Warranties1. Warranty of title 2. Express warranties3. Implied warranties (merchants only)
• Implied warranty of merchantability• Implied warranty of fitness for a
particular purpose
Warranty of Title
Automatic Warranty of Title. UCC – Seller automatically warrants that:
– Good title. The title conveyed is good– Right to convey the title – Goods are free of security interest or other liens– Warranty of title can be disclaimed.
Special Rule for Merchant Sellers – Also warrants that the good is free from any rightful claims of
patent, trademark or similar infringement
Focus Case 10.1, p. 337: Purchase of Stolen Corvette• $8,500 cash for corvette in 1998• Buyer discovered VIN had been altered because car stolen in 1992• Police seized car• Buyer brought action against seller under warranty law• Seller did not know that car had been stolen• Seller breached warranty of title1990 Corvette
Express Warranties
Requirements:– Affirmation of Fact. Seller makes an affirmation of fact or
promise regarding the goods– Description of Goods or Sample. Seller provides a
description of the goods or furnishes a sample– Part of Basis of the Bargain. The statement of promise
must be part of the “basis of the bargain” Puffery
Express Warranty on Carpet – End-of-Chapter Q: 8•Carpet alleged to have caused health issues – serve toxic injuries•pet “was a higher quality than what she brought in the store and that she was getting a very good grade of material.” •Brought claim under breach of express warranty.
Extra Presentation Case: Thomas (P) v. Micro Center (D) (Ohio App 2007), p. 382. Proper Exclusion or Limitation of Implied Warranty?
Douglas Thomas purchased the computer Butler Financial Solutions, LLC
Extended Warranty seller
BUYER COVERED BY THREE WARRANTIES1.Micro Center Receipt. “…COMPUTER…MAY BE RETURNED OR EXCHANGED WITHIN 7 DAYS OF PURCHASE”2.Toshiba Warranty. Provided a one year warranty. The warranty did properly exclude implied warranties (does that apply to Micro Center?)3.TechSaver Protections Plan. 3 Year protection from Butler Financial.
Implied Warranty Sample Cases
Kolarik v. Cory Int’l Corp, Case Illustration 10.2, p. 358
• Plaintiff fractured a tooth while biting down on an olive from a far of pimento-stuffed green olives.•Plaintiff argued label said “minced pimento stuffed” created an express warranty that the olives had been pitted.•Industry standards. The US Dept of Agriculture allows 1.3 pit parts per 100 olives.
Implied Warranty of Merchantability
Applies to Merchants Only. Must be merchant that sells that sort of goods
Goods are merchantable if:– Pass without Objection. They pass without objection in the trade under
the contract description,– Fair and Average Quality. In the case of fungible goods, be of fair and
average quality,– Fit for Ordinary Purpose. Be fit for the ordinary purpose for which such
goods are sold,– Even Kind, Quality and Quantity. Be of even kind, quality, and quantity
within each unit and among all units– Adequately Packaged and Labeled. Be adequately packaged and
labeled, and – Conform to Promises on Container. Conform to any promises or
affirmations of fact made on the container or label
For Sale by Owner
Joe’s Bike Shop
6
Implied Warranty of Fitness for a Particular Purpose
Seller Knows Purpose. The seller has reason to know of the particular purpose for which the buyer intends to use the goods
Seller Knows Buyer Relying on Seller’s Judgment. The seller has reason to know that the buyer is relying upon the seller’s skill or judgment ot select or furnish suitable goods, and
Buyer Actually Relies on Seller’s Judgment. The buyer actually relies upon the seller’s skill or judgment.
Mower•Purchase of a mower to mow driving range by pulling mower with a tractor•Told seller he needed mower to be pulled by 20 hp diesel engine •Seller did not sell tractors•Seller recommended the LasTec 521•It cut lawn poorly, because tractor was underpowered for the mowerLasTec 521
Warranty Disclaimers andPrivity of Contract For Warranty
Warranty Disclaimers– Disclaimers must be unambiguous (any ambiguity resolved against seller)– Tough to disclaim express warranties – never make them in the first place– “as is”
Privity of Contract Not Required– Any member of household and any houseguest are also covered under the
warranty “if it is reasonable to expect that such a person may use, consume or be affected by the goods.”
Privity of Contract – Case Illustration 10.3, p. 360•Husband buys a ’55 Plymouth as a mother’s day gift for his wife•Car came with Express Warranty•Car is defective – car steering faulty•Steering broke and car turned 90 degrees into a sign and brick wall•Wife injured – negligence claim dismissed •Car only has 468 miles on it•Warranty claim survives – warranty of merchantability
As Is
Fake Visor Purchased. Star Trek fan claimed humiliation when he paid more than $24,000 for fake props at a Christie’s auction.
Sued for $7,000,000 Fan asked Data (actor Brent Spiner) to
sign the visor and the actor told him it was a fake.
Sold As Is
Remedies and Defenses
Lost value Consequential damages
– Personal Injury. UCC does not permit limitation of consequential damages when the plaintiff has suffered a personal injury
Incidental damages
Baker v. Burlington Coat Factory, Case Illustration 10.4, p. 362 • Baker purchased fake fur coat from Burlington for $127•Sign in store, receipt on front and back said “No Cash Refunds” Burlington allowed exchanges or in-store credit•Fur began shedding profusely•Baker wanted money back – Burlington would only give credit•Implied Warranty of Merchantability cannot be overridden by store policy
No Cash RefundsExchanges and In-Store Credit Only
Magnuson-Moss Federal Warranty ActCovers Written Warranties
Objectives of law– Ensure that consumers could get complete information
about warranty terms and conditions– Ensure that consumers could compare warranty
coverage prior to purchase– Promote competition on the basis of warranty
coverage and – Strengthen incentives for companies to perform their
warranty obligations and resolve complaints quickly. Full or Limited Warranty
– No warranty required – Full Warranty. Entitles consumer to free repair or
after a reasonable number of failed attempts to fix the product entitles the person to choose of a full refund or replacement.
Other Requirements– Cannot disclaim implied warranties– Warranty provided in a single easy-to-read format– Must be available prior to purchase
Must state whether limited or full
Extra Slides
Extra Presentation Case: Dunleavey (P) v. Paris Ceramics USA (D) , (Super Ct. Conn 2005), p. 379
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