Chapter 21 Flashcards
Article 2A of UCC
established warranties that apply to lease transactions.
Warranties
a seller’s or lessor’s express or implied assurance to a buyer or lessee that the goods sold or leased meet certain quality standards.
*can be either written, oral, or inferred from the seller’s conduct.
Express warranty
a warranty that is created when a seller or lessor makes an affirmation that the goods he or she is selling or leasing meet certain standards, quality, description, performance, or condition.
*made to entice consumers and others to buy or lease products (usually found in ads, brochures, catalogs, pictures, etc.).
Creation of an Express Warranty
when a seller or lessor indicates that the goods conform to:
1) all affirmations of fact or promise made about the goods.
2) any description of the goods.
3) any model or sample of the goods.
* buyers and lessees can recover for breach of an express warranty if the warranty was a contributing factor that induced the buyer to purchase. (usually the retailer is liable for express warranties-a manufacturer is not liable for express warranties by wholesalers and retailers unless the manufacturer authorizes or ratifies the warranty).
Statement of opinion (puffing)
a commendation of goods, made by a seller or lessor, that does not create an express warranty. *an affirmation of the value of goods does not create an express warranty.
Ex. a used car salesperson’s saying “this is the best car on the market” or “this painting is worth a fortune” do not create a warranty because it is an opinion and statements of value, not facts.
Damages Recoverable for Breach of Warranty
the buyer or lessee may sue the seller or lessor to recover compensatory damages. amount of recoverable compensatory damages is generally equal to the difference between
1) the value of the goods as warranted and
2) the actual value of the goods accepted at the time and place of acceptance.
* a purchaser or lessor can recover for personal injuries that are caused by a breach of warranty.
Implied Warranty of Merchantability
unless properly disclosed, a warranty that is implied that sold or leased goods are fit for the ordinary purpose for which they are sold or leased, as well as other assurances.
1) seller or lessor of a good is a merchant (expert or experienced in the goods or sale of the goods).
Implied Warranty requires
1) goods must be fit for the ordinary purposes for which they are used.
2) the goods must be adequately contained, packaged, and labeled.
3) the goods must be of an even kind, quality, and quantity within each unit.
4) the goods must conform to any promise or affirmation of fact made on the container or label.
5) the quality of the goods must pass without objection in the trade.
6) fungible goods must meet a fair average or middle range of quality.
Implied warranty of fitness for human consumption
a warranty that applies to food or drink consumed on or off the premises of restaurants, grocery stores, fast-food outlets, and vending machines.
*incorporated in the implied warranty of merchantability
Foreign substance test
part of implied warranty of fitness for human consumption
-a test to determine merchantability based on foreign objects found in food. a food product is considered unmerchantable if a foreign object in that product causes injury to a person.
Consumer expectation test
part of implied warranty of fitness for human consumption
-a test to determine merchantability based on what the average consumer would expect to find in food products. *under this test, the implied warranty would be breached if a person were injured by a chicken bone with eating a chicken salad sandwich. this is because a consumer would expect that the food producer would have removed all bones from the chicken.
Implied warranty of fitness for a particular purpose
a warranty that arises where a seller or lessor warrants that the goods will meet the buyer’s or lessee’s expressed needs.
the warranty of fitness for a particular purpose is implied at the time of contracting if:
1) the seller or lessor has reason to know the particular purpose for which the buyer is purchasing the goods or the lessee is leasing the goods.
2) the seller or lessor makes a statement that the goods will serve this purpose.
3) the buyer or lessee relies on the seller’s or lessor’s skill and judgment and purchases or leases the goods.
Warranty Disclaimers
a statement that negates express and implied warranties. the rules for disclaiming implied warranties are:
1) “As is” disclaimer.
2) disclaimer of the implied warranty of merchantability: must specifically mention the term merchantability for the implied warranty of merchantability to be disclaimed. these disclaimers may be oral or written.
3) disclaimer of the implied warranty of fitness for a particular purpose. may contain general language, without specific use of the term fitness. *has to be in writing.
Conspicuous Display of disclaimer
a requirement that warranty disclaimers be noticeable to a reasonable person.
