Adopted by the Standing Committee on Consumer Law, State Bar of Michigan
April 18, 1995
Elements and Burden of Proof
The Michigan Consumer Protection Act prohibits certain unfair, unconscionable or deceptive practices in trade or commerce. Plaintiff claims that Defendant violated this Act.
To prove a violation of the Consumer Protection Act, Plaintiff has the burden of proving each of the following elements by a preponderance of the evidence:
1. Defendant was engaged in trade or commerce as defined in the Act;
2. Defendant's conduct or representations were prohibited by one or more of the provisions in the Act; and,
3. Plaintiff suffered a loss as a result of the Defendant's violation of the Act.
Your verdict will be for the Plaintiff (on the claim under the Michigan Consumer Protection Act) if you decide that Plaintiff has proved each of these elements.
Comment: The phrase "unfair, unconscionable or deceptive" is intentionally broad and flexible. Judge Learned Hand stated that the standard is broad so the jury can "discover and make explicit those unexpressed standards of fair dealing which the conscience of the community may have progressively developed" in business dealings. FTCv Standard Education Society, 86 F2d 692 (CA 2 1936).
The Michigan Consumer Protection Act, MCLA 445.901 et. seq., is to be liberally construed in light of the remedial purpose to protect the public. Unconscionability, unfairness and deception are broad and evolving standards. Dixv American Bankers Life AssuranceCo,429 Mich 410 (1987). Violations of other state or federal laws can be the basis for a finding of violations of the Consumer Protection Act. Mikosv Chrysler Corporation, 158 Mich App 781 (1987); Smolen v Dahlmann Apartments, 127 Mich App 108 (1983); see also CheshireMortgage Services v Montes, 223 Conn 80, 612 A2d 1130 (1992); In Re Scrimpsher, 17 BR 999 (Bankr ND NY 1982); Burnettv Ala Moana Pawn Shop, 3 F3rd 1261 (1993).
"The Law is not made for experts, but to protect the public... who, in making purchases, do not stop to analyze, but too often are governed by appearances and general impressions." Arronbergv FTC, 132 F2d 165 (1942).
When proving a claim under the Michigan Consumer Protection Act, the individual plaintiff does not have to prove that he or she acted in reliance on defendant's conduct or representations. Aurigemmav Arco Petroleum Products, 784 F Supp 1025 (D Conn 1990); Aprilv Union Mortgage Co., 709 F Supp 809 (ND Ill 1989); State Street Bank & Trustv Mutual Life Insurance Co, 811 F Supp 915 (SDNY 1992); Randelsv BestReal Estate, 612 NE 2d 984 (Ill App 1993); Heller Financialv INA, 573 NE2d 8 (Mass 1991). In a class action, where plaintiffs claim that class members acted in reliance on defendant's conduct or representations, it is sufficient that the class establishes that a reasonable person would have relied on the representations or the conduct of the defendant. Dixv American Bankers Life Assurance, 429 Mich 410, 418 (1987).
A defendant's good faith efforts do not prevent a practice from being a violation of the Consumer Protection Act. The plaintiff does not need to demonstrate that the defendant acted in bad faith. Equitable Life Assurance Societyv Porter-Englehart, 867 F 2d 79 (CA 1 1989); Aprilv Union Mortgage, supra; Aldrich v Scribners, 154 Mich 23 (1908); Doherty, Clifford, Steers & Shenfield v FTC,392 F 2d 961 (CA 6 1968); Montgomery Wardv FTC, 379 F 2d 666 (CA 7 1967).
Definition of Trade or Commerce
(Delete if not at issue)
Defendant was engaged in trade or commerce if, in the conduct of a business, Defendant provided or offered to provide to Plaintiff goods, property or services primarily for personal, family or household purposes.
Comment: MCLA 445.902(d). See Noggles v Battle Creek Wrecking, 153 Mich App 363 (1986); Smolenv Dahlmann Apartments, 127 Mich App 100 (1983).
Violation Sections, Part I
Violations Not Requiring Intent
Plaintiff claims that Defendant's conduct violated the following prohibition(s) in the Michigan Consumer Protection Act: (Choose any applicable)
1. Causing a probability of confusion or misunderstanding as to the [source, sponsorship, approval or certification of goods or services]. MCLA 445.903(1)(a); MSA 19.418.
2. Causing a probability of confusion or of misunderstanding with respect to the authority of a [salesperson, representative, or agent] to negotiate the final terms of a transaction. MCLA 445.903(1)(m); MSA 19.418
3. Using deceptive representations or deceptive designations of geographic origin in connection with [goods or services.] MCLA 445.903(1)(b); MSA 19.418
4. Representing that goods or services have [sponsorship, approval, characteristics, ingredients uses, benefits, or quantities] which they do not have or that a person has [sponsorship, approval, status, affiliation, or connection] which he does not have. MCLA 445.903(1)(c); MSA 19.418
5. Representing that goods are new if they are [deteriorated, altered, reconditioned, used, or secondhand] MCLA 445.903 (1)(d); MSA 19.418
6. Representing that goods or services are of a particular [standard, quality, or grade, or that goods are of a particular style or model,] if they are of another. MCLA 445.903(1)(e); MSA 19.418
7. Representing that a [part, replacement, or repair service] is needed when it is not. MCLA 445.903(1)(j); MSA 19.418
8. Representing that a consumer will receive [goods or services] ["free", "without charge", or words of similar import] without clearly and conspicuously disclosing with equal prominence in immediate conjunction with the use of those words the [conditions, terms, or prerequisites] to the use or retention of the [goods or services] advertised. MCLA 445.903(1)(r); MSA 19.418
9. Making [false or misleading] statements of fact concerning [the reasons for, existence of, or amounts of], price reductions. MCLA 445.903(1)(I); MSA 19.418
10. Representing that a consumer will receive a [rebate, discount, or other benefit] as an inducement for entering into a transaction, if the benefit is contingent on an event to occur subsequent to the consummation of the transaction. MCLA 445.903(1)(w); MSA 19.418
11. [Disclaiming or limiting] the implied warranty of merchantability and fitness for use, unless a disclaimer is clearly and conspicuously disclosed. MCLA 445.903(1)(p); MSA 19.418
12. Failing to reveal a material fact, the omission of which tends to mislead or deceive the consumer, and which fact could not reasonably be known by the consumer. MCLA 445.903(1)(s); MSA 19.418
13. Failing, in a consumer transaction which is [rescinded, canceled, or otherwise terminated] in accordance with the terms of a[n] [agreement, advertisement, representation, or provision of law], to promptly restore to the person or persons entitled thereto any [deposit, down payment, or other payment, or in the case of property traded in but not available, the greater of the agreed value or the fair market value of the property, or to cancel within a specified time or an otherwise reasonable time an acquired security interest.] MCLA 445.903(1)(u); MSA 19.418
14. Representing to a party to whom [goods or services] are supplied that the [goods or services] are being supplied in response to a request made by or on behalf of the party, when they are not. MCLA 445.903(1)(k); MSA 19.418
15. Misrepresenting that because of some defect in a consumer's home the [health, safety, or lives] of the consumer or his family are in danger if the product or services are not purchased, when in fact [the defect does not exist or the product or services would not remove the danger.] MCLA 445.903(1)(1); MSA 19.418
16. Causing a probability of confusion or of misunderstanding as to the [legal rights, obligations, or remedies] of a party to a transaction. MCLA 445.903(1)(n); MSA 19.418
17. Causing a probability of confusion or of misunderstanding as to the [terms or conditions of credit} of credit if credit is extended in a transaction. MCLA 445.903(1)(o); MSA 19.418
18. Entering into a consumer transaction in which the consumer waives or purports to waive a [right, benefit, or immunity] provided by law, unless the waiver is clearly stated and the consumer has specifically consented to it. MCLA 445.903(1)(t); MSA 19.418
19. Gross discrepancies between the oral representation of the seller and the written agreement covering the same transaction or failure of the other party to the transaction to provide the promised benefits. MCLA 445.903(1)(y); MSA 19.418
20. Charging the consumer a price which is grossly in excess of the price at which similar [property or services] are sold. MCLA 445.903(1)(z); MSA 19.418
21. Causing coercion or duress as the result of the time and nature of a sales presentation. MCLA 445.903(1)(aa); MSA 19.418
22. Making a [representation of fact or statement of fact] material to the transaction such that a person reasonably believes the represented or suggested state of affairs to be other than it actually is. MCLA 445.903(1)(bb); MSA 19.418
23. Failing to reveal facts which are material to the transaction in light of representations of fact made in a positive manner. MCLA 445.903(1)(cc); MSA 19.418
Proof of Intent or Knowledge Required
(Give Immediately After Listing Any Part I Violations)
As to (this/these) claimed violation(s), Plaintiff is not required to prove that Defendant acted with the intent, knowledge or reason to know that the conduct involved was deceptive, unfair or unconscionable. This prohibited conduct, if proved, violates the Act even if Defendant acted in good faith.
Comment: Knowledge or intent are not elements necessary to establish a violation of the sections of the Act cited above. The five sections of the Act which require knowledge or intent are listed under Violation Sections, Part II, with an instruction appropriate to alleged violations of these sections.
Violation Sections, Part II
Violations Requiring Intent
[In addition] Plaintiff claims that Defendant's conduct violated the following prohibitions in the Act: (choose any applicable)
1. [Advertising or representing] [goods or services] with intent not to dispose of those [goods or services] as [advertised or represented]. MCLA 445.903(1)(g).
2. Advertising [goods or services] with intent not to supply reasonably expectable public demand, unless the advertisement discloses a limitation of quantity in immediate conjunction with the advertised [goods or services.] MCLA 445.903(1)(h); MSA 19.418
3. Representing or implying] that the subject of a consumer transaction will be provided [promptly, or at a specified time, or within a reasonable time] if the merchant knows or has reason to know it will not be so provided. MCLA 445.903(1)(q); MSA 19.418
4. Taking or arranging for the consumer to sign a[n] [acknowledgment, certificate, or other writing] affirming [acceptance, delivery, compliance with a requirement of law, or other performance] if the merchant knows or has reason to know that the statement is not true. MCLA 445,903(1)(v); MSA 19.418
5. Taking advantage of the consumer's reasonable inability to protect his interests by reason of [disability, illiteracy, or inability to understand the language] of an agreement presented by the other party to the transaction who knows or reasonably should know of the consumer's inability. MCLA 445.903(1)(x); MSA 19.418
Proof of Intent or Knowledge Required
(Give Immediately After Listing Any Part II Violations)
As to [this/these] claimed violation[s] of the Act, Plaintiff has the burden of proving that Defendant acted [intentionally] [with knowledge or reason to know] or with reckless disregard.
Comment: See Comment after instruction on Proof of Intent Not Required. Selection of bracketed phrases will depend on the wording of the section allegedly violated.
Definition of Loss
Plaintiff has the burden of proving a loss. To satisfy this burden, Plaintiff must prove either 1) that Defendant's violation of the Act caused monetary damage to the Plaintiff, or 2) that Defendant's violation of the Act prevented the fulfillment of Plaintiff's legitimate expectations.
Comment: MCLA 445.911(3); Mayhill v A. H. Pond, 129 Mich App 178 (1983).
(A section) (Sections) of the Act which Plaintiff claims (was) (were) violated prohibit(s) (misrepresentation of) (failure to disclose) a material fact.
A material fact is one which is important to the transaction, or one which the Defendant knew or should have known would influence the Plaintiff in entering into the transaction. It need not be the sole or a major reason for the transaction.
Comment: See Papinv Demski, 17 Mich App 151, 155 (1969); 27 Am Jur 2d, Fraud and Deceit, sec. 178, pp. 238-239; Restatement of Contracts 2d, sec 161(2).
This instruction should be used when a violation of MCLA 445.903(1)(s), (bb) or (cc) is alleged.
Bona Fide Error
The Defendant claims that, if there was any violation of the Michigan Consumer Protection Act, it was a bona fide error, which will limit the Defendant's liability. If you find a violation of the Act to have occurred, you will be asked to determine if the violation resulted from a bona fide error.
To establish bona fide error, the Defendant has to prove, by a preponderance of the evidence, both of the following elements of this defense:
1) That the violation occurred because of an unintentional mistake on the part of
2) That Defendant maintains procedures reasonably adapted to avoid this kind of mistake, although they did not in this instance.
If you find that Defendant has proved both of these elements to be true, you must find that the violation involved was a bona fide error. If either of these elements is not proved, the violation is not a bona fide error.
An error in understanding the law, the legal rights of the Plaintiff or the legal obligations of the Defendant, is not a bona fide error. For example, lack of knowledge by the Defendant that conduct or a representation violated the Michigan Consumer Protection Act does not constitute a bona fide error.
Comment: The bona fide error defense, limiting recovery to actual damages, is set forth at MCLA 445.911(6). This instruction should be given if bona fide error is pled. Caselaw under similar provisions of the federal Fair Debt Collection Practices Act, 15 USC 1692k(c), and the Truth-in-Lending Act, 15 USC 1640(c), may be used for guidance on this section of the MCPA.
Although the bona fide error section of the MCPA does not explicitly say that proof that an error was unintentional is required, this element is implicit in the concept of bona fide error. See Temborius v Slatkin, 157 Mich App 587, 603 (1986). Errors in legal judgment do not provide a basis for asserting the bona fide error defense. See, e.g., Smith v Transworld Systems, 953 F2d 1025 (CA 6 1992) (under FDCPA); Pipiles v Credit Bureau of Lockport, 886 F2d 22 (CA 2 1989) (under FDCPA).