978-0134004006 Chapter 21 Lecture Note

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165

Justice Francis

I. Teacher to Teacher Dialogue

One of the most challenging aspects of teaching law at the undergraduate level is getting our

remind students of the wide and varied menu of remedies they have to work with.

The UCC rules of warranty are a statutory set of buyer protections. There are five common

denominators applicable to all warranties. First, determine whether any sort of warranty may be

in existence either by acts of the parties or by imposition of law. Examine the scope and nature of

otherwise, applicable in this case? Remember also, warranties represent only one path to

rectification of harm. Other avenues may include tort law, consumer protection statutes, and

equitable remedies.

II. Chapter Objectives

1. Identify and describe express warranties.

2. Describe the implied warranty of merchantability.

3. Describe the implied warranty of fitness for a particular purpose.

4. Identify warranty disclaimers and determine when they are unlawful.

5. Describe the warranties of good title and no infringements.

WARRANTIES

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III. Key Question Checklist

 Does this contract come under the purview of the UCC?

 Was an explicit agreement entered into by the parties regarding warranties?

 What type(s) of warranties may be imposed by the UCC?

IV. Text Materials

Caveat emptor! Let the buyer beware! Throughout the history of common law, the law’s

expectations of buyer protection started and ended with the buyers themselves. A person entering

the marketplace was expected to personally know the seller and to resolve any differences

directly with him or her. The roles of government and its courts as sources of buyer protection

Article 2 of the UCC establishes certain warranties that apply to the sale of goods.

Express Warranty

Express warranties are created when a seller or lessor states orally, in writing, or through

Creation of an Express Warranty – Express warranties are created when the seller or lessor

Statement of Opinion – Puffing and commendation of goods do not create an express warranty,

nor does as affirmation of the value of the goods.

damages can be recovered.

Implied Warranty of Merchantability

If the seller is a merchant normally dealing in the goods sold, there is an implied warranty of

Warranties

Case 21.1 Implied Warranty of Merchantability: Osorio v. One World Technologies, Inc.

659 F.3d 81, 2011 U.S. App. Lexis 20174 (2011), United States Court of Appeals for the First

Circuit

Facts: A Home Depot Ryobi brand saw was the product involved in a construction worker’s

merchantability.

Issue: Did Ryobi breach the implied warranty of merchantability?

Denny v. Ford Motor Company

Nancy Denny purchased a Bronco II, a small SUV that was manufactured by Ford Motor

Company. When Denny slammed on her brakes on a paved road to avoid hitting a deer, the

Bronco II rolled over and Denny was severely injured. She sued to recover damages for breach of

the implied warranty of merchantability, claiming that the Bronco II presented a significantly

Nonmerchants and Casual Sales – The implied warranty of merchantability does not apply to

sales or leases by nonmerchants or casual sales.

Implied Warranty of Fitness for Human Consumption

Implied Warranty of Fitness for a Particular Purpose

The UCC contains an implied warranty of fitness at the time of contracting if the seller knows the

particular purpose that the buyer will be using the goods for, the seller makes a statement that the

Warranty Disclaimers

Express warranties can be limited by disclaimers if the warranty and disclaimer can be construed

together. Implied warranties of quality can be disclaimed by use of “as is,” “with all faults,” etc.

of fitness can be generally disclaimed.

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reasonable person.

Case 21.2 Warranty Disclaimer: Roberts v. Lanigan Auto Sales

406 S.W.3d 882, 2013 Ky. App. Lexis 4 (2013), Court of Appeals of Kentucky

Facts: The plaintiff purchased a used vehicle from Lanigan, which was sold “as is.”

money on this vehicle.

Magnuson-Moss Warranty Act

This Act allows for full and limited warranties of consumer products. To qualify for a full

conspicuously displayed.

Landmark Law: Magnuson-Moss Warranty Act Protects Consumers

Digital Law: Warranty Disclaimers in Software Licenses

typical software license.

Warranties of Title and Possession

Warranty of Good Title – Unless otherwise disclaimed, all sellers warrant that they hold valid

title to the goods.

third-party security interests.

Warranty Against Infringements – Unless otherwise stated, the seller or lessor who is a

merchant dealing in the type of goods being sold or leased warrants that said goods are free from

V. Key Terms and Concepts

 “As is” disclaimer—Expressions such as is, with all faults, or other language that makes it

of sales and leases for centuries.

Warranties

place of acceptance.

 Conspicuous—A requirement that warranty disclaimers be noticeable to the average person.

 Consumer expectation test—A test to determine merchantability based on what the average

consumer would expect to find in food products.

 Disclaimer of the implied warranty of fitness for a particular purpose—If the “as is” type of

that the goods he or she is selling or leasing meet certain standards of quality, description,

performance, or condition.

 Foreign substance test—A test to determine merchantability based on foreign objects that are

found in food.

instead are implied by law.

 Implied warranty of fitness for human consumption—A warranty that applies to food or drink

consumed on or off the premises of restaurants, grocery stores, fast food outlets, and vending

machines.

 Implied warranty of fitness for a particular purpose—A warranty that arises where a seller or

other assurances.

 Limited warranty—In a limited warranty, the warrantor limits the scope of the warranty in

some way.

 Magnuson-Moss Warranty Act—A federal statute that regulates written warranties on

consumer products.

create an express warranty.

 Warranty—A buyer’s or lessee’s assurance that the goods meet certain standards.

 Warranty against infringements—A seller or lessor who is a merchant who regularly deals in

goods of the kind sold or leased automatically warrants that the goods are delivered free of

enjoyment of its leasehold interest.

 Warranty of no security interests—Sellers of goods warrant that the goods they sell are

delivered free from any third-party security interests, liens, or encumbrances that are

unknown to the buyer.