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account become available for release to the Dealership. Thus, in
both scenarios the Dealership recovers all the reserve deposits,
yet only in the first were any amounts applied to payment for
repair services. Finally, assume that in the first week of
coverage due to expire after 5 years or 60,000 miles, one
contract holder files a claim for covered repairs that consumes
the entire amount of the reserves attributable to his contract.
Then, at the end of the first year when he has driven 30,000
miles, he cancels. The contract holder is entitled to a refund
of one-half of the purchase price of the VSC, even though the
entire amount of the reserves attributable to his contract has
already been applied to his claim for repair services. As these
examples demonstrate, the Dealership's right to recover amounts
deposited in the reserve is not contingent upon the contract
holders' actual future claims for repair services. Rather, it
is contingent upon time elapsed and mileage driven while the
contract remains in force, variables that are entirely
independent of the amounts applied to repair services.
The absence of any relationship between the amounts of the
reserves actually applied to the provision of repairs under the
VSC and the determination of how the reserves are earned for
refund purposes highlights the central error in petitioners'
theory. This absence indicates that the contract price is in
fact paid for a service that is measured in terms of time and
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