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Business Law Chapter 23 Homework This Especially True The Oneinch Nylon Rope

Page Count
9 pages
Word Count
4549 words
Book Title
Business Law: Text and Cases 14th Edition
Authors
Frank B. Cross, Kenneth W. Clarkson, Roger LeRoy Miller
1
CHAPTER 23
WARRANTIES
ANSWERS TO QUESTIONS
AT THE ENDS OF THE CASES
CASE 23.1CRITICAL THINKING
LEGAL ENVIRONMENT
The court in the Nissan case indicated that the word “premium” may be considered
puffing when viewed in isolation. Is the term also puffing when considered in a broader
context? Explain. Yes, the word “premium” may be considered puffing when used in isolation,
and the term may also be considered puffing in the context of such marketing materials as the
automaker’s brochures in the Nissan case.
Of course, whether a given representation is puffing or a statement of fact may depend
on the circumstances surrounding the representation. Here, Nissan’s marketing brochures
specifically stated that the FX incorporates “premium automotive machinery.” Even considered
in this context, however, there is nothing specific in the representation that is measurable,
capable of verification, or capable of being proved false, as required to establish liability.
And, as the court explained, none of the other statements that Hurst pointed to as alleged
misrepresentations—a “leader in style,” a “luxury” car, a “superior product representing excellent
value,” and a vehicle of “uncompromising style and luxury”—were capable of verification or of
2 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
WHAT IF THE FACTS WERE DIFFERENT?
Suppose that the court in the Nissan case had held the defendant liable based on the
statements in its marketing brochures. What impact would this holding have on the
results in future cases? Discuss. If the court in the Nissan case had held the defendant liable
based on the statements in its marketing brochures, this case would have served as a
precedent for imposing liability on Nissan and other automakersindeed, other manufacturers
and sellers generally—in any situation in which a consumer’s expectation regarding a product
was not met.
A misrepresentation can be defined as a statement that is not in accord with the facts.
This can encompass advertising that creates a false impression. But to be actionable, a
statement must be a specific and measurable claim, capable of being proved false or of being
CASE 23.2CRITICAL THINKING
E-COMMERCE
If Webster had made the chowder herself from a recipe that she had found on the
Internet, could she have successfully brought an action against its author for a breach of
the implied warranty of merchantability? Explain. No, An implied warranty of merchantability
arises only in a sale or lease of goods by a merchant. This action would fail, among other
reasons, because there would have been no sale and possibly neither goods nor a merchant.
CASE 23.3LEGAL REASONING QUESTIONS
1A. What language in a sales contract excludes all implied warranties? Under UCC 2
316, “unless the circumstances indicate otherwise, all implied warranties are excluded by
expressions like ‘as is,’ ‘with all faults’ or other language which in common understanding calls
the buyer's attention to the exclusion of warranties.”
CHAPTER 23: WARRANTIES 3
Both parties to a contract must understand from the expression used that there are no
implied warranties. To specifically disclaim an implied warranty merchantability, a seller or
lessor must mention the word merchantability. The disclaimer need not be written, but if it is, the
2A. How does an “as is” clause in a sales contract affect the bargain between the
buyer and the seller? By agreeing to buy something “as is,” a buyer agrees to rely on his or
her own appraisal of the bargain and to accept the risk that he or she may be wrong.
Regardless of what a seller might represent in making the deal, the seller gives no binding
assurances concerning the value or condition of the thing sold.
According to the court in the Roberts case, “An ‘as is’ clause in a sales contract is
3A. In this case, what did the court rule on the effect of the “as is” clause? Why? In the
Roberts case, Roberts signed a contract to buy a car that stated the vehicle was sold “as is.” By
signing the contract, Roberts acknowledged that the bargain was “without any guarantee
expressed or implied by this dealer.” When the car proved to have been damaged in a previous
accident, thereby undercutting its value, Roberts filed a suit against Lanigan Auto Sales, the
dealer, alleging fraud. But the court held that the “as is” clause effectively shifted “the
ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
1A. Statements
This statement did not create an express warranty, because it is a statement of opinion. Only a
statement of fact creates an express warranty. If the seller or lessor makes a statement that
4 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
2A. Warranty disclaimer
A warranty disclaimer must be clear and specific, not buried in paperwork. Further, the
disclaimer was inconsistent with the promise made at the time of the purchase.
3A. Implied warranty of merchantability
Every sale of goods made by a merchant who deals in goods of the kind sold automatically
gives rise to an implied warranty of merchantability. To be merchantable, goods must be
4A. Title warranty
A title warranty protects buyers who unknowingly purchase goods that are subject to a creditor’s
security interest. If a creditor legally repossesses the goods from a buyer who had no actual
knowledge of the security interest, the buyer can recover from the seller for breach of warranty.
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
No express warranties should be created by the oral statements made by
salespersons about a product. If no express warranties could be created orally by
salespersons, then consumers would demand written warranties for which there would be no
arguments about what was and what was not warranted by the retailer or manufacturer of a
product. This would avoid a “he said” or “she said” shouting match during litigation about liability
for a defective product.
CHAPTER 23: WARRANTIES 5
ANSWERS TO ISSUE SPOTTERS
AT THE END OF THE CHAPTER
1A. General Construction Company (GCC) tells Industrial Supplies, Inc., that it needs
an adhesive to do a particular job. Industrial provides a five-gallon bucket of a certain
brand. When it does not perform to GCC’s specifications, GCC sues Industrial, which
claims, “We didn’t expressly anything.” What should GCC argue? The buyer should argue
that the seller breached an implied warranty of fitness for a particular purpose. An implied
2A. 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 the implied warranty of merchantability? Why or why not? Yes,
Stella can recover from Roasted Bean for breach of the implied warranty of merchantability. An
implied warranty of merchantability arises in every sale of goods sold by a merchant who deals
ANSWERS TO BUSINESS SCENARIOS
AT THE END OF THE CHAPTER
23-1A. Implied warranties
For Moon to have an implied warranty of fitness for a particular purpose, he must prove two
elements: (1) that the seller, Davidson, expressly or impliedly knew the particular purpose for
232A. Warranty disclaimers
Yes. To disclaim the implied warranty of fitness for a particular purpose, the disclaimer must be
in writing and be conspicuous. Although the implied warranty of merchantability can be
6 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
disclaimed orally, if the disclaimer is in writing it must be conspicuously written. This means that
the disclaimer musteither by different color or type size or some other techniquestand out
ANSWERS TO BUSINESS CASE PROBLEMS
AT THE END OF THE CHAPTER
23-3A. Express warranties
The court dismissed the plaintiffs’ complaint, and on the plaintiffs’ appeal, a state intermediate
appellate court affirmed the dismissal. The court explained that “Gold Collection” or
“Masterpiece Collection” is not an affirmation of fact or a promise that the tapes will last for
generations or otherwise have an extraordinary life span. A “collection” is “a number of objects
23-4A. Implied warranties
The court granted Kallestad's request, but on the Rothings’ appeal, the Montana Supreme Court
reversed the lower court’s judgment on this issue and remanded the case for trial. The state
supreme court found no requirement of foreseeability to determine liability for a breach of the
UCC’s implied warranty of merchantability. The court explained that “the Rothings' purchase of
hay from Kallestad was a transaction in goods” and if Kallestad was, on remand, held to be “a
235A. SPOTLIGHT ON APPLEImplied warranties
The court should rule in favor of Apple. Apple’s statements are generalized and nonactionable
puffery because there are vague and generalized terms and not factual representations about a
236A. BUSINESS CASE PROBLEM WITH SAMPLE ANSWERImplied warranties
Yes, Absolute breached the implied warranties of merchantability and fitness for a particular
purpose. Under the UCC, merchants impliedly warrant that the goods they sell or lease are
merchantable and, in certain circumstances, fit for a particular purpose. To be merchantable,
goods must be “reasonably fit for the ordinary purposes for which such goods are used.” They
must be at least average, fair, or medium-grade qualityquality that will pass without objection
in the trade or market for the goods. For example, merchantable food is food that is fit to eat. To
be fit for a particular purpose, the seller must know (or have reason to know) the purpose for
which the buyer will use the goods and that the buyer is relying on the judgment of the seller to
237A. Express warranties
No, the “as is” disclaimer was not sufficient to put Bell on notice that the odometer reading could
be false or that the car had been in an accident. And Gobran cannot avoid liability on the ground
that Bell did not obtain a Carfax report on the vehicle until after she bought the car. A seller
creates an express warranty by making representations concerning the quality, condition,
23-8A. A QUESTION OF ETHICSLemon laws
(a) Kia’s offer to Schweiger of a refund of $3,306.24 for the car that the dealer was
unable to fix could effectively bar Schweiger’s claim for a refund. But it seems reasonable to
require that such an offer would include the full purchase price plus any sales tax, finance
charge, and any other amounts paid by Schweiger at the time of the sale, as well as the costs of
attempted repair, less a reasonable allowance for use. The “other amounts” could include title
(b) A party is certainly entitled to present any argument that he or she believes to be
in his or her favor. But not all arguments are equal in their significance or effect. A party’s
credibility with a court can wear thin if an argument is weak or illogical.
Whether it is unethical to make an illogical argument may be a question of personal
values, perspective, and intent. Some persons may find it objectionable if the proponent is
merely throwing up the argument as a smoke screen for an ulterior purpose. Some may simply
object to the illogic because the law is founded on logic. Others may be willing to discuss the
merits of the argument if its proponent is not being disingenuous but genuinely believes it to be
valid, solid, and persuasive.
CHAPTER 23: WARRANTIES 9
ANSWERS TO LEGAL REASONING GROUP ACTIVITY QUESTIONS
AT THE END OF THE CHAPTER
239A. Warranties
(a) A seller can create an express warranty by making representations concerning the
quality, condition, description, or performance potential of the goods. An express warranty
arises when a seller or lessor indicates that the goods conform to (1) any affirmation of fact or
promise that the seller makes to the buyer about the goods, (2) any description of the goods,
(b) Every sale of goods made by a merchant who deals in goods of the kind sold
automatically gives rise to an implied warranty of merchantability. Weight loss supplements are
not services, real estate, or securitiesthey are goods. Thus, the implied warranty of
merchantability applies to the purchase of weight loss supplements.
(c) The implied warranty of fitness for a particular purpose arises in the sale of goods
when a seller knows the particular purpose for which a buyer will use the goods and that the
buyer is relying on the skill and judgment of the seller to select suitable goods. A seller need not

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