Chapter 23
Warranties
TRUE/FALSE QUESTIONS
B1. In sales law, a warranty is an assurance by the seller or lessor about the quality
and features of the goods being sold or leased.
B2. A warranty against infringement is a promise by the seller that the product is
free from any patent, trademark, or copyright claims of a third person.
B3. Warranties of title do not arise in most sales contracts.
B4. A warranty of good title means that a seller warrants that he or she has valid
title to the goods and that transfer of the title is rightful.
B5. A warranty of title cannot be disclaimed.
2 TEST BANK B—UNIT FOUR: DOMESTIC & INT’L SALES & LEASE CONTRACTS
B6. To constitute an express warranty, a representation must be in writing.
B7. Statements of fact made during the bargaining process are express warranties.
B8. Only a statement made after a contract is entered into can be an express
warranty.
B9. An expression of opinion will usually create a warranty.
B10. A seller who makes a statement that relates to the value or worth of the goods
creates an express warranty.
B11. Merchants are absolute insurers against all accidents arising in connection with
the goods.
B12. Every sale or lease of goods made by a merchant who deals in goods of the
kind sold or leased automatically gives rise to an implied warranty that the
goods are fit for a particular purpose.
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B13. Goods must be of the highest quality possible to be merchantable.
B14. Merchants are not required to warrant that the goods they sell are fit for their
ordinary purpose.
B15. Implied warranties can arise from a “usage of trade.”
B16. A seller is not required to give a written warranty for consumer goods sold.
B17. A full warranty requires free repair or replacement of any defective part.
B18. An implied warranty or merchantability and an implied warranty of fitness for a
particular purpose cannot exist in a single transaction.
B19. Express warranties always displace inconsistent implied warranties with no
exception.
B20. General descriptions take precedence over inconsistent samples.
4 TEST BANK B—UNIT FOUR: DOMESTIC & INT’L SALES & LEASE CONTRACTS
MULTIPLE CHOICE QUESTIONS
B1. Medical Equipment Supply Company and Natural Rehabilitation Center enter
into a contract for a lease of a certain number of wheelchairs. Medical
Equipment assures the lessee that it has valid title to the goods. Under the
UCC, this type of title warranty arises
a. automatically.
b. only if the buyer asks for such a warranty.
c. only if the seller expresses such a warranty.
d. only if the seller actually has valid title to the goods.
B2. Arnold buys a backhoe from Big Dig Equipment Inc. Arnold is unaware that
Credit Collection Company holds a lien against the backhoe when he buys it. If
Credit Collection repossesses the backhoe, Arnold can
a. recover from Big Dig for breach of warranty.
b. do nothing.
c. file criminal charges against Big Dig and Credit Collection.
d. recover damages from Credit Collection for breach of warranty.
B3. Riverside Ranch is a horse breeding facility. Steed Stables is a customer
looking for a new stallion for its breeding program. Riverside’s representative
Tomas shows Steed a stallion that he says is very fertile and can easily breed
twenty mares per year. This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
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B4. Livestock Feedlot orders one hundred sacks of cattle feed from MegaNutrient
Feed, Inc. Each sack is stamped with the phrase “Twenty percent protein.” This
is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
B5. MotorCo, Inc., makes and sells auto parts to retail repair services, vehicle sales
outlets, and consumer parts stores. On one MotorCo box is a label that reads
“Contains one gross (144) sparkplugs, assorted sizes.” This statement is
a. an implied warranty of fitness for a particular purpose.
b. an implied warranty of merchantability.
c. an express warranty.
d. none of the choices.
B6. Chord Guitars, Inc., sells guitars and other stringed instruments to consumers.
A Chord salesperson says to a potential customer, “This Chord is the best
guitar you’ll find anywhere, even online.” This statement is
a. an implied warranty of fitness for a particular purpose.
b. an implied warranty of merchantability.
c. an express warranty.
d. none of the choices.
6 TEST BANK B—UNIT FOUR: DOMESTIC & INT’L SALES & LEASE CONTRACTS
B7. Phoenix, a salesperson for Quality Fruit, Inc., shows Robert, a buyer for Sweet
Home Fruit Company, samples of peaches, stating that any shipment will
match the samples. This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
B8. Quade is an expert in twentieth-century art. Rachel visits Quade’s gallery,
seeking to buy artwork as an investment. Quade shows her a painting that in
his opinion is by Picasso. Quade’s statement is
a. an express warranty.
b. an implied warranty.
c. an opinion.
d. puffery.
B9. Trucks & Trailers, Inc. (T&T), and United Delivery Service enter into a contract
for a lease of trucks. T&T is a merchant who deals in goods of the kind leased.
Under the UCC, an implied warranty of merchantability arises
a. automatically.
b. only if the lessee asks for such a warranty.
c. only if the lessor expresses such a warranty.
d. only in conjunction with sales contracts, not lease contracts.
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B10. Replay Sports Stores and SportsPower Products, Inc., enter into a contract for
a sale of trampolines. SportsPower Products is a merchant who deals in goods
of the kind sold. Under the UCC, an implied warranty of merchantability arises
a. automatically.
b. only if the buyer asks for such a warranty.
c. only if the seller expresses such a warranty.
d. only in conjunction with lease contracts, not sales contracts.
B11. Beginners Run Ski Shop sells a pair of skis to Crystal. When Crystal first uses
the skis, they snap in two. The cause is something that Beginners Run did not
know about and could not have discovered. Beginners Run breached
a. the merchant’s implied duty of inspection.
b. the implied warranty of merchantability.
c. no duty or warranty because Beginners Run knew nothing about the
defect that made the goods unsafe.
d. no duty or warranty because consumers should reasonably expect to
occasionally find a product that does not work as warranted.
B12. Rita eats Salsa Caliente made and sold by Salsa Zest Corporation and
becomes ill. Rita files a suit against Salsa Zest, alleging that its product was not
merchantable. Merchantable food is food that is fit to eat on the basis of
a. consumer expectations.
b. what constitutes a perfect condition.
c. its maker’s intentions.
d. its producer’s experience.
8 TEST BANK B—UNIT FOUR: DOMESTIC & INT’L SALES & LEASE CONTRACTS
B13. Freddi buys bike shoes from Get n’ Gear Store, telling the clerk that she wants
the shoes to compete in High Pace Triathlon. The shoes break apart during the
competition, causing Freddi to be injured in a fall. Get n’ Gear most likely
breached
a. an express warranty.
b. an implied warranty of fitness for a particular purpose.
c. an implied warranty of merchantability.
d. a warranty of title.
B14. Aerospace, Inc., makes and sells flight navigation equipment, through inde–
pendent salespersons, to retailers for resale to consumers. The Magnuson–
Moss Warranty Act covers
a. implied warranties, oral statements, and written promises.
b. only implied warranties that consumers are aware of.
c. only a salesperson’s oral statements.
d. only a seller’s written promises.
B15. Eden Valley Ranch and Farm Supply Corporation enter into a contract for a
sale of fencing materials. Farm Supply, a merchant who deals in goods of the
kind, makes implied and express warranties in connection with the sale. Under
the UCC, if these are inconsistent
a. all implied warranties displace all express warranties.
b. all express warranties displace all implied warranties.
c. the implied warranty of fitness for a particular purpose takes
precedence.
d. the implied warranty of merchantability takes precedence.
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B16. Grande Floors, Inc., and Home Decor Stores enter into a contract for a sale of
carpeting. Grande Floors, a merchant who deals in goods of the kind sold,
makes express warranties in connection with the sale. Under the UCC, at the
time a contract is formed, an express warranty can be disclaimed or modified
a. by clear, conspicuous language called to the buyer’s attention.
b. by implied affirmations of fact relating to the goods.
c. in any way that the seller sees fit for the ordinary purpose.
d. in no way.
B17. Band Instruments, Inc., sells seventy-six trombones to Community & School
Band Source, Inc. To avoid liability for most implied warranties, Band
Instruments should state in writing that the trombones are sold
a. as is.
b. by a merchant.
c. in perfect condition.
d. with no known defects.
B18. Marcos buys a pneumatic drill from NuTools, Inc. Owen leases a table saw
from Piecework Tools Sales & Lease Company. Later, Marcos and Owen
become aware of defects in the goods that indicate breaches of warranty. An
action for breach of warranty accrues when
a. the seller or lessor tenders delivery.
b. the buyer or lessee becomes aware of the breach.
c. the nonbreaching party notifies the breaching party of the breach.
d. four years have passed since the breach occurred.
10 TEST BANK B—UNIT FOUR: DOMESTIC & INT’L SALES & LEASE CONTRACTS
B19. Regal Autos, Inc., sells cars to consumers. To avoid potential liability for oral
express warranties, each Regal sales agreement should note that a car is sold
a. as is.
b. in perfect condition.
c. subject to warranties included in the written contract only.
d. with no known defects.
B20. Watercourse Pipe Company includes in its contracts a provision that reads, in
large red letters, “There are no warranties that extend beyond the description
on the face hereof.” This disclaimer effectively negates
a. the implied warranty of fitness for a particular purpose.
b. the implied warranty of merchantability.
c. the implied warranty of title.
d. none of the choices.
ESSAY QUESTIONS
B1. Equipment Manufacturing Company tells First Choice Supplies, Inc., that it
needs an adhesive to do a particular job. First Choice provides a certain brand.
When it does not perform to Equipment Manufacturing’s specifications,
Equipment Manufacturing sues First Choice, which claims, “We didn’t
expressly promise anything.” What should Equipment Manufacturing argue?
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B2. Stella bought a cup of coffee at the Roasted Bean Drive-Thru. The coffee had
been heated to 190 degrees and consequently had dissolved the inside of the
cup. When Stella lifted the lid, the cup collapsed, spilling the contents on her
lap. To recover for third-degree burns on her thighs, Stella filed a suit against
the Roasted Bean. Can Stella recover for breach of warranty? Explain.