Express and Implied Warranties

Question 1

5 ways warranties are created under Article 2

Answer 1

a. Express warranties

b. Implied warranties of merchantability
Expression of law and doesn’t require acknowledgement by the parties

c. Warranty of fitness for a particular purpose
d. Warranties created by usage of trade, course of dealing, etc.
e. Warranties of title

Question 2

3 ways to create an Express Warranties

Answer 2

1. By affirmation of fact or promise to the buyer which relates to the goods. You, the seller, are saying the goods will conform to the affirmation.
2. By description of the goods. You are saying the goods will conform to the description.
3. By sample or model. You are saying goods will confrom to the sample/model

Question 3

Express Warranties must always be made part of the _____________

Answer 3

Basis of the Bargain. Ads can be express if you’ve seen them. If you havent seen the ad, its tricky because it is a part of the basis of the bargain.

Question 4

Most Common interpretation of “basis of the bargain”

Answer 4

Reliance still required. Buyer only need to show that seller made the statement and the buyer was aware of it, not that he relied on it. But if the seller can clearly show by affirmative evidence that the buyer did not rely at all, then the seller wins

Example: Seller shows buyer a sample of coal, creating an express warranty. Seller later informed buyer that sample was incorrect and would not meet his specifications. Buyer went ahead with purchase anyways and later tried to sue. Seller wins because of notification of the incorrect sample. Buyer didn’t rely.

Question 5

2-313 comments stat that…

Answer 5

language used after closing of the deal (like receiving info in the packaging) becomes a modification and need not be supported by consideration.

Question 6

Doug Conner v. Proto-Grind

Answer 6

Connor bought grinder. Proto said it would grind certain trees which later it could not do. Connor claims statements by Proto created an express warranty.

Proto’s best argument is that Connor was aware of another purchaser’s unhappiness with the machine.

Take away; more the buyer knows and has expertise, the less likely he can claim an express warranty.

Question 7

Can words or descriptors be fairly regarded as part of the contract?

Answer 7

Language used by the seller must be measurable in some way so you can tell when it has been breached. The broader and more vague the statement, the more likely the statement is mere puffing. Example: Young, inexperienced buyer purchased a horse said to be “very gentle.” Turns out to be fucking nuts. is there a warranty?

1. the seller should know the condition of the horse and buyer is potentially ignorant.
2. on the other hand, how can you accurately measure gentle?
3. You probably need to establish a standard for the term gentle, maybe try and find an expert on horses

Question 8

2 main Implied Warranties

Answer 8

Merchantability and Fitness for a particular purpose

Question 9

Standard for Merchantability

Answer 9

For goods to be merchantable, they must be fit for the ordinary purpose for which such goods are used.

Question 10

Idea behind Implied Warranty of Merchantability

Answer 10

If the goods are being used for an ordinary, likely foreseeable purpose, then the merchant should take responsibility for their use.

Question 11

What does it mean to be merchantable

Answer 11

A person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved.

Difficult to match “fit for ordinary purpose” language to scenarios

Standard is not perfect regarding to the goods. Best is not required.

Question 12

Ambassador Steel v. Ewald Steel

Answer 12

1. Buyer bought steel from seller and resold it to Ultimate Buyer. The steel failed when welded.
2. It is up to the buyer to show the purpose and that it is an ordinary purpose.
3. Buyer came in with enough evidence to show that commercial grade steel, which was being called fro here, had a carbon content of 1010-1020 which was not provided.
4. Comment 2 to 2-314: Goods must be of a quality comparable to that generally acceptable in that line of trade under the description or other designation of the goods used in the agreement.

Question 13

Bethlehem Steel v. Chicago Eastern Corp

Answer 13

Here steel was bought to construct grain boxes. Boxes were defective. Buyer says the steel had problems with the nitrogen level.

Buyer failed to put on evidence that the grain boxes was one of the ordinary purposes for the steel. Buyer was required to show that the renitrogenization process made the steel unfit for this purpose. It did neither

This case shows the importance and difficulty of establishing no only the quality standard envisioned, but also the failure of the goods to meed that standard.

Question 14

Buyers who then sell to others

Answer 14

Most courts will find that the original buyer has accepted the express warranties made by the manufacturer and it becomes a part of the sale to the ultimate buyer.

Remember, the warranty of merchantability deals with goods, not services. So when you have a situation that includes both (such as installing a swimming pool and the diving board turns out to be defective), most courts say look at the contract and discover which aspect is the predominant aspect. Look to cost allocations to goods and services

Question 15

Is inspection of the goods relevant?

Answer 15

It is relevant to telling us what the condition of the goods were in at the time of turn-over. The more care a seller takes, the better the seller can argue that whatever went wrong occurred after the goods were turned over.

Question 16

Denny v. Ford Motor Co.

Answer 16

Nancy Denny was injured in a car accident when she braked to avoid hitting a deer and her car rolled over. She sued based on strict products liability and breach of implied warranty of merchantability.

Jury said strict liability claim failed but upheld merchantability claim.

Court said the 2 test are different

1. in tort, you are trying to get manufacturers to make safe products
2. in contract, you care about allocating risks.

Implied warranty of merchantability

1. its a warranty implied in a contract for sale, so where’s the contract between Ford and Denny?
2. Well the warranty flows down from the manufacturer through dealers
3. Lack of privity would have been a defense, but here Florida had already ruled out such an option.

Question 17

3 categories of Product Defects

Answer 17

Design
Manufacture
Poor warning or lables

Question 18

Distinction b/w contract law and tort law regarding products liability

Answer 18

Focus on strict products liability and implied warranty

Torts-
Test: Defective
What damages get you into court in tort?
1. personal injury
2. property damage
No notice requirement 
    May just file your lawsuit
Disclaimers?
    Personal injury- clearly no
    Property damages-usually no

Privity is irrelevent
Causation
Statute of limitations
Usually around 2 years from when you know or shouldve known of the defect

UCC-
Test: Non merchantable
What damages get you into court on a contract?
Contact doesnt differentiate based on damages
May recover damages reasonably considered to arise naturally from a breach, or those damages within reasonable contemplation of the parties at the time of contracting.
Notice is required
1. Opens the door to negotiations before litigation
2. Gives seller the ability to inspect the goods.

Disclaimers are allowed.
Lack of privity can be an issue
Statute of limitations
4 years from tender of delivery

Question 19

Implied Warranty of Fitness

Answer 19

Where the seller at the time of contracting..

1. Has reason to know of any particular purpose for which the goods are required and . . . .
2. That the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods.

So 2 main parts

1. Seller has reason to know of the purpose for the goods.
2. Seller has reason to know buyer is relying on his skill or judgment