Facts of the Case: A customer bought his mountain bike two years ago for $1,200 in cash. It is capable of large hills trek. From his 18th birthday bash yesterday, the customer, with his great deal of alcohol consumption, rode down his bike down Cuesta Grande and crashed his bike on a Ford Expedition. Nothing remained from the accident except him and the bent frame of the bike. The customer is claiming a refund.
Issue: Should I acknowledge the customer’s claim for a full refund of $1,200?
Analysis: No. It is because firstly, a refund is a result of breach of contract and its warranties that transpired during the purchase. The product served the purpose because the customer used the bike for two years. The customer shared with me an implied contract with implied warranties. “Implied warranties are promises about the condition of products at the time they are sold, but they do not assure that a product will last for any specific length of time. [The normal durability of a product is, of course, one aspect of a product’s merchantability or its fitness for a particular purpose.] Nor does the law say that everything that can possibly go wrong with a product falls within the scope of implied warranties. For example, implied warranties do not cover problems such as those caused by abuse, misuse, ordinary wear, failure to follow directions, or improper maintenance. Generally, there is no specified duration for implied warranties under state laws. However, the state statutes of limitations for breach of either an express or an implied warranty are generally four years from date of purchase. This means that buyers have four years in which to discover and seek a remedy for problems that were present in the product at the time it was sold. It does not mean that the product must last for four years. It means only that the product must be of normal durability, considering its nature and price.”
(“ A Businessperson’s Guide to Federal Warranty Law”, December 2006, Federal Trade Commission, (http://www.ftc.gov/bcp/conline/pubs/)