Warranties and Product Warranties and Product LiabilityLiability

Sales and Lease WarrantiesSales and Lease Warranties

Express warrantyExpress warranty Implied warranty of Implied warranty of

merchantabilitymerchantability Implied warranty of fitness for a Implied warranty of fitness for a

particular purposeparticular purpose Warranty of TitleWarranty of Title

Express WarrantiesExpress Warranties

Oral or in writing Oral or in writing don’t have to use the words “warrant” don’t have to use the words “warrant”

or “guarantee”or “guarantee” any affirmation or promiseany affirmation or promise any descriptionany description any sample or modelany sample or model

What do you have with What do you have with you right now with a you right now with a

warranty?warranty?

Express Warranties: Basis of The Express Warranties: Basis of The BargainBargain

Buyer must rely on warranty Buyer must rely on warranty when he when he enters into contractenters into contract

Statements of Opinion and ValueStatements of Opinion and Value usually just “puffing” - not an express usually just “puffing” - not an express

warrantywarranty not puffing if given as opinion by an not puffing if given as opinion by an

“expert”“expert”

Implied WarrantiesImplied Warranties

MerchantabilityMerchantability

Fitness for a Particular PurposeFitness for a Particular Purpose

Arising out of Course of Dealing or Arising out of Course of Dealing or Trade UsageTrade Usage

Implied Warranty of MerchantabilityImplied Warranty of Merchantability

Made only by merchantsMade only by merchants Goods are of average, fair, or Goods are of average, fair, or

medium-grademedium-grade Adequately packaged and labeledAdequately packaged and labeled Conform to promises on labelConform to promises on label Have a consistent quality and Have a consistent quality and

quantity among the commercial unitsquantity among the commercial units

Implied Warranty of Fitness for a Implied Warranty of Fitness for a Particular PurposeParticular Purpose

Made by any seller who Made by any seller who knows the particular purpose for which knows the particular purpose for which

the goods are being bought andthe goods are being bought and knows the buyer is relying on seller’s knows the buyer is relying on seller’s

skill and judgment to select suitable skill and judgment to select suitable goodsgoods

Implied Warranty Arising from Implied Warranty Arising from Course of Dealing or Trade UsageCourse of Dealing or Trade Usage

Both parties to a contract have Both parties to a contract have knowledge of a well-recognized knowledge of a well-recognized trade custom = courts infer that trade custom = courts infer that both meant this custom to apply to both meant this custom to apply to their transactiontheir transaction

Warranty of TitleWarranty of Title

Good TitleGood Title

No LiensNo Liens

No InfringementsNo Infringements

How Is Warranty of Title How Is Warranty of Title Disclaimed?Disclaimed?

By Specific Language By Specific Language

Warranty doesn’t occur at sheriff’s Warranty doesn’t occur at sheriff’s salessales

Overlapping WarrantiesOverlapping Warranties

Two or more warranties made in a Two or more warranties made in a single transactionsingle transaction construed as cumulative if consistentconstrued as cumulative if consistent if inconsistent?if inconsistent?

First: implied warrant of fitness for a First: implied warrant of fitness for a particular purposeparticular purpose

Then: expressThen: express samples over general descriptionssamples over general descriptions technical over general descriptionstechnical over general descriptions

Warranties and Third PartiesWarranties and Third Parties

Common law: Only buyer because Common law: Only buyer because she is the one in the contract w/ she is the one in the contract w/ the seller = buyer is in privity of the seller = buyer is in privity of contract w/ the sellercontract w/ the seller

UCC: provides 3 alternatives from UCC: provides 3 alternatives from which the states may choosewhich the states may choose UCC 2-318UCC 2-318

Language of the UCCLanguage of the UCC

UCC § 2-318. Third Party UCC § 2-318. Third Party Beneficiaries of Warranties Express Beneficiaries of Warranties Express or Implied.or Implied. [Note: If this Act is introduced in the [Note: If this Act is introduced in the

Congress of the United States this Congress of the United States this section should be omitted. (States to section should be omitted. (States to select one alternative.)] select one alternative.)]

Language of the UCCLanguage of the UCCAlternative A Alternative A A seller's warranty A seller's warranty

whether express or whether express or implied extends to implied extends to any natural person any natural person who is in the family who is in the family or household of his or household of his buyer or who is a buyer or who is a guest in his home if guest in his home if it is reasonable to it is reasonable to expect that such expect that such person may use, person may use, consume or be consume or be affected by the affected by the goods and who is goods and who is injured in person by injured in person by breach of the breach of the warranty. A seller warranty. A seller may not exclude or may not exclude or limit the operation of limit the operation of this section. this section.

Alternative B Alternative B A seller's warranty A seller's warranty

whether express or whether express or implied extends to implied extends to any natural person any natural person who may reasonably who may reasonably be expected to use, be expected to use, consume or be consume or be affected by the affected by the goods and who is goods and who is injured in person by injured in person by breach of the breach of the warranty. A seller warranty. A seller may not exclude or may not exclude or limit the operation of limit the operation of this section.this section.

Alternative C Alternative C A seller's warranty A seller's warranty

whether express or whether express or implied extends to implied extends to any person who may any person who may reasonably be reasonably be expected to use, expected to use, consume or be consume or be affected by the affected by the goods and who is goods and who is injured by breach of injured by breach of the warranty. A the warranty. A seller may not seller may not exclude or limit the exclude or limit the operation of this operation of this section with respect section with respect to injury to the to injury to the person of an person of an individual to whom individual to whom the warranty the warranty extends. extends.

Language of the UCCLanguage of the UCC

N.J.S.A 12A:2-318. N.J.S.A 12A:2-318.  A seller's warranty whether A seller's warranty whether

express or implied extends express or implied extends to any natural person  who to any natural person  who is in the family or is in the family or household of his buyer or household of his buyer or who is a guest in his home who is a guest in his home if  it is reasonable to if  it is reasonable to expect that such person expect that such person may use, consume or be may use, consume or be affected by  the goods and affected by  the goods and who is injured in person by who is injured in person by breach of the warranty.  A breach of the warranty.  A seller may  not exclude or seller may  not exclude or limit the operation of this limit the operation of this section.section.

13 Pa. Cons. Stat. § 231813 Pa. Cons. Stat. § 2318 The warranty of a seller The warranty of a seller

whether express or implied whether express or implied extends to any natural extends to any natural person who is in the family person who is in the family or household of his buyer or household of his buyer or who is a guest in his or who is a guest in his home if it is reasonable to home if it is reasonable to expect that such person expect that such person may use, consume or be may use, consume or be affected by the goods and affected by the goods and who is injured in person by who is injured in person by breach of the warranty. A breach of the warranty. A seller may not exclude or seller may not exclude or limit the operation of this limit the operation of this section. section.

What is the difference?What is the difference?

Disclaimer of WarrantiesDisclaimer of Warranties

Express:Express: don’t make anydon’t make any a clear written disclaimer in contract a clear written disclaimer in contract

will over- ride an express oral warranty will over- ride an express oral warranty because of the parol evidence rule because of the parol evidence rule

Disclaimer of WarrantiesDisclaimer of Warranties

ImpliedImplied merchantability: say exact work in disclaimer merchantability: say exact work in disclaimer

clearly, or say “as is,” “with all faults”clearly, or say “as is,” “with all faults” fitness for a particular purpose: must be in fitness for a particular purpose: must be in

writing, don’t have to say exact words writing, don’t have to say exact words “f.p.p.” in disclaimer“f.p.p.” in disclaimer

seller demands buyer inspect or examine the seller demands buyer inspect or examine the goods goods

subject to skill of buyersubject to skill of buyer

UnconscionabilityUnconscionability

Video

ProductProduct Liability Based on Liability Based on NegligenceNegligence

If a manufacturer fails to exercise If a manufacturer fails to exercise due care to make a product safe, a due care to make a product safe, a person who is injured by the product person who is injured by the product may sue the manufacturer for may sue the manufacturer for negligencenegligence

Types of NegligenceTypes of Negligence

Manufacturing Defects - when the Manufacturing Defects - when the product, for some reason departs product, for some reason departs from its intended designfrom its intended design

Design Defects - when the present Design Defects - when the present design is defective and a reasonable design is defective and a reasonable alternative design exists which alternative design exists which would remedy or lessen the defect.would remedy or lessen the defect.

Warning Defects - inadequate Warning Defects - inadequate instructions for use or prohibited useinstructions for use or prohibited use

Strict Product LiabilityStrict Product Liability

When an article is placed into the When an article is placed into the stream of commerce which causes stream of commerce which causes injury because it is in a defective injury because it is in a defective condition unreasonably dangerous.condition unreasonably dangerous.

Elements of Strict LiabilityElements of Strict Liability

Product was soldProduct was sold Product was defectiveProduct was defective Product placed into stream of commerce by Product placed into stream of commerce by

someone in the business of selling that someone in the business of selling that productproduct

Product bothProduct both Cause in factCause in fact Proximate causeProximate cause

Defect existed when it left Ds possessionDefect existed when it left Ds possession Product was manufactured or sold by DProduct was manufactured or sold by D