[Code of Federal Regulations]
[Title 16, Volume 1]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 16CFR700.1]

[Page 526-527]
 
                     TITLE 16--COMMERCIAL PRACTICES
 
                   CHAPTER I--FEDERAL TRADE COMMISSION
 
PART 700--INTERPRETATIONS OF MAGNUSON-MOSS WARRANTY ACT--Table of Contents
 
Sec. 700.1  Products covered.

    (a) The Act applies to written warranties on tangible personal 
property which is normally used for personal, family, or household 
purposes. This definition includes property which is intended to be 
attached to or installed in any real property without regard to whether 
it is so attached or installed. This means that a product is a 
``consumer product'' if the use of that type of product is not uncommon. 
The percentage of sales or the use to which a product is put by any 
individual buyer is not determinative. For example, products such as 
automobiles and typewriters which are used for both personal and 
commercial purposes come within the definition of consumer product. 
Where it is unclear whether a particular product is covered under the 
definition of consumer product, any ambiguity will be resolved in favor 
of coverage.
    (b) Agricultural products such as farm machinery, structures and 
implements used in the business or occupation of farming are not covered 
by the Act where their personal, family, or household use is uncommon. 
However, those agricultural products normally used for personal or 
household gardening (for example, to produce goods for personal 
consumption, and not for resale) are consumer products under the Act.
    (c) The definition of ``Consumer product'' limits the applicability 
of the Act to personal property, ``including any such property intended 
to be attached to or installed in any real property without regard to 
whether it is so attached or installed.'' This provision brings under 
the Act separate items of equipment attached to real property, such as 
air conditioners, furnaces, and water heaters.
    (d) The coverage of separate items of equipment attached to real 
property includes, but is not limited to, appliances and other thermal, 
mechanical, and electrical equipment. (It does not extend to the wiring, 
plumbing, ducts, and other items which are integral component parts of 
the structure.) State law would classify many such products as fixtures 
to, and therefore a part of, realty. The statutory definition is 
designed to bring such products under the Act regardless of whether they 
may be considered fixtures under state law.
    (e) The coverage of building materials which are not separate items 
of equipment is based on the nature of the purchase transaction. An 
analysis of the transaction will determine whether the goods are real or 
personal property. The numerous products which go into the construction 
of a consumer dwelling are all consumer products when sold ``over the 
counter,'' as by hardware and building supply retailers. This is also 
true where a consumer contracts for the purchase of such materials in 
connection with the improvement, repair, or modification of a home (for 
example, paneling, dropped ceilings, siding, roofing, storm windows, 
remodeling). However, where such

[[Page 527]]

products are at the time of sale integrated into the structure of a 
dwelling they are not consumer products as they cannot be practically 
distinguished from realty. Thus, for example, the beams, wallboard, 
wiring, plumbing, windows, roofing, and other structural components of a 
dwelling are not consumer products when they are sold as part of real 
estate covered by a written warranty.
    (f) In the case where a consumer contracts with a builder to 
construct a home, a substantial addition to a home, or other realty 
(such as a garage or an in-ground swimming pool) the building materials 
to be used are not consumer products. Although the materials are 
separately identifiable at the time the contract is made, it is the 
intention of the parties to contract for the construction of realty 
which will integrate the component materials. Of course, as noted above, 
any separate items of equipment to be attached to such realty are 
consumer products under the Act.
    (g) Certain provisions of the Act apply only to products actually 
costing the consumer more than a specified amount. Section 103 applies 
to consumer products actually costing the consumer more than $10, 
excluding tax. The $10 minimum will be interpreted to include multiple-
packaged items which may individually sell for less than $10, but which 
have been packaged in a manner that does not permit breaking the package 
to purchase an item or items at a price less than $10. Thus, a written 
warranty on a dozen items packaged and priced for sale at $12 must be 
designated, even though identical items may be offered in smaller 
quantities at under $10. This interpretation applies in the same manner 
to the minimum dollar limits in section 102 and rules promulgated under 
that section.
    (h) Warranties on replacement parts and components used to repair 
consumer products are covered; warranties on services are not covered. 
Therefore, warranties which apply solely to a repairer's workmanship in 
performing repairs are not subject to the Act. Where a written agreement 
warrants both the parts provided to effect a repair and the workmanship 
in making that repair, the warranty must comply with the Act and the 
rules thereunder.
    (i) The Act covers written warranties on consumer products 
``distributed in commerce'' as that term is defined in section 101(3). 
Thus, by its terms the Act arguably applies to products exported to 
foreign jurisdictions. However, the public interest would not be served 
by the use of Commission resources to enforce the Act with respect to 
such products. Moreover, the legislative intent to apply the 
requirements of the Act to such products is not sufficiently clear to 
justify such an extraordinary result. The Commission does not 
contemplate the enforcement of the Act with respect to consumer products 
exported to foreign jurisdictions. Products exported for sale at 
military post exchanges remain subject to the same enforcement standards 
as products sold within the United States, its territories and 
possessions.