negation of Producing Cause - May negate causation and damages with broad “as-is” clause
Mediation can be compelled by either party early in suit
Pre-Suit Notice
Pre-Suit Notice
Unless filed as counterclaim, must give written notice 60 days before filing suit. Notice must describe economic damages, damages for mental anguish, an description of complaint
Purpose of notice is to encourage settlement
Remedy for failure to give notice: Abatement
Contents of Settlement
Defendant has 60 days to propose a settlement in kind or reduced to cash value
Must separately state amount of money for consumer’s damages and for reasonable attorney’s fees
