Unit 4 Consumer and Housing Law

Contracts Vocab: Contract: Breach: Offer: Acceptance: Consideration: Do: problem 23.1 p 277

Terms Consumer: a person who buys goods and services for personal or household purposes from a seller. Contract: A legally enforceable agreement between two or more people to exchange something of value Caveat Emptor: “Let the buyer beware” (historical view)

Minors and Contracts Cosign Ratify

Written and Oral Contracts Contracts that MUST be in writing: for a sale priced at $ or more agreements to pay another person’s debt agreements for services that will not be performed within one year from the date of the agreement

Illegal Contracts Kinds of agreements not accepted in court:  Agreement for an illegal act  Unconscionable agreement  Fraud Do: p 280 Prob 23.4

Warranties Warranty  Breach Types of warranties  Express warranty  If a warranty is written, you are protected by the Magnuson-Moss Warranty Act  Full or Limited warranty Do: Problem 24.1, p 283

Warranties (cont) Implied Warranty  Applies to products sold by dealers  Three types of implied warranty:  Warranty of merchantability  Warranty of fitness for a particular purpose  Warranty of title  Strict Liability Do: problem 24.2, p 285

Warranties (cont) Disclaimers  “as is”  “with all faults” Magnuson-Moss Warranty Act  Prohibits sellers offering a written warranty from modifying the warranty

Credit and Other Financial Services (Ch 25) What is credit?  Read: pp (basic information about banking) Legal ramifications of credit  Vocabulary:  Creditors  Debtors  Finance charge  Interest

Credit, continued Two credit types:  Unsecured credit  Secured credit  Collateral APR (Annual percentage rate) Credit card example credit card payment calculator

Lost and stolen credit cards You are responsible to report lost or stolen cards Keep this information on all your cards: 1. Name of the company issuing the card 2. The card number(s) 3. The number to call if the card is lost or stolen  Federal law protects consumers $50.00 maximum charge

Making credit decisions Use credit to make major purchases that have been planned for your budget Use credit to cover an emergency Use credit to access a better rate than what you would otherwise get In 2001, most families had about $1, debt on credit cards In 2008, that number has exploded—about $7, debt on credit cards

Cost of Credit Usury Variable Interest Rates Other offers  Credit property insturance  Credit Life/disability insurance  Service charge  Penalty charge Loan sharking Balloon payments Acceleration clause  Must pay ALL if late or missed payment Bill consolidation  Consider carefully—do you want to finance your consumer purchases over 30 years? Do: Problem 25.6, page 303

Default and Collection Practices When a consumer who has used credit cannot make their payments, the consumer is in DEFAULT Actions:  Budget  Change lifestyle  Contract creditors and have the term of the debt extended  Ask creditor for a reduction in payments  Contact a credit counseling service agency  Ask friends/relatives for help

Default and collection practices Bankruptcy  Procedure through which a person places assets under the control of a federal court in order to be relieved of debt  Chapter 13  Chapter 7  Long term consequences

Default and collection practices Creditor collection practices  Calls and letters  Repossession  Court Action  Default judgment  Garnishment  Attachment Do: Problem 26.1, p 310

Deceptive Sales Practices Door-to-Door and Telephone Sales Phony Contests and Referral Sales Advertising and the Consumer  Corrective advertising  Puffing: ads based on the seller’s opinion, personal taste, or obvious exaggeration—not illegal Bait and Switch Mail Order Sales Repairs and Estimates

Influences on Consumers Advertising  Target market  Print  TV  Radio Wants versus needs

How Laws Protect the Consumer Federal Laws  Prohibit unfair or misleading trade practices  Set standards for the quality, safety, and reliability of many goods and services  Establish agencies to enforce consumer laws  To improve the operation of the marketplace  Protect consumers against discrimination on the basis of disability.

How Laws Protect the Consumer State laws  Allow consumers to bring complaints into state court and before state agencies  State Attorney General Office Class Action Lawsuit Remedies  Cease and Desist Order  Consent Decrees  Restitution

How you can protect your rights as a consumer What to do before buying What to do after buying Consumer Protection Agencies and Organizations

Taking Your Case to Court Criminal Court  Fraud Civil Court  Damages  Rescission and Restitution  Specific Performance Do: Problem 27-9, p 340 Small Claims Court  Subpoena

Small Claims Court Simulation Groups:  5 students  1 judge  Plaintiff + 1 witness  Defendant + 1 witness Case facts: p 342 Debrief

Cars & the Consumer Do: car search Discuss: Math and cost of credit

Housing and the Consumer Vocab: Mortgage Term Renting Renter = Tenant Owner = Landlord Lease Month-to-month lease Tenancy at will Tenancy for years

Housing, Cont. Rent control Upkeep and repairs  Warranty of habitability Use of the Property  Normal wear-and-tear  Waste (damages that are beyond the norm) Security Deposit DO: Problem 29.7, p 361

Housing, Cont. Landlords are NOT responsible for injuries in the building  AKA “Waiver of tort liability”  Waive: to give up Landlord access:  Right of entry or access  Most leases have this clause

Housing, Cont. Sublease Clauses  Tenants may or may NOT have the right to rent the apartment to someone else  Release: being allowed to “get out of” the terms of a lease. Landlords can consent, or not  Continuing to pay rent may be an outcome, even if the tenant no longer lives there! Quiet Enjoyment  A tenant’s right—cannot be bothered NOR bother anyone else!