Warranties - Uniform Commercial Code

Question 1

Under the UCC, what are the four “cause of action” requirements for an action based on warranty?

Answer 1

1) Existence of a warranty 2) breach of the warranty 3) the breach was the actual and proximate cause of plaintiff’s injuries 4) damages

Question 2

What is Warranty of Title?

Answer 2

A warranty of title is a guarantee by a seller to a buyer that the seller has the right to transfer ownership and no one else has rights to the property.

It is a essentially a guarantee in contracts for sale that the title conveyed will be good, and that the goods will be delivered free from any security interest or other encumbrance of which the buyer has no knowledge at the time of contracting.

A warranty by the seller that 1) the title conveyed is good and its transfer is rightful and 2) the goods have been delivered free of any security interest or lien or encumbrance of which the buyer is unaware.

Question 3

Under Warranty of Title, what does a merchant warrant?

Answer 3

That the goods delivered are free of any rightful claims of a third person

Question 4

When can a Warranty of Title be excluded?

Answer 4

Warranty of title can be excluded only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have.

Exclusion of Warranty of Title, in essence, is specific language or circumstances which give the buyer reason to know that the person selling does not claim title in himself and is only selling rights, if any, that he may have.

Question 5

What is an Express Warranty?

Answer 5

A warranty that the goods will conform to their description or to any promise made by the seller.

Under express warranty, any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

If there is any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes the basis of the bargain, then there is an express warranty that the goods will conform to the affirmation or promise.

Question 6

If there is a sample or model, must the goods conform to the sample or model under Express Warranty?

Answer 6

Yes. Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample.

Question 7

What is the Implied Warranty of Merchantability?

Answer 7

A warranty of merchantability is implied in every sale of goods by a merchant with respect to goods of that kind.

It is a warranty that the goods shall be merchantable and is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind.

An implied warranty of merchantability is, in essence, an unwritten and unspoken guarantee by a merchant to the buyer that goods purchased conform to ordinary standards of care and that they are of the same average grade, quality, and value as similar goods sold under similar circumstances. In other words, merchantable goods are goods fit for the ordinary purposes for which they are to be used.

Question 8

Under the Implied Warranty of Merchantability, is the serving of food and drinks considered goods?

Answer 8

Yes

Question 9

What three conditions must goods meet to be considered merchantable?

Answer 9

The goods are 1) of fair average quality 2) fit for ordinary purposes for which such goods are used 3) adequately contained, packaged and labeled as the agreement may require.

Question 10

What is Implied Warranty of Fitness for a Particular Purpose?

Answer 10

A warranty that goods are fit for the buyer’s particular purpose.

The implied warranty for fitness for a particular purpose (which obviously differs from the ordinary purpose standard of the warranty of merchantability) applies when a buyer relies on the seller’s skill or judgment in choosing a product for a particular purpose and when the seller knows or should know the buyer’s purpose. The seller is essentially guaranteeing that the item is fit for that particular purpose.

Question 11

What are the two elements of the Implied Warranty of Fitness for a Particular Purpose?

Answer 11

At the time of contracting 1) the seller has reason to know of any particular purpose for which the goods are required and 2) the buyer is relying on the seller’s skill or judgement to select suitable goods

Question 12

Under Disclaimer of Warranties, to exclude an Implied Warranty of Merchantability, the language used to disclaim must mention merchantability and (if) in writing:

Answer 12

The writing must be conspicuous (stand out as to be clearly visible)

Question 13

Under Disclaimer of Warranties, to exclude an Implied Warranty of Fitness for a Particular Purpose, the disclaimer (must) be in writing and be:

Answer 13

The writing must be conspicuous (stand out as to be clearly visible)

Question 14

Under Disclaimer of Warranties, to exclude all implied warranties of fitness, the disclaimer will be sufficient if it states:

Answer 14

“There are no warranties which extend beyond the description on the face hereof”

Question 15

Under Disclaimer of Warranties, all implied warranties are excluded by expressions like:

Answer 15

“As-is”, “With all faults”, or language that calls the buyers attention to the exclusion warranties.

Question 16

If a discrepancy exists between an Express Warranty and any disclaimer, which will prevail?

Answer 16

The Express Warranty

Question 17

What is the Extent of Liability for Injured Third Parties?

Answer 17

States allow an action for breach of warranty to extend to varying degrees of injured third parties.

Question 18

Under Extent of Liability for Injured Third Parties - Alternative A - most states extend protection to any natural person (who is in the buyers home) who:

Answer 18

Suffers a personal injury

Question 19

Under Extent of Liability for Injured Third Parties - Alternative B - some states extend protection to any natural person who:

Answer 19

Suffers a personal injury

Question 20

Under Extent of Liability for Injured Third Parties - Alternative C - few states extend protection to any person who:

Answer 20

Suffers any injury

Question 21

Under Defenses to Warranties, when is the buyer required to notify the seller?

Answer 21

Within a reasonable time after breach occurs (or) after a breach should have been discovered.

A buyer’s failure to notify the seller of a breach of warranty within a reasonable time after the buyer discovers or should have discovered a breach bars the buyer from any remedy.

Question 22

What is the purpose of Defenses to Warranties - Buyer’s Notice to Seller?

Answer 22

To protect the seller (and) to protect the right of the seller to cure.

Question 23

What is Entrustment?

Answer 23

An entrusting of possession of goods to a merchant who deals in goods of that kind that gives the merchant power to transfer all rights of the entrusted to a buyer in the ordinary course of business.

Essentially, under an entrustment, when an owner of property entrusts goods to a merchant, the dealer can transfer all of the owner’s rights - even if the owner did not authorize such a transfer - to a “buyer in the ordinary course of business.”

Question 24

Entrustment includes delivery or any retention of possession of goods even if procurement of the entrusting was such to be:

Answer 24

Larcenous (theft) under criminal law

Question 25

What is a Disclaimer of Warranty?

Answer 25

A warranty disclaimer is a statement or written document that informs a buyer that the seller is not bound by any warranty guarantees or promises regarding the product.

Question 26

What is the difference between an Express Warranty and the two types of Implied Warranties (Merchantability and Fitness)?

Answer 26

When people use the word “warranty,” they are typically referring to a specific kind of warranty that the U.C.C. calls an “express warranty.” Express warranties are affirmative promises about the quality and features of the goods being sold. Claiming a watch is “waterproof to 250 feet,” that a car gets “35 mpg on the highway,” or that a brand of concrete “cures rock-hard in 5 minutes, no matter what the weather” are all examples of express warranties. But express warranties under the U.C.C. include more than just affirmative statements. They also include descriptions of the goods being sold or samples shown to the buyer. If the buyer is shown a floor sample of the kind of television he/she wants to buy, this sample is an express warranty that the television actually sold is the same type and same quality as the floor sample.

In addition to express warranties, the U.C.C. also creates a second kind of warranty, called an “implied warranty.” As the name suggests, an implied warranty is made, regardless of whether or not it is specifically mentioned. The implied warranties created by the U.C.C. ended the old rule of caveat emptor-“Let the buyer beware.” Implied warranties allows buyers to purchase goods and be confident that they meet certain minimum standards. The two implied warranties the U.C.C. creates are the warranty of “merchantability” of the goods being sold, and the warranty that the goods are “fit for a particular purpose.”

Question 27

What are the two conditions under which an Implied Warranty of Merchantability will be found:

Answer 27

Most courts imply a warranty of merchantability when (1) the seller is the merchant of such goods, and (2) the buyer uses the goods for the ordinary purposes for which such goods are sold.