UCC provides for two kinds of implied warranties
(1) Implied Warranty of Merchantability: Warranty of fitness for the ordinary purpose for which the goods are used
(2) Implied Warranty of Fitness for a Particular Purpose: Narrower, more specific and more precise implied warranty.
Conditions for Implied Warranty of Fitness
Conditions for Implied Warranty of Fitness
- Seller must have reason to know buyer’s particular purpose.
- Seller must have reason to know that the buyer is relying on the seller’s skill or judgment to furnish appropriate good.
- The buyer must in fact rely upon the seller’s skill or judgment.
Implied Warranty of Merchantability
(UCC § 2-314(2)):
- Must pass without objection in the trade under the contract description;
- In the case of fungible goods, are of fair and average quality;
- Are fit for ordinary purposes for which goods are used
- Are of even kind, quality, and quantity within each unit and among all units involved,
- Adequately contained, packaged, and labeled as agreement
- Conform to the promises or affirmations of fact made on the container or label if any.
Express Warranties
Express Warranties § 2-313
(1) Affirmation of fact / promise (written or oral)
(2) Relates to the goods
(3) Becomes part of the basis of the bargain
NOTE: Sample or model which is part of the bargain is an express warranty that whole of the goods will be like the sample/model.
Example: “No fires” is a warranty because it can be verified, is specific, and about not about the consequences. It’s about the present capacity of the good. The plaintiff relied on this statement and made it the basis of the bargain. This means he must think it’s true
Express Warranties
Affirmation of Fact Analysis
- *1. Can we verify?
2. Is it vague/specific?
3. Is it a statement of value/opinion? (typically not warranty…simply salesmanship)** Exception: Expression of future capacity or performance (in terms of output) can constitute a promise/statement of fact. - *4. Is it written/oral?** written is more likely warranty
- *5. Is it definite? **focus on the manner in which the representation was made
Royal Business Machines, Inc. v. Lorraine Corp.
(copiers)
P and D were in a series of transactions for the sale of D’s copying machines. Alleged breach of warranties and fraud; goods of high quality, few repairs would be necessary, replacement parts would be easily obtainable, maintenance costs were low, machines were marketable, P would reap substantial profits, goods were safe, and service calls were only recalled every 7K to 9K copies.
HOLD: Determining whether a particular promise contained an express warranty is whether the assertion constitutes fact or merely an expression of the seller’s opinion.
Statements regarding quality of goods are mere expressions of the seller’s opinion, and do not constitute express warranties.
“Copiers are of high quality, you will gain significant profits, or necessity of repair would be infrequent” = expressions of D’s opinion regarding the goods.
D’s assurances that machines were safe, tested, and marketable all constitute statements of fact relating to the goods and giving rise to the finding that express warranty was made. Assurances relating to cost of maintenance and frequency of repairs constitute express warranties as to representations.
Rule: No reliance if the party “relying” on the statement of fact knows _______.
Rule: No reliance if the party “relying” on the statement of fact knows that the assurance is not true.
As time goes on, party has less and less right to rely on a warranty as a part of the bargain
Royal Business Machines: They had been receiving copiers for quite some time, so they could no longer rely on the warranties of the company if the operation of the copiers had proven something else to them.
Warranties typically exist in
the context of the sale of ______
goods, so the UCC applies
However, there are time when the common law governs warranties. If you pay for the express warranty, then it doesn’t matter if you doubted the facts or did not rely on the statement of fact.
*CBS: *Since they paid for the warranty, it was consideration in their agreement. Not a UCC case so don’t have to prove Reliance
§2-314 Implied warranty: Merchantability;
Usage of Trade
(1) Except exclusions in §2-316, implied warrant of merchantability applies to merchants
(2) Goods must
- Pass without objection in trade under contract description
- In case of fungibles, are of fair average quality and
- Are fit for ordinary purposes for which good is used and
- Run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved and
- Are adequately contained, packaged, and labeled and
- Conform to the promises of fact made on container or label if any.
Schneider v. Miller
(guy wants to recind K for rusty car)
P was an attorney who entered into contract to buy a Chevy Impala from D’s car lot. P talked about nosies in car; D said brakes needed repair. Rust in car. P took car to mechanic for repairs, car was unfit for driving, sought to rescind contract. Contract had “as is” clause.
HOLD: Where a buyer in a contract for the sale of goods signs a document expressly disclaiming any implied warranties and providing that the buyer accept delivery of the item “as is,” or where the buyer has had the opportunity to inspect the goods, no implied warranties exist and all risk is transferred to the buyer.
“As is” clauses is the seller shifting the blame to the buyer.
Disclaimers § 2-316
You cannot disclaim an _______ warranty.
You can disclaim an ______ warranty.
Disclaimers § 2-316
- You cannot disclaim an express warranty.
- You can disclaim an implied warranty.
- Language such as: “sold as is,” etc.
- Buyer has had opportunity to examine goods and accept/reject them or refused to examine goods.
UCC 2-316
A seller may disclaim all implied warranties with expressions
- UCC 2-316: A seller may disclaim all implied warranties with expressions like “as is,” “with all faults” or other language which in common understanding calls the buyer’s attention to the exclusion of warranties and make plain there is no implied.
- If the buyer before entering the contract had examined the goods as fully as he desired or refused to examine the goods, there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed.
- An integration clause (that says the entire agreement is contained within the 4 corners of the document) is effective to waive any implied warranty.
Just because you disclaim any warranty under the UCC, it doesn’t mean that
Just because you disclaim any warranty under the UCC, it doesn’t mean that you have disclaimed any causes of action under the Consumer Protection Act
Disclaimer Requirements
To disclaim WOM you must say ______.
To disclaim WOF _________.
- To disclaim WOM you must say the word merchantability and it must be conspicuous
- To disclaim WOF it must be in writing and conspicuous
- If the buyer examined the goods, there are no warranties for defects which he should have seen
Note: the disclaimer only affects claims brought under the UCC; claims under other
Step-Saver Data Syst. v. Wyse Technology
computers purchase incompatible with system
F: P purchased D’s computer after conducting a bench test. Computers found to be incompatible with software used by P.
I: Was there an implied warranty of merchantability or fitness?
H: **No, seller did not know buyer’s particular purpose, buyer didn’t rely on seller’s expected knowledge of buyer’s purpose, buyer performed their own bench test. Product exceeded ordinary standards of the trade usage of product. **
Schneider v. Miller
rusty car bought from salesman
F: P bought car under a clause of “As is” from D.
I: Can P revoke a contract under an implied warranty of merchantability over an “as is” clause?
H: no, an integration clause which provides that the entire agreement between the parties is contained within the four corners of the contract is effective to waive any implied warranty.
R: terms like “as is” in ordinary commercial usage are understood to mean that the buyer takes the entire risk as to the quality of the goods involved. Implied warranties are default rules that can be contracted around.
Morris v. Mack’s Used Cars
deception on part of seller
R: rules of waiver of implied/expressed warranties do not apply to deceptive acts or practices on part of seller in failing to disclose to the buyer certain facts.
