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Chapter 23
Warranties
INTRODUCTION
At one time, caveat emptor (“let the buyer beware”) was the philosophy in sales contract law. This was a
realistic approach when buyers and sellers were equally capable of judging the quality of the goods that were the
subjects of their bargains. Today, however, it is likely that a buyer does not comprehend what is behind the goods he
or she buys, including the risks and their assumption. Thus, caveat emptor was replaced with a consumer-oriented
approach. A warranty now covers most goods. The term warranty is synonymous with the term promise.
Breaching a warranty has the same consequences as breaching any contractual promise. If parties have not
CHAPTER OUTLINE
I. Warranties of Title
Provisions similar to the following apply to leases [see UCC 2A–211(1), 2A–214(4), 2A–516(3)(b), 2A–
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A. GOOD TITLE
Generally, sellers warrant that they have good title to the goods they sell and that the transfer of title is
rightful [UCC 2–312(1)(a)].
B. NO LIENS
Sellers warrant that goods will be delivered free of encumbrances of which a buyer is unaware at the
C. NO INFRINGEMENTS
A merchant warrants that goods are free of any third person’s patent, trademark, or copyright claim
[UCC 2–312(3), 2–607(6)].
1. Notice in Sales Contracts
if the buyer is sued by a party holding patent, trademark, or copyright rights in the goods, the buyer
2. Notice in Lease Contracts
II. Express Warranties
A. STATEMENTS THAT CREATE EXPRESS WARRANTIES
Express warranties arise if a seller indicates goods will conform to—
B. BASIS OF THE BARGAIN
A reasonable buyer need only regard a representation as part of the basis of the bargain. Formal words
are not necessary.
CASE SYNOPSIS—
Case 23.1: Hurst v. Nissan North America Inc.
Nissan North America, Inc. makes and sells Infiniti autos, including a sport utility vehicle called the FX.
Nissan’s marketing brochures for the FX contain statements that are meant to convey “an overall image of a
very refined vehicle” and a promise of “premium automotive machinery.” Robert Hurst bought an Infiniti FX
that, with other models made at the same time, developed dashboard bubbling. Hurst and other FX owners
filed a suit in a Missouri state court against the automaker under the Missouri Merchandising Practices Act
(MMPA). The plaintiffs alleged that Nissan’s representations were not in accord with the facts regarding the
quality of the FX. A jury issued a verdict in the plaintiffs’ favor and awarded damages. Nissan appealed.
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Notes and Questions
If the plaintiffs had been allowed to recover damages for breach of warranty, what should be the
measure of those damages? Under UCC 2–714(2), the measure of damages for breach of warranty when
C. STATEMENTS OF OPINION AND VALUE
A seller’s statement about the value or worth of goods or a seller’s statement of opinion (puffing) is not
an express warranty.
1. Opinions by Experts
A seller who is an expert and gives an opinion as an expert to a layperson may create a warranty.
2. Reasonable Reliance
Clearly improbable claims and oral statements are less likely to qualify as warranties.
ENHANCING YOUR LECTURE—
THE DEBATE OVER PUFFERY
The term puffing refers to a salesperson’s exaggerated claims as to the quality of goods offered for sale.
Puffing is considered a statement of opinion and not a statement of fact, and therefore it does not constitute
an express warranty. The law assumes that most buyers or lessees know, or should know, that sellers and
lessors traditionally have engaged in “huffing and puffing” their wares, and that reasonable buyers and
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Commissioners on Uniform State Laws has not opted to change the UCC provisions relating to puffery.
In the meantime, the courts have to distinguish between statements that amount to mere puffery and
statements that constitute express warranties or misrepresentations of material facts.
PUFFERY V. EXPRESS WARRANTIES
The ad specifically indicated how much of the product should be applied per acre and stated that, if applied as
directed, Chlor-O-Pic would give “season-long control with application in fall, winter, or spring.” The farmer
bought eight thousand pounds of Chlor-O-Pic and applied it as directed to 143 acres of his tobacco crop.
Nonetheless, the crop developed black shank disease, resulting in an estimated loss of three thousand
pounds of tobacco per acre.
The line between statements that amount to puffery and statements that constitute express warranties is
not always clear. For example, in one case a tobacco farmer had read an ad stating that Chlor-O-Pic was a
chemical fumigant that would suppress black shank disease, a fungal disease that destroys tobacco crops.
farmer sued the manufacturer of Chlor-O-Pic, he argued that he had purchased the product in reliance on
Were the representations made in the ad mere puffery? Did the manufacturer have a duty to disclose in
the ad that several applications of Chlor-O-Pic may be required to prevent black shank disease? When the
PUFFERY V. MISREPRESENTATION
The line between puffery and fraudulent misrepresentation is also not always readily discernible. For
example, in one case, a sales representative for a Mazda dealer was trying to sell a used Mazda to Kevin
Garrett. The salesperson said that although the car had nearly 15,000 miles on it, the salesperson himself
had used the car as a demonstrator and for his personal use and had “babied it to death.” In fact, the car had
been stolen from the dealer and driven 10,000 miles, and prior to the theft, the dealer had had to replace the
engine after the car had been driven only approximately 3,000 miles.
court held that the theft of the car was a material fact and that the salesperson had a duty to disclose this
information. According to the court, the statements made by the salesperson crossed the line between
Had the sales representative committed fraud? Did he have a duty to disclose that the car had been
stolen? When Garrett later experienced numerous problems with the car and eventually sued the dealer, the
WHERE DO YOU STAND?
In the cases just discussed, the courts held those who made claims about their products liable either for
breach of warranty or for misrepresentation. In numerous other cases, though, the courts, despite a buyer’s
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III. Implied Warranties
Merchants impliedly warrant that the goods they sell are merchantable and, in certain circumstances, fit for a
particular purpose. An implied warranty may arise from a course of dealing or usage of trade.
A. IMPLIED WARRANTY OF MERCHANTABILITY
This warranty arises in every sale of goods by a merchant who deals in goods of the kind [UCC 2–314,
2A–212].
1. Merchantable Goods
Goods that are merchantable are “reasonably fit for the ordinary purposes for which such goods are
used.” They must at least—
• Be of average, fair, or medium-grade quality.
2. Merchantable Food
The serving of food or drink is a sale of goods subject to the implied warranty of merchantability
[UCC 2–314(1)].
CASE SYNOPSIS—
Case 23.2: Webster v. Blue Ship Tea Room
Webster brought an action against the Blue Ship Tea Room for personal injuries she sustained when she
swallowed a fish bone contained in a bowl of the Blue Ship Tea Room’s fish chowder. Her theory was breach
of implied warranty of merchantability. A jury rendered a verdict for her. Blue ShipTea Room appealed.
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Notes and Questions
This is a landmark case in Massachusetts where fish and clam chowder are common. Whether the same
result would prevail in a state in which chowder is not so common is open for conjecture, but the case is a
logical application of the UCC, and most students find it interesting.
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of a particular purpose.
chowder. Would the result have been different if Webster had asked whether the chowder was bone–
ADDITIONAL CASES ADDRESSING THIS ISSUE —
The Implied Warranty of Merchantability
Cases centering on food that allegedly breaches the implied warranty of merchantability include the
following.
• McCroy ex rel. McCroy v. Coastal Mart, Inc., 207 F.Supp.2d 1265 (D.Kan. 2002) (a buyer burned by a hot
drink from a vending machine failed to show that the beverage was defective, or that its temperature rendered
it unfit for human consumption at the time that it was sold, as required for a claim for a breach of the implied
warranty of merchantability).
• L.T. Overseas Ltd. v. Hartej Corp., __ A.2d __ (Conn.Super. 2002) (an importer did not breach the
implied warranty of merchantability when it sold rice to a distributor, in part because there had been only two
complaints in the previous four years and the distributor continued to do business with the importer despite
the complaints).
Recent cases concerning other implied warranty of merchantability questions include the following.
a breach of the implied warranty of merchantability).
B. IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
This warranty arises when any seller knows a particular purpose for which a buyer will use goods and
that the buyer is relying on the seller’s skill and judgment to select suitable goods [UCC 2–315, 2A–213].
1. Particular versus Ordinary Purpose
2. Knowledge and Reliance Requirements
The seller or lessor’s actual knowledge of the buyer’s particular purpose is not required, but the
buyer must have relied on the seller or lessor’s skill or judgment to select suitable goods.
C. WARRANTIES IMPLIED FROM PRIOR DEALINGS OR TRADE CUSTOM
has given important and valuable protection to consumers; that in states without this valuable warranty
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Warranties can arise from a course of dealing or usage of trade. When the parties know of a well-
recognized trade custom, courts will infer that they intended the custom to apply to their contract [UCC
2–314(3), 2A–212(3)].
ADDITIONAL BACKGROUND—
Warranties under the CISG
contained or packaged in the manner required by the contract.” Other provisions of Article 35 are, in effect,
The United Nations Convention on Contracts for the International Sale of Goods (CISG) provides for
warranty protection similar to that available under the UCC. Article 35 of the CISG states that the seller “must
D. LEMON LAWS
1. Seller Has Had Opportunity to Remedy Defect
Most states have lemon laws, which provide that if an automobile under warranty possesses a
2. Arbitration Often Required
Some states have established mandatory, government-sponsored arbitration programs for lemon-
law disputes.
ADDITIONAL BACKGROUND—
Lemon Laws
The lemon laws of Connecticut and California have served as the model for most of the other states’
statutes. The following is the text of California’s lemon law—California Civil Code Section 1795.8.
CIVIL CODE
DIVISION 3. OBLIGATIONS
PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS
TITLE 1.7. CONSUMER WARRANTIES
CHAPTER 1. CONSUMER WARRANTY PROTECTION
ARTICLE 3. SALE WARRANTIES
§ 1795.8. Automotive Consumer Notification Act; disclosure requirement
(a) The Legislature finds and declares that the expansion of state warranty laws covering new and used cars
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reasonable length of time or the dealer or manufacturer was not willing to repair the vehicle; that these
and that the disappearance of these notices upon the transfer of title from another state to this state
Legislature hereby enacts the Automotive Consumer Notification Act.
(b) For purposes of this section, “dealer” means any person engaged in the business of selling, offering for
sale, or negotiating the retail sale of used motor vehicles or selling motor vehicles as a broker or agent for
another, including the officers, agents, and employees of the person and any combination or association of
dealers. “Dealer” does not include a bank or other financial institution, or the state, its agencies, bureaus,
boards, commissions, authorities, or any of its political subdivisions. A person shall be deemed to be
engaged in the business of selling used motor vehicles if the person has sold more than four used motor
vehicles in the preceding 12 months.
by a manufacturer due to the inability of the manufacturer to conform the vehicle to applicable warranties
law to be replaced or required by law to be accepted for restitution by a dealer or manufacturer due to the
law of this state, any other state, or federal law shall disclose that fact to the buyer in writing prior to the
purchase and a dealer or manufacturer shall include as part of the titling documents of the vehicle the
following disclosure statement set forth as a separate document and signed by the buyer:
and does not relieve any person, including any dealer or manufacturer, from complying with any other
applicable law, including any requirement of paragraph (5) of subdivision (e) of Section 1793.2 or comparable
automobile warranty laws in other states.
(c) Any person, including any dealer or manufacturer, selling a motor vehicle in this state that is known or
should be known to have been required by law to be replaced or required by law to be accepted for restitution
1991 Pocket Part Credit(s)
(Added by Stats.1989, c. 862, § 1.)
E. MAGNUSON-MOSS WARRANTY ACT
1. Applies Only to Consumer Transactions
Under this federal statute, a seller need not give a written warranty for consumer goods, but if he or
she does and the price of goods is more than $25, the warranty must be labeled as either full or lim-
ited.
• A full warranty requires free repair or replacement of a defective part. If repair cannot be done
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2. Requires Certain Disclosures
Certain information must be disclosed in “readily understood language.”
IV. Overlapping Warranties
A. WHEN THE WARRANTIES ARE CONSISTENT
Express and implied warranties are construed as cumulative if they are consistent with one another
[UCC 2–317, 2A–215].
B. CONFLICTING WARRANTIES
If warranties are inconsistent—
V. Warranty Disclaimers and Limitations on Liability
Courts view warranty disclaimers with disfavor, especially when consumers are involved, often holding
A. EXPRESS WARRANTIES
A seller’s best protection from being held accountable for affirmations of fact or promises is not to make
B. IMPLIED WARRANTIES
Implied warranties can be disclaimed by the expression “as is,” or “with all faults,” or some other similar
phrase [UCC 2–316, 2A–214].
CASE SYNOPSIS—
Case 23.3: Roberts v. Lanigan Auto Sales
Evan Roberts bought a used car “as is” from Lanigan Auto Sales. When he learned that the vehicle had
previously been involved in an accident and suffered damage to the undercarriage, he filed a suit in a
Kentucky state court against Lanigan. The court ruled in Lanigan’s favor. Roberts appealed.
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Notes and Questions
language of the deal must be carefully scrutinized to determine whether this warranty has been disclaimed.
What would a person who buys a car have to show to prove that the seller breached the implied
warranty of merchantability? An implied warranty of merchantability automatically arises in every sale of
Does an “as is” clause in a sales contract bar all claims of fraud? Explain. An “as is” clause does
not bar all claims of fraud. Under UCC 2–316, when “circumstances indicate otherwise,” an attempted
1. Disclaimer of the Implied Warranty of Merchantability
A merchantability disclaimer must mention merchantability; it need not be written, but if it is, the
writing must be conspicuous.
2. Disclaimer of the Implied Warranty of Fitness
C. BUYER’S OR LESSEE’S EXAMINATION OR REFUSAL TO INSPECT
If a buyer refuses to examine goods or if a buyer examines goods as fully as desired before contracting,
there is no implied warranty with respect to defects that a reasonable examination will reveal.
D. WARRANTY DISCLAIMERS AND UNCONSCIONABILITY
The UCC does not refer to unconscionability as a factor in considering warranty disclaimers. Eventually,
E. STATUTES OF LIMITATIONS
Under the UCC, an action for breach of contract must be brought within four years after the cause ac–
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TEACHING SUGGESTIONS
should be emphasized that warranties exist because a sale occurs. A seller may be entirely ignorant of the
1. Many students believe that unless sellers specifically guarantee certain qualities, buyers take the risk. It
applies. In other words, the UCC rules apply, unless the parties agree otherwise.
2. You might explain that the UCC rules concerning warranties and disclaimers provide a good illustration of
the point that the UCC is comparable to the rules of a game—the rules are the rules, unless the players agree
Appropriate experiences could be used to focus an outline of the principles dealt with in this chapter by dis–
3. Discuss warranties from the point of view of the consumer movement. Students might be asked to
4. Ask students what they think are public policy reasons for applying, or not applying, warranty law in
consumer and commercial cases. The theory has not been without controversy and, as the text points out,
some states do not recognize it.
Cyberlaw Link
How are warranties for data based products created, limited, modified, and disclaimed? Should
there be any exceptions to the warranty rules when they are applied to sales or leases of software?
DISCUSSION QUESTIONS
1. What is the difference between express warranties and puffing? A seller’s statement about the value or
2. What implied warranties arise under the UCC? Implied warranties that arise under the UCC include the
3. What is the difference between the implied warranty of merchantability and the implied warranty of
fitness for a particular purpose? Implied warranty of merchantability. An implied warranty of merchantability arises
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4. If warranties are inconsistent, what are the priorities? If express and implied warranties are inconsistent:
(1) express warranties displace implied warranties except implied warranties of fitness for a particular purpose (an
5. How can implied warranties of merchantability and fitness for a particular purpose be disclaimed?
Unless circumstances indicate otherwise, implied warranties are generally disclaimed by expressions such as “as is,”
6. What effect does a buyer’s examination of the goods before contracting have on implied warranties? If
a buyer examines goods or refuses to examine goods (or a sample or model) as much as he or she wants before
contracting, there is no implied warranty with respect to defects that a reasonable examination will reveal (and the
7. When does a cause of action accrue for breach of warranty? A cause of action accrues for breach of
warranty when a seller tenders delivery, even if the nonbreaching party is unaware that a cause has accrued. If a
8. In what ways does the Magnuson-Moss Warranty Act modify UCC rules on implied warranties? Implied
warranties do not arise under the Warranty Act, but when an express warranty is made in a sales contract or a
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ACTIVITY AND RESEARCH ASSIGNMENT
A person who is not a party to a contract generally has no rights under it and cannot bring an action at common
law for its breach. The connection between contracting parties is called privity of contract. The UCC provides three
EXPLANATION OF A SELECTED FOOTNOTE IN THE TEXT
Footnote 7: The Magnuson-Moss Warranty Act was designed to prevent deception in warranties by making
them easier to understand. The following is the text of the section of the Warranty Act (15 U.S.C. § 2302) that details
information that must be included when a warranty is written.
TITLE 15. COMMERCE AND TRADE
CHAPTER 50—CONSUMER PRODUCT WARRANTIES
§ 2302. Rules governing contents of warranties
(a) Full and conspicuous disclosure of terms and conditions; additional requirements for contents
Such rules may require inclusion in the written warranty of any of the following items among others:
In order to improve the adequacy of information available to consumers, prevent deception, and improve
(1) The clear identification of the names and addresses of the warrantors.
(2) The identity of the party or parties to whom the warranty is extended.
(3) The products or parts covered.
such written warranty—at whose expense—and for what period of time.
(5) A statement of what the consumer must do and expenses he must bear.
(6) Exceptions and exclusions from the terms of the warranty.
(4) A statement of what the warrantor will do in the event of a defect, malfunction, or failure to conform with
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obligation under the warranty, including the identification of any person or class of persons authorized to
perform the obligations set forth in the warranty.
warrantor and a recital, where the warranty so provides, that the purchaser may be required to resort to such
procedure before pursuing any legal remedies in the courts.
(9) A brief, general description of the legal remedies available to the consumer.
(10) The time at which the warrantor will perform any obligations under the warranty.
(8) Information respecting the availability of any informal dispute settlement procedure offered by the
(11) The period of time within which, after notice of a defect, malfunction, or failure to conform with the
warranty, the warrantor will perform any obligations under the warranty.
(12) The characteristics or properties of the products, or parts thereof, that are not covered by the warranty.
(13) The elements of the warranty in words or phrases which would not mislead a reasonable, average
consumer as to the nature or scope of the warranty.
(b) Availability of terms to consumer; manner and form for presentation and display of information; duration;
extension of period for written warranty or service contract
(1)(A) The Commission shall prescribe rules requiring that the terms of any written warranty on a consumer
product be made available to the consumer (or prospective consumer) prior to the sale of the product to him.
displayed so as not to mislead the reasonable, average consumer, when such information is contained in
advertising, labeling, point-of-sale material, or other representations in writing.
(B) The Commission may prescribe rules for determining the manner and form in which information with
respect to any written warranty of a consumer product shall be clearly and conspicuously presented or
(2) Nothing in this chapter (other than paragraph (3) of this subsection) shall be deemed to authorize the
Commission to prescribe the duration of written warranties given or to require that a consumer product or any
of its components be warranted.
to carry out such warranty (or service contract) within the period specified in the warranty (or service
(3) The Commission may prescribe rules for extending the period of time a written warranty or service
(c) Prohibition on conditions for written or implied warranty; waiver by Commission
provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate
name; except that the prohibition of this subsection may be waived by the Commission if—
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(2) the Commission finds that such a waiver is in the public interest.
(1) the warrantor satisfies the Commission that the warranted product will function properly only if the article
The Commission shall identify in the Federal Register, and permit public comment on, all applications for
waiver of the prohibition of this subsection, and shall publish in the Federal Register its disposition of any
such application, including the reasons therefor.
(d) Incorporation by reference of detailed substantive warranty provisions
The Commission may by rule devise detailed substantive warranty provisions which warrantors may
incorporate by reference in their warranties.
(e) Applicability to consumer products costing more than $5.00
The provisions of this section apply only to warranties which pertain to consumer products actually costing the
consumer more than $5.
(Pub.L. 93-637, Title I, § 102, Jan. 4, 1975, 88 Stat. 2185.)