1. Warranties and Product Liability
OBE 118, Section 3, Fall 2004
Professor McKinsey

2. Warranties
A contractual theory of responsibility for sellers for how a good performs
Often the UCC is involved
Two Categories of warranties:
3 ways to create:
3 types:
Statement of fact
Description of goods
Samples or models

3. Express Warranties Opinions and Puffing are not warranty
Statement of fact that a product will meet a standard or do a specific thing.
Examples (yes or no?)
This blade will last for over 100 hours
Will kill any weed you spray it on
I think this car is the best
I think this car will last another 100,000 miles without any major maintenance
This is the best product on the market

4. Implied Warranties Title Warranties – with nearly all sales of goods
Implied Warranty of Merchantability – only possible when merchant seller
Implied Warranty of Fitness for a Particular Purpose – certain circumstances

5. Implied Title Warranties
Three types:
Good Title – sellers owns the goods
No Liens – good is free of claims by others
No Infringements – good is free from Intellectual Property(IP) claims

6. Implied Warranty of Merchantability
When a merchant sells a good, it is warranted to be fit for use in general purpose
“ ”
Goods must be reasonably fit for the ordinary purposes for which such goods are used, meet label expectations and be safe
Victim must have harm caused by the breach of warranty

7. Implied Warranty of Fitness for a Particular Purpose
Arises when any seller recommends goods to the buyer for a particular purpose:
1) Seller aware of particular use
2) Buyer relies on seller’s knowledge or skill
3) Seller aware of buyer’s reliance
4) Seller recommends goods for particular use

8. Handling Warranties A warranty creates terms in the contract
Warranty failure is a potential breach of contract
The act of ensuring no warranties is called “disclaiming”
Warranty disclaimers often have to meet requirements to be effective

9. Disclaiming Warranties
Merchantability
Conspicuous disclaimer with “ ” in it
Fitness for a Particular Purpose
Use the words: “ ” and “ ”

10. Product Liability
Contractual theory- using warranties (express and implied) within a contract
Negligence theory- was product negligently made or sold?
Strict liability theory – does product fall under the strict liability doctrine

11. Product Liability using Negligence
To prove negligence the part must show a breach of the duty of care.
Proximate cause may limit the number of people in the chain of commerce that can be held liable
Key part is finding a “smoking gun” or other evidence showing fault.

12. PL based on Strict Liability
1. D sold product in defective condition
2. D normally in business of selling product
3. Product unreasonably dangerous*
4. P suffers physical harm through use of product
5. Defective condition is proximate cause
6. No substantial changes to product since sold

13. PL using Strict Liability Theory
Advantages: lots of possible parties to sue, no need to show fault
Disadvantages: has to meet one of three types of “defective products”