Money now, terms later” agreements, or rolling contracts, are commonplace in consumer transactions. Courts frequently allow these agreements to stand. But problems arise when product manufacturers disclaim a warranty that protects consumers, such as the implied warranty of merchantability, without disclosing the disclaimer upfront—effectively rendering the warranty useless. Suppose, for example, a consumer purchases a refrigerator or computer where the implied warranty of merchantability disclaimer is printed on the last page of a thick instruction booklet. The booklet is hidden deep inside the box, buried in a morass of cords and paperwork. The consumer has no way of knowing about the disclaimer until after she purchases and opens the product. Even then, the disclaimer is quite difficult to find. These “hidden disclaimers” appear to conflict with § 2-316 of the Uniform Commercial Code (UCC), which requires that disclaimers be conspicuous. Nevertheless, some courts have upheld hidden disclaimers under a narrow reading of § 2-316.
Part I of this Comment reviews the history, purpose, and operation of the implied warranty of merchantability. Part II explains the conflict between rolling contract theory and UCC § 2-316. Part III identifies problems with hidden disclaimers. In Part IV, I argue that courts should interpret § 2-316’s conspicuousness requirement to render implied warranty of merchantability disclaimers ineffective unless a reasonable consumer would have noticed the disclaimer before making the purchase. This interpretation conforms with § 2-316’s purpose, compelling policy considerations, and common sense.
Out of Sight, Out of Mind: Hidden Disclaimers and UCC § 2-316’s Conspicuousness Requirement,
U. Mich. J. L. Reform Caveat
Available at: http://repository.law.umich.edu/mjlr_caveat/vol49/iss1/1