1. Section 14.1

2. The Importance of Chapter 14 Warranties Section 14.1
Express and Implied Warranties
Section 14.2
Exclusion of Warranties, Privity,
and Duty to Notify

3. What You’ll Learn
How to describe the three ways an express warranty can be made (p. 294)
How to state the obligations of merchants under the Magnuson-Moss Warranty Act (p. 297)

4. What You’ll Learn
How to contrast a limited warranty with a full warranty (pp. 297, 298)

5. What You’ll Learn
How to differentiate between the implied warranty of fitness of a particular purpose and the implied warranty of merchantability (pp. 301, 302)
How to explain the warranty of title
(p. 303)

6. Why It’s Important
Understanding warranties will keep you from losing money.

7. Legal Terms
warranty (p. 294)
express warranty (p. 294)
full/limited warranty (pp. 297, 298)
implied warranty (p. 301)

8. Legal Terms
warranty of fitness for a particular purpose (p. 301)
warranty of merchantability (p. 302)
usage of trade (p. 303)
warranty of title (p. 304)

9. Section Outline Law of Warranties Express Warranties
Statement of Fact or Promise
Availability before Sale
Advertising Express Warranties

10. Section Outline Express Warranties, continued
Magnuson-Moss Warranty Act
Description of the Goods
Sample or Model

11. Section Outline Implied Warranties Warranty of Title
Warranty of Fitness for a Particular Purpose
Warranty of Merchantability
Usage of Trade
Warranty of Title

12. Pre-Learning Question
What is a warranty?

13. Law of Warranties
The UCC provides protection under its law of warranties for situations such as:
Products that don’t work after you buy them.
Impurities in foods in restaurants.
Technical problems with computers.

14. Law of Warranties A warranty is another name for a guarantee.
A breach of warranty is a breach of contract.

15. Pre-Learning Question
What is an express warranty?

16. Express Warranties
An express warranty is an oral or written statement, promise, or other representation about the quality, ability, or performance of a product.
Express warranties apply to goods that are sold or leased.

17. Express Warranties Express warranties are conveyed in three ways:
By a statement of fact or promise made by the seller
By a description of the goods
By the use of a sample or model

18. Statement of Fact or Promise
An express warranty is created when a private party or a merchant sells goods and makes a statement of fact or a promise about the goods to the buyer.

19. Statement of Fact or Promise
An express warranty may be a statement of fact or a promise of something that may happen in the future.
Express warranties are often found in sales brochures, circulars, and advertisements.

20. Availability before Sale
Written warranties on consumer products costing more than $15 must be made available before you buy the product.

21. Advertising Express Warranties
An advertisement stating that a product is warranted must tell you how to get a copy of the warranty before you buy the product.

22. Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act is a law affecting only the sale of goods sold in interstate commerce (business activities that touch more than one state).

23. Magnuson-Moss Warranty Act
This federal act gives added protection to consumers when written express warranties are made.

24. Magnuson-Moss Warranty Act
When a written warranty is offered on consumer goods costing more that $10 and sold in interstate commerce, the warranty must be labeled as full or limited.

25. Full Warranty
A full warranty promises to fix or replace a defective product at no charge to the consumer.

26. Full Warranty A full warranty:
Must be honored within a reasonable amount of time.
Is good for the period mentioned in the warranty, regardless of who owns the item when it breaks.

27. Limited Warranty
A limited warranty is any written warranty that does not meet the requirements for a full warranty.

28. Limited Warranty A limited warranty:
Does not promise free repair or replacement.
Commonly covers only parts, not labor.
May offer a partial refund.

29. Limited Warranty A limited warranty: May require you to pay shipping.
May only apply to the original buyer.
Must be labeled “limited warranty.”

30. Description of the Goods
Any description of the goods that is part of a transaction also creates an express warranty.
The seller warrants that the goods will be the same as the description.

31. Sample or Model
Any sample or model that is part of a transaction creates an express warranty.
When displaying a sample or model, the seller warrants that the goods sold will be the same.

32. Pre-Learning Question
What is an implied warranty?

33. Implied Warranties
An implied warranty is a guarantee of quality imposed by law.

34. Implied Warranties An implied warranty: Is not in writing.
Applies only to goods that are sold, not services contracted.

35. Implied Warranties There are three types of implied warranties:
Warranty of fitness for a particular purpose
Warranty of merchantability
Warranty that comes from a course of dealing or usage of trade

36. What is the difference between an express and an implied warranty?

37. ANSWER
Express: provided by the seller; implied: imposed by law.

38. for a Particular Purpose
Warranty of Fitness
for a Particular Purpose
A warranty of fitness for a particular purpose is created when the seller knows the purpose for which the goods are needed.

39. for a Particular Purpose
Warranty of Fitness
for a Particular Purpose
The seller advises the buyer in making a purchase, and the buyer relies on the seller’s knowledge and advice.

40. for a Particular Purpose
Warranty of Fitness
for a Particular Purpose
In this way, the seller warrants by implication that the goods will be fit for the purpose for which they are to be used.

41. for a Particular Purpose
Warranty of Fitness
for a Particular Purpose
This warranty exists whether the seller is a merchant or a private party.

42. Warranty of Merchantability
Under an implied warranty of merchantability, the merchant warrants that the goods being sold are merchantable.

43. Warranty of Merchantability
This warranty is given only when the seller regularly sells goods of that kind.
Unless disclaimed, retailers, wholesalers, and manufacturers imply such a warranty in every sale.

44. Warranty of Merchantability
This gives assurance that their products are fit for the purpose for which they are purchased.

45. Warranty of Merchantability
Private parties do not provide the warranty of merchantability.

46. Usage of Trade
Another implied warranty arises from the customary ways in which the parties have dealt in the past, or the usage of trade.

47. Pre-Learning Question
What is a warranty of title?

48. Warranty of Title
When a merchant or a private party sells goods, the seller warrants that the title being conveyed is good and that the transfer is lawful.
This is called the warranty of title.

49. Reviewing What You Learned
Section Assessment
Reviewing What You Learned
What are the three ways an express warranty can be made?

50. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
By a statement of fact or promise made by the seller, by a description of the goods, and by the use of a sample or model.

51. Reviewing What You Learned
Section Assessment
Reviewing What You Learned
What are the obligations of merchants under the Magnuson-Moss Warranty Act?

52. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
Merchants must label written warranties as either “full” or “limited” for consumer products costing more than $10.

53. Reviewing What You Learned
Section Assessment
Reviewing What You Learned
What is difference between a limited warranty and a full warranty?

54. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
A limited warranty is one that does not meet all of the requirements for a full warranty.

55. Reviewing What You Learned
Section Assessment
Reviewing What You Learned
What is the difference between the implied warranty of fitness for a particular purpose and the implied warranty of merchantability?

56. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
A warranty of fitness for a particular purpose is created when the seller knows about a particular purpose for which the goods are needed.

57. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
The seller advises the buyer in making a purchase and the buyer relies on the seller’s advice. This warranty exists whether the seller is a merchant or a private party.

58. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
In contrast, sellers who regularly sell goods of a particular kind imply a warranty of merchantability in every sale, assuring that their products are fit for the purpose for which they are purchased.

59. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
Private parties do not provide the warranty of merchantability.

60. Reviewing What You Learned What is the warranty of title?
Section Assessment
Reviewing What You Learned
What is the warranty of title?

61. Reviewing What You Learned Answer
Section Assessment
Reviewing What You Learned
Answer
Guarantees that the title being conveyed is good, and the transfer is lawful.

62. Critical Thinking Activity Opinion or Fact
Section Assessment
Critical Thinking Activity
Opinion or Fact
A statement of fact by a seller about a product is a warranty; a seller’s opinion is not. Talk with another class member and compare the following pairs of statements.

63. Critical Thinking Activity Opinion or Fact
Section Assessment
Critical Thinking Activity
Opinion or Fact
Classify each statement as fact or opinion.

64. Critical Thinking Activity Opinion or Fact
Section Assessment
Critical Thinking Activity
Opinion or Fact
These goods are 100 percent wool.
This is the finest wool around.

65. Critical Thinking Activity Answer Opinion or Fact
Section Assessment
Critical Thinking Activity Answer
Opinion or Fact
These goods are 100 percent wool. (fact)
This is the finest wool around. (opinion)

66. Critical Thinking Activity Opinion or Fact
Section Assessment
Critical Thinking Activity
Opinion or Fact
This truck has never been in an accident.
This truck is solid.

67. Critical Thinking Activity Answer Opinion or Fact
Section Assessment
Critical Thinking Activity Answer
Opinion or Fact
This truck has never been in an accident. (fact)
This truck is solid. (opinion)

68. Critical Thinking Activity Opinion or Fact
Section Assessment
Critical Thinking Activity
Opinion or Fact
This ink will not stain clothes.
This ink is safe to use.

69. Critical Thinking Activity Answer Opinion or Fact
Section Assessment
Critical Thinking Activity Answer
Opinion or Fact
This ink will not stain clothes. (fact)
This ink is safe to use. (opinion)

70. Critical Thinking Activity Opinion or Fact
Section Assessment
Critical Thinking Activity
Opinion or Fact
This is an IBM-compatible computer.
This computer is as good as any IBM.

71. Critical Thinking Activity Answer Opinion or Fact
Section Assessment
Critical Thinking Activity Answer
Opinion or Fact
This is an IBM-compatible computer. (fact)
This computer is as good as any IBM. (opinion)

72. Critical Thinking Activity Opinion or Fact
Section Assessment
Critical Thinking Activity
Opinion or Fact
This watch is waterproof.
This watch is durable.

73. Critical Thinking Activity Answer Opinion or Fact
Section Assessment
Critical Thinking Activity Answer
Opinion or Fact
This watch is waterproof. (fact)
This watch is durable. (opinion)

74. Legal Skills in Action Written Guarantees
Section Assessment
Legal Skills in Action
Written Guarantees
Turner is planning to sell his computer system to Lynne. It is only two years old and has a modem, color monitor, and CD-ROM drive. According to Turner, the system has never had a problem.

75. Legal Skills in Action Written Guarantees
Section Assessment
Legal Skills in Action
Written Guarantees
Lynne is a little nervous about buying a used system and wants a written guarantee. In groups of two, help Turner write a warranty on his computer system.

76. Legal Skills in Action Answer
Section Assessment
Legal Skills in Action Answer
Written Guarantees
Warranties will vary, but should recognize that Turner need only provide Lynne with a warranty of fitness for a particular purpose.

77. End of Section 14.1