Chapter 14 Sales Contracts Rights, Duties, Breach, and Warranties
4. The Federal Trade Commission has established specific rules for advertising express
warranties on goods sold in interstate commerce.
5. Buyers must use common sense to recognize the difference between a sales person’s
statements of fact and statements that are opinion or puffery.
6. The Magnuson-Moss Warranty Act applies when written warranties are made
voluntarily for purchases of consumer products.
7. The Magnuson-Moss Warranty Act is designed to prevent deceptive warranty
practices and to provide consumers with more information about warranties.
8. The Magnuson-Moss Warranty has the following terms:
a. Under the act when a written warranty is given to a consumer on goods costing
more than $10, the warranty must disclose whether it is a full or a limited
b. When goods cost more than $15, the written warranty must be made available
before the consumer decides to buy the product.
c. A full warranty is one in which a defective product will be repaired without
charge within a reasonable time after a complaint has been made about it, or the
consumer may have a replacement or a refund.
d. A full warranty must state its duration.
e. A limited warranty is anything less than a full warranty.
B. Implied Warranties
1. There are three types of implied warranties: the implied warranty of merchantability
the implied warranty of fitness for a particular purpose, and the implied warranty that
is derived from a course of dealing or usage of trade.
2. Unless it is validly excluded, the implied warranty of merchantability provides that
whenever a merchant sells goods, the merchant warrants the goods are merchantable,
meaning that they are fit for the purpose for which the goods are to be used.
3. The implied warranty of fitness for a particular purpose arises when a buyer relies on
the seller’s skill and judgment to select the goods and the seller impliedly warrants
that the goods will be fit for the purpose for which they are to be used.
4. Other implied warranties may arise from ways in which the parties have dealt in the
past or by usage of trade.
C. Warranty of Title
1. When goods are sold by a merchant or a private party, the seller warrants that the title
being conveyed is good and that the transfer is rightful.
2. When the buyer is aware, such as in a sheriff’s sale, that the person selling the goods
does not personally claim title to them, the warranty of tile is not made by the seller.
D. Warranty Exclusion
1. To exclude the implied warranty of merchantability in states that allow it, the word
merchantability must be used in the disclaimer; and if the exclusion is in writing, it
must be in large, bold type so that it is conspicuous.
2. To exclude the implied warranty of fitness for a particular purpose, the exclusion
must be in writing and also be conspicuous.
3. The use of expressions such as “as is,” “with all faults,” and others is another way to
exclude implied warranties; however, those words do not exclude express warranties
or the warranty of title.
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