UCC Warranties

Question 1

What warranty is automatic with all contracts for sale of goods?

Answer 1

Warranty of title

Question 2

Express warranties

Answer 2

If it is the basis of the bargain, any of these create an express warranty:
* Any affirmation of fact or promise made by the seller to the buyer
* any description of the goods
* any sample or model

no actual reliance required

Question 3

Implied warranty of merchantability

Answer 3

Implied in any contract for sale (or lease) by a merchant who deals in goods of the kind sold

warranty that goods are merchantable (fit for the ordinary purpose for which such goods are used)

based on absolute liability, not negligence (doesnt matter if seller didnt know of defect)

Question 4

To establish breach of an implied warranty:

Answer 4

Buyer must show
* existence of a warranty
* warranty was broken
* the breach was the proximate cause of the loss

Question 5

Implied warranty for fitness for a particular purpose

Answer 5

• any seller has reason to know the partucular purpose for which goods are to be used
• knows buyer is relying on seller’s skill and judgement to select suitable goods
• buyer in fact relies on seller’s skill and judgement

Question 6

Warranty of Title

Answer 6

any seller of goods warrants that:
* the title transferred is good
* the transfer is rightful
* there are no leins or encumberances against the title of which the buyer is unaware at the time of contracting

Question 7

Warranty against infringement

Answer 7

a merchant seller regularly dealing in goods of the kind sold automatically warrants goods delivered free of infringement

Question 8

Specific disclosures of implied warranties (by warranty type)

Answer 8

Seller can always disclaim implied warranties

Of title = specific language or circumstances that give buyer notice that seller does not claim title

Of merchantability = by disclaimer mentioning “merchantability” (if written must be conspicuous)

Of fitness = by conspicuous written disclaimer

Question 9

Disclaiming implied warranties general methods

Answer 9

• “as is” or “with all faults” language
• By course of dealing, course of performance, usage of trade
• By examination or refusal to examine (by buyer before entering contract)

Question 10

Limiting damages

Answer 10

Allowed unless unconscionable
(warranty disclaimers limiting damages for personal injury is always unconscionable

Question 11

Damages for breach of warranty (generally)

Answer 11

value of goods as warranted (minus) value of goods accepted (plus) appropriate consequential and incidental damages

Question 12

Consequences for breach of title

Answer 12

• goods reclaimed by true owner/leinholder
• buyer may rescind contract, revoke acceptace, or sue for damages
• damages = value of goods as warranted

Question 13

Special circumstances that alter damages

Answer 13

Great appreciation or depreciation