Ch. 18: Warranties and Product Liability – No. 1
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Good Title: Except where disclaimed, sellers warrant that
Quiet Possession: A lessor transfers the rights to
possess and use the goods during the lease term, not title
the lease term.
goods they are selling are free of any liens – that is, any
disclaimed by specific language in a sales contract.
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
EXPRESS WARRANTIES
Express Warranty: A seller’s or lessor’s oral or written
the goods made by the seller/lessor to the buyer/lessee,
(2) conform to any factual description of the goods made,
e.g., on a label, packaging, or in a brochure, or
(3) conform to any sample or model of the goods shown to
the buyer/lessee prior to purchase/lease.
constitute more than a mere statement of opinion or
value (unless the speaker is an expert on whose opinion
or valuation the buyer could reasonably rely) or puffery
(i.e., “sales talk”).
Ch. 18: Warranties and Product Liability – No. 3
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
IMPLIED WARRANTIES
Implied Warranty: A warranty imposed by implication or
inference from the nature of the transaction or the relative
bargaining positions or circumstances of the parties.
Merchantability: A warranty, arising in every sale or
lease of goods by a merchant, that the goods being sold
Fitness for a Particular Purpose: A warranty, imposed
on any seller/lessor who knows that the buyer/lessee is
relying on the seller’s/lessor’s skill and judgment to
select suitable goods, that the goods being sold or leased
are fit for the particular purpose for which the
Ch. 18: Warranties and Product Liability – No. 4
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
“LEMON” LAWS
(3) the seller fails to remedy the defect within a specified
number of opportunities,
(4) the buyer is entitled to
(a) a new car,
(b) replacement of defective parts, or
the buyer.
Ch. 18: Warranties and Product Liability – No. 5
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
MAGNUSON-MOSS WARRANTIES
express warranty, and if the value of the goods sold is more
than $25 the warranty must be labeled as “full” or “limited.”
Full warranties (1) require free repair or replacement
of any defective part; and, (2) if the product cannot be
A full warranty generally has no time limit.
A limited warranty is any warranty that does not meet
all of the requisites for a full warranty. If an express
Ch. 18: Warranties and Product Liability – No. 6
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
OVERLAPPING WARRANTIES
warranty, but not an implied warranty of fitness for a
particular purpose;
a sample takes precedence over an inconsistent general
description; and
WARRANTY DISCLAIMERS
Express Warranty: Any oral or written express warranty
may be disclaimed by a
Implied Warranty of Fitness: To disclaim an implied
warranty of fitness for a particular purpose, the disclaimer
must be (1) written and (2) conspicuous.
Implied Warranty of Merchantability: The disclaimer need
refuses to examine the goods at the seller’s/lessor’s request,
there is no implied warranty with respect to defects that a
reasonable examination did reveal or would reveal.
The doctrine of unconscionability may limit a seller’s ability
to disclaim, or have a buyer waive, a warranty.
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
EXPRESS WARRANTIES
Express Warranty: A seller’s or lessor’s oral or written
the goods made by the seller/lessor to the buyer/lessee,
(2) conform to any factual description of the goods made,
e.g., on a label, packaging, or in a brochure, or
(3) conform to any sample or model of the goods shown to
the buyer/lessee prior to purchase/lease.
constitute more than a mere statement of opinion or
value (unless the speaker is an expert on whose opinion
or valuation the buyer could reasonably rely) or puffery
(i.e., “sales talk”).
Ch. 18: Warranties and Product Liability – No. 3
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
IMPLIED WARRANTIES
Implied Warranty: A warranty imposed by implication or
inference from the nature of the transaction or the relative
bargaining positions or circumstances of the parties.
Merchantability: A warranty, arising in every sale or
lease of goods by a merchant, that the goods being sold
Fitness for a Particular Purpose: A warranty, imposed
on any seller/lessor who knows that the buyer/lessee is
relying on the seller’s/lessor’s skill and judgment to
select suitable goods, that the goods being sold or leased
are fit for the particular purpose for which the
Ch. 18: Warranties and Product Liability – No. 4
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
“LEMON” LAWS
(3) the seller fails to remedy the defect within a specified
number of opportunities,
(4) the buyer is entitled to
(a) a new car,
(b) replacement of defective parts, or
the buyer.
Ch. 18: Warranties and Product Liability – No. 5
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
MAGNUSON-MOSS WARRANTIES
express warranty, and if the value of the goods sold is more
than $25 the warranty must be labeled as “full” or “limited.”
Full warranties (1) require free repair or replacement
of any defective part; and, (2) if the product cannot be
A full warranty generally has no time limit.
A limited warranty is any warranty that does not meet
all of the requisites for a full warranty. If an express
Ch. 18: Warranties and Product Liability – No. 6
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
OVERLAPPING WARRANTIES
warranty, but not an implied warranty of fitness for a
particular purpose;
a sample takes precedence over an inconsistent general
description; and
WARRANTY DISCLAIMERS
Express Warranty: Any oral or written express warranty
may be disclaimed by a
Implied Warranty of Fitness: To disclaim an implied
warranty of fitness for a particular purpose, the disclaimer
must be (1) written and (2) conspicuous.
Implied Warranty of Merchantability: The disclaimer need
refuses to examine the goods at the seller’s/lessor’s request,
there is no implied warranty with respect to defects that a
reasonable examination did reveal or would reveal.
The doctrine of unconscionability may limit a seller’s ability
to disclaim, or have a buyer waive, a warranty.