14.1 Express and Implied Warranties  After finishing this section, you will know how to:  Describe the three ways an express warranty can be made  State the obligations of merchants under the Magnuson Moss Warranty Act  Contrast a full warranty with a limited warranty  Differentiate between the implied warranty of fitness for a particular purpose and the implied warranty of merchantability

 Warranty- SELLER’S GUARANTEE THAT THEIR PRODUCT IS NOT DEFECTIVE AND THAT IT IS SUITABLE FOR THE USE FOR WHICH IT WAS INTENDED

 Warranties are intended to:  PROVIDE AN INCENTIVE TO BUY  IMPROVE THE QUALITY OF PRODUCTS

 There are 2 types of warranties under the UCC:  Express warranty  Implied warranty

 Express warranty- ORAL OR WRITTEN GUARANTEE BY THE MANUFACTURER OR SELLER  There are 3 types of express warranties:  STATEMENT OF FACT OR PROMISE BY THE SELLER  DESCRIPTION OF THE GOODS  USE OF SAMPLE OR MODEL

 Statement or promise  STATEMENT OF AN EXISTING FACT:  Example 1  PROMISE OF SOMETHING THAT MAY HAPPEN IN THE FUTURE:  Example 2  EXPRESS WARRANTIES ARE OFTEN FOUND IN SALES BROCHURES, CIRCULARS, AND ADVERTISEMENTS.  Example 3

 STATED IN CLEAR, PRECISE, AND UNDERSTANDABLE TERMS  TRY TO GET THE WARRANTY IN WRITING  DOESN’T HAVE TO BE WRITTEN, BUT IT MAKES IT EASIER TO PROVE  PAROL EVIDENCE RULE APPLIES  OPINIONS ARE NOT WARRANTIES

 Description of the goods- THE SELLER WARRANTS THAT THE GOODS WILL BE THE SAME AS THE DESCRIPTION  Example 4  Sample or model- THE SELLER WARRANTS THAT THE GOODS WILL BE THE SAME AS THE SAMPLE OR MODEL  Example 5

 Consumer protection  Guarantee- A PROMISE OR ASSURANCE OF THE QUALITY OR LIFE OF A PRODUCT  ANOTHER NAME FOR EXPRESS WARRANTY  Guarantor- ONE MAKING THE PROMISE  Example 6

 A GUARANTEE NEEDS TO BE STATED CLEARLY  FTC- FEDERAL AGENCY SET UP IN 1914 TO ENSURE FAIR ECONOMIC PRACTICES

 Magnuson-Moss Warranty Act (1975)- FTC CAN DEVELOP RULES REGUALTING THE ADVERTISEMENT OF GRARANTEES AND TO ENFORCE THESE GUIDELINES  PRODUCT OR PART COVERED BY THE GUARANTEE  TIME LIMIT WHEN THE PRODUCT IS ADVERTISED WITH A “LIFETIME GUARANTEE” OF PRODUCT LIFE OR THE LIFETIME OF THE PERSON  HOW THEY WILL SETTLE THE CLAIM  IDENTITY OF WHO IS THE GUARANTOR

 Full or Limited Warranty ($10 or more)  Full warranty-ONE IN WHICH A DEFECTIVE PRODUCT WILL BE FIXED OR REPLACED FREE WITHIN A REASONABLE TIME AFTER THE COMPLAINT HAS BEEN MADE ABOUT IT.  THE CONSUMER DOESN’T HAVE TO ANYTHING UNREASONABLE- SHIP HEAVY PRODUCTS BACK TO THE FACTORY  GOOD NO MATTER WHO OWNS IT  IF IT CAN’T BE FIXED- NEW ONE OR MONEY BACK

 Limited warranty- A WARRANTY THAT PROVIDES RESTRICTED PROTECTION  MUST BE LABELED  WHEN YOU SEE THIS ON A LABEL IT’S A GOOD IDEA TO READ THE WARRANTY

 Magnuson-Moss Warranty Act- $15 or over the warranty must be:  AVAILABLE FOR THE CUSTOMER TO READ  FULLY DISCLOSED IN SIMPLE, EASILY UNDERSTANDABLE LANGUAGE AND TERMS AND CONDITIONS OF THE WARRANTY  Example 7

 Implied warranty- GUARANTEE OF QUALITY IMPOSED BY LAW  NOT IN WRITING  ONLY WITH A SALE OF GOODS

 There are two principal types of implied warranties:  WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE  WARRANTY OF MERCHANTABILITY

 Warranty of Fitness for a particular purpose- THE SELLER GUARANTEES THAT GOODS ARE SUITABLE AND FIT FOR THE PURPOSE FOR THE BUYERS NEEDS  THE SELLER ADVISES THE BUYER AND THE BUYER RELIES ON THAT RECOMMENDATION  Example 8

 Warranty of Merchantability- IMPLIED WARRANTY THAT MAKES MERCHANT OR SELLER LIABLE FOR GOODS THAT ARE NOT FAIR OR AVERAGE QUALITY AND FIT FOR ORDINARY PURPOSES FOR WHICH SUCH GOODS ARE USED  To be merchantable, goods must be:  PASS WITHOUT OBJECTION IN THE TRADE  BE FIT FOR ORDINARY PURPOSE  ADEQUATELY CONTAINED, PACKAGED, AND LABELED  CONFORM TO THE PROMISE

 ONLY GIVEN BY A MERCHANT  Example 9  NEW OR USED GOODS  Example 10

 Usage of trade- COMMON PRACTICE- WHEN SELLING A PUREBREAD DOG: THE ANIMAL IS ACCOMPANIED BY PAPERS  Warranty of title- SELLER WARRANTS THAT THE TITLE IS GOOD AND DELIVERED FREE OF ANY FINANCIAL OBLIGATIONS  Example 11

Assignment  Page 304  Reviewing What You Learned  #1-5