Chap 24 Products Liability Warranties Flashcards
a warranty
obligates the seller to assure that the goods he/she sells will conform to certain qualities, characteristics or conditions
a seller, however, is not required to warrant
the goods and in general, he may by appropriate words, disclaim (exclude) or modify a particular warranty or even all warranties
in bringing a warranty action, the buyer must prove that
1 a warranty existed
2 the warranty has been breached
3 the breach of the warranty caused the loss suffered and
4 notice of the breach of warranty was given to the seller
in a breach of warranty
the buyer may choose to reject or revoke acceptance of the goods
in either case, the buyer may recover a judgement against the seller for damages, including personal injury, damage to property and economic loss
a warranty may arise out of
the mere existence of a sale (warranty of title), our of any affirmation of fact or promise made by the seller to the buyer (an express warranty), or out of the circumstances under which the sale is made (an implied warranty)
warranty of title
a seller implicitly guarantees that good title is conveyed to the buyer
this includes warranting that the property is not subject to a lien or security interest of which the buyer is unaware
warranty against infringement
merchant sellers regularly dealing in goods of the kind warrant to buyers that the goods will be delivered to the buyer free of any infringement of patent or trademark
buyers who furnish to the sellers the specifications for the manufacture of the product likewise agree to hold the seller harmless against any such claim for infringement which results from the sellers compliance with such specifications
which warranties are put there by law
warranty of title and warranty against infringement
express warranties
expressions by the seller regarding the quality or nature of the goods; may include affirmation of facts or promises, descriptions or a sale by a model or sample of the goods, which relate to the goods and are made a part of basis of the bargain
such actions create an express warranty that such goods shall conform to the affirmation, promise, description, sample or model
express warranties may be
oral or in writing
it is not necessary that the seller
have intent to create an express warranty or use formal word such as “warrant” or “guarantee”
sales talk
puffing, a commendation of the goods or rendering a non expert opinion is not normally considered to be factual and will not create an express warranty
expression of value based on fact
such as the price previously paid for the merchandise does create an express warranty
even if a seller does not have knowledge of the falsity of a statement she makes, she may still be liable for breach, however to prove fraud on the part of the seller, the buyer would have to demonstrate both intent and knowledge of falsity (scienter)
basis of bargain
the code does not require that the buyer rely on the expression, it matters only that the warranty was part of the basis of the bargain
is sales talk a breach of warranty?
no
implied warranties
are not created by expressions of the seller like express warranties; rather, the code makes implied warranty implicit in the transaction in order to provide protection to the buyer
an implied warranty arises
out of the circumstances under which the parties enter into their contract and is simply an operation of law
merchantability
the implied warranty of merchantability guarantees that the product is merchantable
merchantable
i.e. among other things it will pass without objection in the trade, is in the case of fungible goods of fair, average quality, are fit for the ordinary purpose for which the goods are used, run within variations permitted by the agreement, adequately contained, packaged and labeled as per the agreement, conform to any promise or affirmation made on the container label, if any
a warranty of merchantability
is only made by a merchant seller and also provides that the serving of food or drink for value to be consumed either on the premises or elsewhere is a sale to which the implied warranty of merchantability applies
fitness for a particular purpose
if a seller (including merchants and non merchants alike) sells a product having reason to know the buyers purpose in purchasing the goods and that the buyer is relying on the sellers skill and judgement in furnishing suitable goods to the buyer there is unless excluded or modified an implied warranty that the goods shall be fit for such purpose
note that reliance by the buyer
on the sellers skill and judgement is critical to establishing the existence of fitness for a particular purpose warranty
technical obstacles which limit the use of a warranty for a buyer
to recover loss or damages include disclaimers of warranties, limitations or modifications of warranties, privity, notice of breach and the conduct of the plaintiff
a disclaimer
(negation of warranty) must be positive, explicit, unequivocal and conspicuous
in general, a seller cannot provide an express warranty and then disclaim it
a seller can however carefully refrain from making an express warranty by not making any promises or affirmations of fact, not describing the goods or not using a sample of model in a sale
to exclude or to modify the warranty of title
the seller must use specific language or there must be circumstances in which the buyer should know that the seller would not ordinarily have title to goods which are being sold
in an implied warranty of merchantability
the language of the disclaimer or modification must mention merchantability and in the case of writing must be conspicuous
to exclude or modify the implied warranty of fitness for the particular purpose of the buyer
the disclaimer must be in writing and conspicuous
language to exclude all implied warranties of fitness will be sufficient if it states, for example, “there are not warranties which extend beyond the description on the face hereof”
notwithstanding the above
all implied warranties may be disclaimed by using words such as “as is” “with all faults” or other language that in common understanding calls the buyers attention to the exclusion of warranties and makes it plain that there is no implied warranty
examination or refusal to examine
if the buyer inspects the goods, implied warranties do not apply to obvious defects that are apparent on examination
the warranties also do not apply where the buyer has refused to examine the goods or where the examination should have revealed the obvious
if buyer knows of lack of conformity upon entering the contract
the seller is not liable for the warranty of particular purpose, ordinary purpose or sale by sample or model
the FTC has established
guidlines for the type of consumer product warranty information a seller must supply
limitation or modification of warranties
if not unconscionable, the parties may by contract limit or modify warranties or impose time limits within which the warranty is effective
privity of contract
common law required that the plaintiff have a contractual relationship with the defendant in order to pursue a breach of warranty action
this relationship is known as privity of contract
horizontal privity refers
to noncontracting parties injured by defective goods
the code relaxes the requirements for determining to whom horizontal privity extends
in addition, the UICC provides three alternatives which are available for adoption by the states
UCC 2-318 alternative A
sellers warranty whether express or implied
1 extends to natural persons (but not artificial entities such as corporations)
2 in the family or household of the buyer or a guest in the home
3 if such person may reasonably be expected to use, consumer or be affected by the goods
4 who is injured in person (not property) by breach of warranty
5 seller may not exclude or limit the operation of this section
most states have, for all practical purposes
eliminated privity of contract in warranty cases
notice of breach of warranty
the buyer must notify the seller of any warranty breach within a reasonable time or she will not be permitted to recover
in determining a reasonable period of time, commercial standards apply to a merchant buyer while more lenient standards apply to a retail consumer
plaintiffs conduct
contributory and comparative negligence are tort defenses and usually cannot be used as a defense to a breach of warranty action
voluntary assumption of the risk is a defense if the buyer is aware of defects in the product and continues to use it
elements of negligence
1 defendant owes plaintiff a legal duty (i.e. duty imposed by law)
2 defendant breaches the legal duty
3 plaintiff sustains injury (to person or property)
4 injury to plaintiff is proximately caused by breach of the legal duty
for proximate cases
the injury must be foreseeable
in other words it cannot be so remote as to not be reasonably contemplated by the defendant
obstacles to recovery
contributory negligence
comparative negligence
contributory negligence
if plaintiff is found to have been negligent (irrespective of the percentage) in contributing to his/her injury, he/she will recover nothing
few states still follow this doctrine
comparative negligence
this is the more modern view
measures the negligence between plaintiff and defendant
some states hold that if a plaintiffs share of the responsibility exceeds a stated amount (75%) plaintiff will recover nothing
strict liability in tort
402A of the Restatement of Torts 2nd imposes strict liability in tort on merchant sellers for personal injuries and property damage that result from selling a product in a defective condition, which makes the product reasonably dangerous to the user or consumer
strict liability actions focus on the product, not on the conduct of the manufacturer, and do not require the plaintiff to prove that the injury or property damage resulted from the negligence of the seller, or that the consumer had a contractual relationship with the seller
requirements of strict liability in tort
1 the defendant was engaged in the business of selling such a product (i.e. a merchant)
2 the defendant sold the product in a defective condition
3 the defective made the product unreasonably dangerous
4 there was no substantial change in the condition go the goods from the time they were sold (i.e. the defect existed a the time it left the defendants hands, and the goods were not modified between the time that they left the seller to the time they reached the hands of the consumer or user
5 the plaintiff sustained physical harm or property damage by use or consumption of the product and the defect was the proximate cause of the injury or damage
6 seller is liable even though it used all possible care in the preparation and sale of the product (i.e. seller was not negligent)
7 seller is liable even though the ultimate used or consumer has not bought the goods from or entered into any contractual relationship with the seller (i.e. there is not privity of contract needed between seller and ultimate user)
majority of courts have held that
402A imposes liability only for injury to person and property damage, not for commercial loss, such as business interruption
some jurisdictions are including
merchant-sellers of used goods, but not the occasional seller
manufacturing defect
product does not work properly
malfunction
design defect
created by inadequate plans or specifications, such as deficient engineering or selection of materials
failure to warn
where use of a product gives rise to a foreseeable danger of physical injury without adequate instructions or warning, the seller has a duty to warn
if a product is dangerous, it will be held to be defective absent a warning where it can be shown that a superior design or production process existed
unreasonably dangerous
products are unreasonably dangerous because of the defect (i.e. the danger) is beyond that to be reasonably assumed by the ordinary buyer
construe defect
broadly, not narrowly
