Business Law

Chapters 18 & 19

What is a warranty?

A statement about the product’s qualities or performance that the seller assures the buyer is true.

What is an express warranty?

An assurance of quality or promise of performance explicitly made by the seller is an express warranty. An express warranty may be either oral or written.

Full and Limited Warranties

An express warranty that obligates the seller to repair or to replace a defective product without cost to the buyer and within a reasonable time is a full warranty. Any warranty that provides less protection than a full warranty is a limited warranty, and the seller must identify it as such.

What is an implied warranty?

Sellers are free to decide whether to give any express warranties.

However, the law compels all sellers to honor certain implicit, unstated warranties, in order to ensure minimal standards of contractual performance.

Caveat Emptor

Latin for “let the buyer beware.” This warning applies to all buyers. The

buyer may get the “worst of the bargain” because of a failure to define needs, to study values, and to compare available brands and prices before buying.

Persons who fail to observe shortcomings in the quality and value of goods they buy must usually live with their mistakes.

Fortunately, many large stores voluntarily accept returns of merchandise.

CHAPTER 19

What is A Chapter 7?

Also called liquidation or “straight bankruptcy.”

They sale what they can and take what assets they can to pay off debts.

Discharge’s most or all of the debt.WORSE KIND OF BANKRUPTCY

What is A Chapter 11?

Reorganization of Debt.Designed for BusinessesMeant to keep the business going-but

they reorganize and pay off debt.

Chapter 13

Very similar to Chapter 11Individuals and Sole Proprietor’sReorganize debt without selling off their

assets.

Chapter 12

For Farm OwnersLiquidation is Voluntary or involuntary.Reorganize debt to pay off debt.

Truth in Lending Act…

Designed to protect consumers when they become debtors.

Creditors must furnish debtors with certain information… Interest rates, finance charges, length of loan.

Does not apply to-First mortgage loans on homes.

Bank or Creditor Violates this—Can be Fined, Imprisoned or Both!