Warranties Flashcards
Warranty
a contractual obligation by the seller to remedy certain possible defects in the goods. The UCC divides warranties into two basic types: warranties of title and warranties of quality
Warranty of Title
In a sales contract, the seller warrants that :
- Good title to the goods is being conveyed
- The transfer itself is rightful
- The goods will be delivered free of any security interest, lien, or encumbrance of which the buyer, at the time of contracting, lacks actual knowledge
When is it Applicable? Who Does it Apply To?
Triggered at the time of sale and applies to all sellers
Exclusion and Modification?
Can only be excluded or modified by specific language giving the purchaser reasons to know that the vendor is only selling what title he possesses.
“As is” is not sufficient to disclaim the warranty of title
The seller should employ specific language bringing home to the buyer that the buyer, not the seller, has the risk of title.
Without very precise and unambiguous language, the buyer in good faith expects to get good title and might view any warranty disclaimers from the seller as relating only to quality
Example of Good Language
Seller makes no warranty as to the title to the goods, and buyer assumes all risks of nonownership of the goods by seller
[W]here the language in a purported disclaimer expresses how the seller’s liability will be limited rather than what title (or lack thereof) the seller purports to transfer, the purported disclaimer is ineffective
Entrustment of Goods
Merchant may pass good title to goods someone has entrusted to the merchant, even though the merchant neither owns the goods nor has actual authority to sell them.
Must be merchant of that particular good to which you have entrusted your belongings
WoQ: Express Warranty
Three distinct ways for the seller to create an express warranty:
- An affirmation of fact or promise
- A description of the goods, or
- A sample or model
AND becomes the basis of the bargain (induces buyer to purchase)
What is Not an Express Warranty
Not an express warranty if it is just puffery or the seller’s opinion; must relate to the goods and become part of the basis of the bargain
WoQ: Implied Warranties
are automatically apart of the contract unless seller or circumstances do something to remove them
Merchantability
there is implied in every contract for sale a warranty that goods sold will be merchantable, if the seller is a merchant of that kind of goods
For a Good to Be Merchantable, the Good Must:
Be at least fit for the ordinary purposes for which goods of that kind are used
Must be adequately contained, packages, and labeled as the contract may require
Who Does it Apply To? What Extent?
Applies only to a seller who is a merchant with respect to goods of the kind
Goods do not have to be perfect, at least average quality for goods of the kind – pass in the trade without objection
Fitness for a Particular Purpose
Warranty applies if, at the time of contracting, the seller has reason to know:
- Any particular purpose for which the buyer requires the goods and
- That the buyer relies on the seller’s judgement or skill to provide or select suitable goods
Exclusion? Modification?
Unless the warranty is excluded or modified, there is an implied warranty that the goods will be fit for the particular purpose
Who Does it Apply To?
Can be applied regardless of whether the seller is a merchant, buyer’s purpose of use is different than the ordinary purpose of goods
Seller must have reason to know (not actual knowledge) of the buyer’s particular purpose and reliance on the seller’s skill or judgment to furnish goods suitable for that purpose
Buyer must actually rely on seller’s skill or judgement to furnish suitable goods
