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Warranties 1.Warranty of title 2.Express warranties 3.Implied warranties (merchants only) Implied warranty of merchantability Implied warranty of fitness.

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Presentation on theme: "Warranties 1.Warranty of title 2.Express warranties 3.Implied warranties (merchants only) Implied warranty of merchantability Implied warranty of fitness."— Presentation transcript:

1 Warranties 1.Warranty of title 2.Express warranties 3.Implied warranties (merchants only) Implied warranty of merchantability Implied warranty of fitness for a particular purpose

2 Warranty of Title Automatic Warranty of Title. UCC – Seller automatically warrants that: – Good title. The title conveyed is good – Right to convey the title – Goods are free of security interest or other liens – Warranty of title can be disclaimed. Special Rule for Merchant Sellers – Also warrants that the good is free from any rightful claims of patent, trademark or similar infringement Focus Case 10.1, p. 337: Purchase of Stolen Corvette $8,500 cash for corvette in 1998 Buyer discovered VIN had been altered because car stolen in 1992 Police seized car Buyer brought action against seller under warranty law Seller did not know that car had been stolen Seller breached warranty of title 1990 Corvette

3 Presentation Case: Dunleavey (P) v. Paris Ceramics USA (D), (Super Ct. Conn 2005), p. 379 Groups 26 & 17 Cruiser’s Yacht Offering the best performance and cruising accommodations in its class, the 3375 Espirt offers a choice of either stern drive or inboard power, superb handling and sleeping accommodations for six. French Antique Bourgogne Stone

4 Express Warranties Requirements: – Affirmation of Fact. Seller makes an affirmation of fact or promise regarding the goods – Description of Goods or Sample. Seller provides a description of the goods or furnishes a sample – Part of Basis of the Bargain. The statement of promise must be part of the “basis of the bargain” Puffery Express Warranty on Carpet – End-of-Chapter Q: 8 Carpet alleged to have caused health issues – serve toxic injuries pet “was a higher quality than what she brought in the store and that she was getting a very good grade of material.” Brought claim under breach of express warranty. Start here on Thursday 930 did first case

5 Presentation Case: Thomas (P) v. Micro Center (D) (Ohio App 2007), p. 382. Groups 28 & 35 Douglas Thomas purchased the computer Butler Financial Solutions, LLC Extended Warranty seller

6 Implied Warranty Sample Cases Kolarik v. Cory Int’l Corp, Case Illustration 10.2, p. 358 Plaintiff fractured a tooth while biting down on an olive from a far of pimento- stuffed green olives. Plaintiff argued label said “minced pimento stuffed” created an express warranty that the olives had been pitted. Industry standards. The US Dept of Agriculture allows 1.3 pit parts per 100 olives.

7 As Is Fake Visor Purchased. Star Trek fan claimed humiliation when he paid more than $24,000 for fake props at a Christie’s auction. Sued for $7,000,000 Fan asked Data (actor Brent Spiner) to sign the visor and the actor told him it was a fake. Sold As Is

8 Implied Warranty of Merchantability Applies to Merchants Only. Must be merchant that sells that sort of goods Goods are merchantable if: – Pass without Objection. They pass without objection in the trade under the contract description, – Fair and Average Quality. In the case of fungible goods, be of fair and average quality, – Fit for Ordinary Purpose. Be fit for the ordinary purpose for which such goods are sold, – Even Kind, Quality and Quantity. Be of even kind, quality, and quantity within each unit and among all units – Adequately Packaged and Labeled. Be adequately packaged and labeled, and – Conform to Promises on Container. Conform to any promises or affirmations of fact made on the container or label For Sale by Owner Joe’s Bike Shop 8

9 Implied Warranty of Fitness for a Particular Purpose Seller Knows Purpose. The seller has reason to know of the particular purpose for which the buyer intends to use the goods Seller Knows Buyer Relying on Seller’s Judgment. The seller has reason to know that the buyer is relying upon the seller’s skill or judgment ot select or furnish suitable goods, and Buyer Actually Relies on Seller’s Judgment. The buyer actually relies upon the seller’s skill or judgment. Mower Purchase of a mower to mow driving range by pulling mower with a tractor Told seller he needed mower to be pulled by 20 hp diesel engine Seller did not sell tractors Seller recommended the LasTec 521 It cut lawn poorly, because tractor was underpowered for the mower LasTec 521

10 Warranty Disclaimers and Privity of Contract For Warranty Warranty Disclaimers – Disclaimers must be unambiguous (any ambiguity resolved against seller) – Tough to disclaim express warranties – never make them in the first place – “as is” Privity of Contract Not Required – Any member of household and any houseguest are also covered under the warranty “if it is reasonable to expect that such a person may use, consume or be affected by the goods.” Privity of Contract – Case Illustration 10.3, p. 360 Husband buys a ’55 Plymouth as a mother’s day gift for his wife Car came with Express Warranty Car is defective – car steering faulty Steering broke and car turned 90 degrees into a sign and brick wall Wife injured – negligence claim dismissed Car only has 468 miles on it Warranty claim survives – warranty of merchantability

11 Remedies and Defenses Lost value Consequential damages – Personal Injury. UCC does not permit limitation of consequential damages when the plaintiff has suffered a personal injury Incidental damages Baker v. Burlington Coat Factory, Case Illustration 10.4, p. 362 Baker purchased fake fur coat from Burlington for $127 Sign in store, receipt on front and back said “No Cash Refunds” Burlington allowed exchanges or in-store credit Fur began shedding profusely Baker wanted money back – Burlington would only give credit Implied Warranty of Merchantability cannot be overridden by store policy No Cash Refunds Exchanges and In-Store Credit Only

12 Magnuson-Moss Federal Warranty Act Covers Written Warranties Objectives of law – Ensure that consumers could get complete information about warranty terms and conditions – Ensure that consumers could compare warranty coverage prior to purchase – Promote competition on the basis of warranty coverage and – Strengthen incentives for companies to perform their warranty obligations and resolve complaints quickly. Full or Limited Warranty – No warranty required – Full Warranty. Entitles consumer to free repair or after a reasonable number of failed attempts to fix the product entitles the person to choose of a full refund or replacement. Other Requirements – Cannot disclaim implied warranties – Warranty provided in a single easy-to-read format – Must be available prior to purchase Must state whether limited or full

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