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DLLR's Division of Occupational and Professional Licensing

 

Basic Facts about the Maryland Service Contracts and Consumer Products Guaranty Act

 

Maryland consumers are protected by the Service Contracts and Consumer Products Guaranty Act, which is found in the Commercial Law Article of the Annotated Code of Maryland. This Act establishes guidelines for contractors and consumers to follow whenever a contract includes a guaranty or service contract agreement as part of the bargain. This flyer only provides basic information regarding the Act; for legal advice regarding your rights or obligations, please consult an attorney.

The Act covers goods or services used for personal, family, or household purposes that cost $10 or more. Services include home improvement, and the repair or installation of electrical, hearing, plumbing, and mechanical services.

Guaranties

The Act covers a guaranty, or warranty, that is made at the time of sale of a consumer product by a guarantor which is part of the basis of the agreement between them. This includes (a) a written affirmation of fact or written promise which relates to the nature of the material or workmanship and affirms or promises that the material or workmanship is defect-free or meets a specified level of performance; or (b) A written undertaking to refund, repair, replace, or take other remedial action with respect to the consumer product if it proves defective in material or workmanship or fails to meet a specified level of performance.

A contractor who offers a guaranty shall disclose to the consumer the following information in writing: (1) the duration of the guaranty period; (2) any reasonable and necessary maintenance required as a condition for the performance of the guaranty; (3) a recital of the guarantor's obligations to the person guaranteed during the guaranty period; (4) The procedure which the person guaranteed should follow to obtain the repair or replacement of the malfunctioning or defective consumer product; and (5) any means established by the guarantor for quick informal settlement of any guaranty dispute.

It is the contractor's duty to fulfill the terms of the guaranty within a reasonable time and for the stated period of time. If no period of time is listed, then for a reasonable period of time. If the contractor fails to repair successfully a malfunctioning or defective product within the guaranty period, then the guaranty period is automatically extended. Likewise the guaranty does not terminate until the consumer product successfully performs its intended function for the remaining period of the guaranty plus a period equal to the time of repair. If the contractor is unable to fulfill the terms of the guaranty within 10 days, the guarantor shall provide on request of the person guaranteed a brief written explanation for the delay.

Service Contracts

The Act also covers a service contract, which is a contract or agreement for a separately stated consideration for a specific duration to perform the repair, replacement, or maintenance of a product, or to indemnify for the repair, replacement, or maintenance, because of an operational or structural failure due to a defect in materials, workmanship, or normal wear and tear.

Each service contract shall be in writing and shall specify: (1) the duration of the service contract measured by time or, if practical, by some measure of usage; (2) any reasonable and necessary maintenance required to be performed by the person guaranteed as a condition for the performance of the service contract; (3) the purchase price and terms of the service contract, including a recital of the provider's obligations under the service contract; (4) the merchandise and services to be provided; (5) the procedures which the person guaranteed should follow to obtain the services under the service contract or to file a claim under the service contract; (6) limitations, exceptions, or exclusions, if any, under the service contract; (7) the terms, restrictions, or conditions governing the cancellation of the service contract before the expiration date of the service contract either by the provider or person guaranteed; and (8) any means established by the provider for quick informal settlement of a service contract dispute. Within a reasonable time after the parties enter into a service contract, the provider shall deliver a copy of the service contract to the person guaranteed.

The homeowner may cancel the service contract within 20 days after receipt of the service contract if mailed; within 20 days after the date of delivery of the service contract if received at the time of sale; or for a period of time not less than 20 days as specified in the service contract. If a service contract is canceled and a claim has not been made under the service contract prior to its cancellation, the service contract is void and the contractor shall refund to the homeowner the full amount paid for the service contract within 45 days.

A contractor shall fulfill the obligations under the service contract according to its terms at or within the period stated in the service contract, or if no period is stated, within a reasonable time; and for the stated duration of the service contract. A service contract is extended automatically when the provider fails to perform the services under the service contract. Likewise, the service contract does not terminate until the services are provided in accordance with the terms of the service contract. If a contractor is unable to fulfill the terms of the service contract within 10 days after the date on which the contractor is required to perform obligations under the service contract, the contractor shall provide on request of the homeowner a brief written explanation of the reasons for the delay.

Remedies

The Home Improvement Commission does not enforce the Service Contracts and Consumer Products Guaranty Act. However, homeowners do have the right to file a civil lawsuit in court and to seek a judgment for the costs and expenses that were reasonably incurred due to the breach of the guaranty or service contract, including attorney's fees. However, the homeowner is not entitled to costs and expenses if the court finds that she or he failed to reasonably settle the dispute with the contractor.