© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. M ILLER

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  A warranty is an assurance or guarantee by the seller or lessor of certain facts concerning the goods being sold or leased.  If seller breaches a warranty, buyer can recover damages, or rescind the contract. 2

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Warranties automatically arise in most commercial sales transactions.  Normally warranties can be disclaimed or modified with specific language in the contract.  3

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  UCC-312 can creates three express warranties at sale:  Good Title.  No Liens.  No Infringements. 4

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Statements That Create:  Quality, condition, description, or performance potential of goods.  Can be created by: Any Affirmation or Promise. Any Description. Any Sample or Model. 5

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Basis of the Bargain.  Seller does not have to use the words “guarantee” or “warranty.”  Buyer must rely on warranty when he enters into contract.  6

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Statements of Opinion and Value.  Only statements of fact create express warranties. Puffery versus Express Warranties.  Exception for Statements of Opinion by Experts.  Reasonable Reliance. 7

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Inferred at law based on the circumstances or nature of the transaction.  8

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Merchantability.  Automatically arises from merchants.  Merchantable Goods: Goods are of average, fair, or medium-grade. Adequately packaged and labeled. Conform to promises on label.  9

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Merchantability.  Merchantable Goods: Warranty can be breached even if merchant did not know product was defective.  CASE 23.1 S HOOP V. D AIMLER C HRYSLER C ORP. (2007). 10

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Merchantability.  Merchantable Food: Serving of food or drinks in a public establishment also has an implied warranty of merchantability. CASE 23.2 W EBSTER V. B LUE S HIP T EA R OOM, I NC. (1964). 11

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Fitness for a Particular Purpose.  Particular vs. Ordinary Purpose: Differs from ordinary purpose of merchantability. Goods can be merchantable but unfit for a particular purpose.  12

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Fitness for a Particular Purpose.  Knowledge and Reliance Requirements: seller must have reason to know purpose, and buyer must have relied on the recommendation. 13

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Prior Dealings or Custom.  Arises when both parties to a contract have knowledge of a well- recognized trade custom. Courts infer that both meant this custom to apply to their transaction. 14

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Lemon Laws.  Defective automobiles that repeatedly fail to meet standards of quality or performance.  Seller has had opportunity to fix.  Arbitration often required. 15

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Magnuson-Moss Warranty Act.  Modifies UCC for consumer sales.  Only applies when written warranties are made by Seller. If goods > $10 label “full” or “limited.” If goods > $15 Seller must make additional disclosures.  16

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Magnuson-Moss Warranty Act.  Full Warranty: Seller must repair or replace.  Limited Warranty must be conspicuous. If limit of time only must say, e.g., “full twelve-month warranty.”  17

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Magnuson-Moss Warranty Act.  UCC Implied Warranties: May not be disclaimed, but can be limited, but must correspond with time of express warranty. Requires document of all warranties in “readily understood language.” 18

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Occurs when two or more warranties are made in a single transaction:  Consistent Warranties are construed as cumulative.  19

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Inconsistent Warranties:  Express warranties displace inconsistent implied warranties – except fitness for a particular purpose.  20

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Inconsistent Warranties:  Samples take precedence over inconsistent descriptions.  Exact or technical specifications displace inconsistent samples or descriptions. 21

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Express Warranties disclaimed:  If they were never made (evidentiary matter).  If a clear written disclaimer in contract with specific, unambiguous language and called to Buyer’s attention (BOLD CAPS UNDERLINED). 22

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Implied Warranties.  Unless circumstances indicate otherwise, warranties of fitness and merchantability can be disclaimed with the words “As Is,” “With All Faults.”  23

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Implied Warranties. CASE 23.3 R OBERTS V. L ANIGAN A UTO S ALES (2013).  Disclaimer of the Implied Warranty of Merchantability: must use the word merchantability.  24

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Implied Warranties.  Disclaimer of the Implied Warranty of Fitness: must be in writing and conspicuous. 25

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Buyer or Lessee’s Examination or Refusal to Inspect.  Warranties are disclaimed as to defects that could reasonably be found on examination.  26

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Warranty Disclaimers and Unconscionability.  Factors include ‘take-it-or-leave-it’ provision or unequal bargaining power.  27

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Statutes of Limitation.  Action for Breach of Warranty must commence within four (4) years after the action accrues (breach).  Begins to toll at tender, but buyer must notify Seller within a reasonable time. 28