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Chapter 21Warranties

Introduction to Warranties

Caveat emptor: “Let the buyer beware” Governed law of sales and leases since Roman

times Warranties that apply under UCC give buyers more

protection

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Express Warranty

Created when seller/lessor affirms goods meet certain standards of quality, description, performance, or condition

May be written, oral, or inferred from conduct Sellers and lessors are not required to make express

warranties

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Express Warranty

Created when seller/lessor indicates goods will conform to: All affirmations of fact or promise made about the

goods Any description of the goods Any model or sample of the goods

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Express Warranty

Recovery for breach of warranty Warranty must be a contributing factor that enticed

buyer/lessee to enter the contract A retailer is liable for the express warranties made

by manufacturers of goods it sells

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Express Warranty

Statement of opinion: A commendation of goods, made by a seller or lessor, that does not create an express warranty Puffing or commendation of goods

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Damages Recoverable for Breach of Warranty

Compensatory damages: Difference between value of goods as warranted and and the actual value of the goods accepted at the time and place of acceptance Purchaser or lessee can recover for personal

injuries

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Warranties Implied By Law

Implied Warranty of Implied Warranty of MerchantabilityMerchantability

Implied Warranty of Fitness Implied Warranty of Fitness for Human Consumptionfor Human Consumption

Implied Warranty of Fitness Implied Warranty of Fitness for a Particular Purposefor a Particular Purpose

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Implied Warranty of Merchantability

Standards The goods must be fit for the ordinary purposes for

which they are used The goods must be adequately contained,

packaged, and labeled The goods must be of an even kind, quality, and

quantity within each unit

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Implied Warranty of Merchantability

The goods must conform to any promise or affirmation of fact made on the container or label

The quality of the goods must pass without objection in the trade

Fungible goods must meet a fair average or middle range of quality

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Case 21.1: Implied Warranty of Merchantability

Case Denny v. Ford Motor Company 87 N.Y.2d 248, 662 N.E.2d 730, 639 N.Y.S.2d 250, Web 1995

N.Y. Lexis 4445 Court of Appeals of New York

Issue Has Ford Motor Company breached the implied

warranty of merchantability?

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Implied Warranty of Fitness for Human Consumption

Applies to food or drink obtained from restaurants, grocery stores, fast-food outlets, vending machines

Tests Foreign substance test: To determine

merchantability based on foreign objects found in food

Consumer expectation test: To determine merchantability based on what the average consumer would expect to find in food products

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Implied Warranty of Fitness for a Particular Purpose

Arises where a seller/lessor warrants that the goods will meet the buyer/lessee’s expressed needs

Applies to both merchant and nonmerchant sellers/lessors

Breached if the goods do not meet the buyer’s or lessee’s expressed needs

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Case 21.2: Implied Warranty of Fitness for a Particular Purpose

Case Mack Massey Motors, Inc. v. Garnica 814 S.W.2d 167, 1991 Tex. Lexis 1814 Court of Appeals of Texas

Issue Have the defendants made and breached an

implied warranty of fitness for a particular purpose?

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Warranty Disclaimers

Warranty disclaimer: A statement that negates express and implied warranties

Rules: “As is” disclaimer Disclaimer of the implied warranty of

merchantability Disclaimer of the implied warranty of fitness for a

particular purpose Written disclaimers must be conspicuously displayed

to be valid

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Warranties of Title and Possession

Good TitleGood TitleNo Security No Security

InterestsInterests

No No InterferenceInterference

No No InfringementsInfringements

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Warranties of Title and Possession

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