Consumer Law

Question 1

T/F: The Deceptive Trade Practices Act (DTPA) is liberally construed to protect consumers. Generally, it cannot be waived.

Answer 1

True. Its purpose is to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty.

Question 2

How can the Deceptive Trade Practices Act (DTPA) be waived?

Answer 2

The DTPA can only be waived if:

1. in writing and signed by consumer
2. consumer is not in a terrible bargaining position
3. consumer is represented by legal counsel

Question 3

For the Deceptive Trade Practices Act (DTPA), what is a consumer?

Answer 3

The DTPA covers consumers. A consumer is an entity who seeks or acquires by purchase or lease of goods or services.

Question 4

What are the 3 types of Deceptive Trade Practices Act (DTPA) questions?

Answer 4

Pure DTPA questions

DPTA with a tie-in statute

DPTA + insurance

Question 5

The DTPA covers consumers, or entities, who seek or acquire by purchase or lease of goods or services.

What is “seek or acquire”?

Answer 5

Any purchaser or anyone with a good intent faith to purchase is a consumer, there is no need to consummate transaction or to pay. Further, any purchaser “acquires,” as does any intended beneficiary. Incidental beneficiaries do not acquire.

Question 6

The DTPA covers consumers, or entities, who seek or acquire by purchase or lease of goods or services.

What is “purchase or lease”?

Answer 6

Truly free services or goods are not subject to DTPA, but “purchase” is broadly defined and the consumer does not have the be the one who pays.

Question 7

The DTPA covers consumers, or entities, who seek or acquire by purchase or lease of goods or services.

What are “goods or services”?

Answer 7

Goods are tangible chattel or real property purchased or leased for use.

Services include work, labor, or service purchased or leased for use, and include insurance.

Question 8

T/F: Loaning money is not subject to DTPA.

Answer 8

Somewhat true. Merely loaning money is not subject to DTPA. But if from the consumer’s perspective, if this loan was an essential part to the transaction then it will be subject to DTPA (and whoever lent the money).

Question 9

The DTPA covers consumers, or entities, who seek or acquire by purchase or lease of goods or services.

Are there any exclusions to entities?

Answer 9

Yes. A business with assets of $25M+ or one that is owned or controlled by an entity with assets of $25M+ is not a consumer under DTPA.

Question 10

T/F: D has the burden to prove the business consumer exception as an affirmative defense.

Answer 10

True. A business with assets of $25M+ or one that is owned or controlled by an entity with assets of $25M+ is not a consumer under DTPA.

Question 11

What are the professional exceptions to the DTPA?

Answer 11

DTPA does not apply to professional services in which the essence is providing advice, judgment, or opinion.

Question 12

T/F: Generally, lawyers, accountants, doctors, architects, and engineers are exempt from the DTPA.

Answer 12

True. But they can be liable under the DTPA for material misrepresentation, unscionability, failure to disclose, or breach of an express warranty.

Question 13

T/F: All damages from personal injury are recoverable under Section 17.50 (h) for a violation of a tie-in statute.

Answer 13

True.

Question 14

T/F: DTPA does not apply to a claim arising out of a contract if the contract relates to a project, transaction, or set of transactions over $100,000.

Answer 14

True. But exemption is if it there is a signed written contract and the consumer is represented by an attorney. It does not apply to residences (so DTPA would apply).

Question 15

T/F: DTPA does not apply to a cause of action arising out of a transaction, project, or a set of transactions involving a total consideration of more than $500,000.

Answer 15

True.

Question 16

T/F: Consumer can sue anyone who violates the DTPA if transaction forms the basis of the complaint.

Answer 16

True. e.g., consumer bought a house and the prior to the sale, the agent misrepresented the sq ft. Consumer can sue agent, even if no contractual relationship between the two.

Question 17

T/F: Conduct of immediate parties is always in connection with and relevant to DTPA.

Answer 17

True. Remote parties are usually not subject to DTPA unless they work directly with consumer or their misrepresentation reached the consumer.

Question 18

DTPA provides that a consumer can maintain an action where 4 conditions constitute a producing cause of economic damages or damages for mental anguish.

What are these 4 conditions?

Answer 18

A consumer is an entity who seeks or acquires by purchase or lease of goods or services.

1. use of false, misleading, or deceptive act or practice that is:
   (a) on the laundry list
   (b) relied on by consumer to their detriment
2. breach of express or implied warranty
3. unconscionable act
4. use or practice that violates the insurance code
   * These are separate but cumulative claims.

Question 19

What is the DTPA laundry list?

Answer 19

To determine if there can be an action, there must be a consumer and one of the 4 potential causes of action. One of these is the laundry list and consumer’s reliance.

The laundry list is the most common DTPA claim; one act can violate several provisions on the list. It includes 30 different acts and practices that are prima facie false, deceptive, or misleading. There is no requirement for privity or knowledge/culpable mental state unless specified.

Question 20

Under the DTPA, what’s unscionability?

Answer 20

This is determined at time of transaction. It is an act takes advantage of the lack of knowledge, ability, experience, or capacity of consumer to a grossly unfair degree.

Question 21

T/F: Valid disclaimers and limitations are valid even if claim is brought under DTPA.

Answer 21

True. And the DTPA claim will fail.

Question 22

T/F: Consumer cannot assert an implied warranty under DTPA against remote manufacturer.

Answer 22

True.

Question 23

What is the implied warranty of good and workmanlike performance in service contracts?

Answer 23

In a contract for repair or modification of tangible chattels or real estate, there is an implied warranty that work will be done in a workmanlike and good manner. It cannot be disclaimed.

*Professionals don’t make this warranty.

Question 24

T/F: A pre-suit notice is required unless the DTPA claim is filed as a counterclaim.

Answer 24

True. This entails written notice 60 days before filing suit, and the written notice includes economic damages and mental anguish and attorneys’ fees.

Question 25

What is the remedy for failure to give notice before filing a DTPA suit?

Answer 25

Abatement to get notice.

Question 26

T/F: D must offer to settle in money or in-kind reduced to money.

Answer 26

True.

Question 27

What happens if a consumer rejects a reasonable settlement?

Answer 27

If the D’s settlement offer is the same or substantially the same or more than, the consumer may not recover in excess of: (i) amt of damages tendered in settlement offer or (ii) amt of damages found by trier of fact. Consumer’s recovery of attorneys’ fees is also limited.

Question 28

T/F: An action under DTPA must be commenced within 2 years after consumer knew or should have known (date of injury) of violation.

Answer 28

True.

Question 29

What are the damages a consumer who prevails in a DTPA suit get?

Differentiate between the standard, if D acted knowingly, or if D acted intentionally.

Answer 29

General damages = economic damages.

If D acted knowingly, economic damages + mental anguish damages not more than 3x the amount of economic damages.

if D acted intentionally, may not award more than 3x amount of damages for mental anguish and economic damages.

*In appropriate case the consumer may also recover equitable and injunctive relief.

Question 30

T/F: Award to prevailing attorney is mandatory, but the amount is discretionary.

Answer 30

True. The amount is in hourly basis.

Question 31

T/F: If there are different acts or practices resulting in different damages, cumulative recovery is permissible.

Answer 31

True. The provisions of the DTPA are not exclusive. The remedies provided by the DTPA are in addition to any other procedures or remedies provided for in any other law. Although the remedies under the DTPA are cumulative to other available remedies, a consumer cannot recover actual damages and penalties for the same act or practice under more than one theory of recovery. Cumulative recovery under the DTPA is barred only for damages or penalties resulting from the same act or practice.

Question 32

Plaintiff has proven that the defendant violated the Texas Insurance Code. Under the code, the plaintiff is entitled to:

Answer 32

Actual damages, attorneys’ fees and court costs.

Question 33

The Texas Debt Collection Act (TDCA) prohibits a debt collector from using, or attempting to use, threats, coercion, or attempts to coerce against any person. The act enumerates eight types of prohibited conduct. What are these?

Answer 33

Debt collectors may not do or threaten to do the following: (i) Use violence to a person or their property; (ii) accuse falsely a person of fraud or any other crime; and (iii) once the consumer notified the debt collector that the debt is in dispute, represent to anyone other than the consumer that the consumer is willfully refusing to pay a nondisputed debt. Debt collectors also may not threaten to do the following: (i) sell or assign the consumer’s obligation to another party, which would result in the consumer losing a defense to the debt and subject him to illegal collection practices; (ii) have the consumer arrested without due process; (iii) file a charge, complaint or criminal action against a consumer when the consumer has not violated a criminal statute; (iv) seize, repossess, or sell the consumer’s property without due process; and (v) take any illegal action.

The following conduct is expressly permitted by the TDCA: (i) Informing the consumer that she may be arrested after proper court proceedings if she has violated a criminal statute; (ii) threatening to institute civil lawsuits or other judicial proceedings to collect the debt; and (iii) exercising or threatening to exercise a statutory or contractual right of seizure, repossession, or sale that does not require court proceedings.

Question 34

T/F: The DTPA does not apply to a malpractice claim based on a professional’s failure to follow a reasonable standard of performance.

Answer 34

True. But claims based on a failure to disclose, misrepresentation of fact, unconscionability, or breach of an express warranty, are subject to the DTPA regardless of whether the defendant is a professional.

Question 35

Under the Texas Deceptive Trade Practices and Consumer Protection Act (“DTPA”), a home buyer may sue which of the following parties in connection with the sale of the house?

Answer 35

The seller, the seller’s real estate agent, and the buyer’s real estate agent.

Question 36

If a seller knew about a roofing problem and deliberately withheld the information from the buyer in order to effectuate the transaction, that behavior would constitute a DTPA violation. How?

Answer 36

The failure to disclose prohibition on the laundry list has 4 required elements: (i) D knew the information regarding the goods or services; (ii) the information was not disclosed; (iii) there was an intent to induce the consumer into the transaction; and (iv) had the information been disclosed, the consumer would not have entered into the transaction under the same terms.

Question 37

Disclaimers, modifications, or limitations of warranties are all valid and enforceable in a claim under the Texas Deceptive Trade Practices and Consumer Protection Act (“DTPA”) if:

Answer 37

they are valid and enforceable outside of DTPA.

Question 38

What is an “as is” clause?

Answer 38

An “as is” clause states that the consumer purchases the goods or services in its current condition and does not rely on any representations from the seller.

By knowingly and voluntarily signing a contract containing an “as is” provision, the consumer may have negated the “producing cause” element of his claim and may not recover any damages. However, “as is” provisions may negate producing cause only when the transaction was bargained for at arm’s length and freely, knowingly, and intelligently negotiated. An “as is” clause may not negate producing cause in a one-sided transaction in which a knowledgeable businessperson sells goods or services to an unsophisticated consumer.