1. Express and Implied Warranties Section 14.1

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

3. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties 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. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties What You’ll Learn How to contrast a limited warranty with a full warranty (pp. 297, 298)

5. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties 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. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Why It’s Important Understanding warranties will keep you from losing money.

7. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Legal Terms warranty (p. 294) express warranty (p. 294) full/limited warranty (pp. 297, 298) implied warranty (p. 301)

8. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties 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. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Law of Warranties Express Warranties Statement of Fact or Promise Availability before Sale Advertising Express Warranties Section Outline

10. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Express Warranties, continued Magnuson-Moss Warranty Act Description of the Goods Sample or Model Section Outline

11. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Implied Warranties Warranty of Fitness for a Particular Purpose Warranty of Merchantability Usage of Trade Warranty of Title Section Outline

12. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Pre-Learning Question What is a warranty?

13. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties The UCC provides protection under its law of warranties for situations such as: Law of Warranties Products that don’t work after you buy them. Impurities in foods in restaurants. Technical problems with computers.

14. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties A warranty is another name for a guarantee. A breach of warranty is a breach of contract. Law of Warranties

15. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Pre-Learning Question What is an express warranty?

16. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of 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. Express Warranties

17. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Express warranties are conveyed in three ways: Express Warranties 1.By a statement of fact or promise made by the seller 2.By a description of the goods 3.By the use of a sample or model

18. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties 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. Statement of Fact or Promise

19. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties 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. Statement of Fact or Promise

20. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Written warranties on consumer products costing more than $15 must be made available before you buy the product. Availability before Sale

21. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of 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. Advertising Express Warranties

22. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties 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). Magnuson-Moss Warranty Act

23. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties This federal act gives added protection to consumers when written express warranties are made. Magnuson-Moss Warranty Act

24. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties 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. Magnuson-Moss Warranty Act

25. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties A full warranty promises to fix or replace a defective product at no charge to the consumer. Full Warranty

26. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties A full warranty: 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. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties A limited warranty is any written warranty that does not meet the requirements for a full warranty. Limited Warranty

28. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties A limited warranty: Limited Warranty Does not promise free repair or replacement. Commonly covers only parts, not labor. May offer a partial refund.

29. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties A limited warranty: Limited Warranty May require you to pay shipping. May only apply to the original buyer. Must be labeled “limited warranty.”

30. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties 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. Description of the Goods

31. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties 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. Sample or Model

32. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Pre-Learning Question What is an implied warranty?

33. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties An implied warranty is a guarantee of quality imposed by law. Implied Warranties

34. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties An implied warranty: Implied Warranties Is not in writing. Applies only to goods that are sold, not services contracted.

35. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties There are three types of implied warranties: Implied Warranties 1.Warranty of fitness for a particular purpose 2.Warranty of merchantability 3.Warranty that comes from a course of dealing or usage of trade

36. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties What is the difference between an express and an implied warranty?

37. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties ANSWER Express: provided by the seller; implied: imposed by law.

38. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties A warranty of fitness for a particular purpose is created when the seller knows the purpose for which the goods are needed. Warranty of Fitness for a Particular Purpose

39. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties The seller advises the buyer in making a purchase, and the buyer relies on the seller’s knowledge and advice. Warranty of Fitness for a Particular Purpose

40. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties In this way, the seller warrants by implication that the goods will be fit for the purpose for which they are to be used. Warranty of Fitness for a Particular Purpose

41. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties This warranty exists whether the seller is a merchant or a private party. Warranty of Fitness for a Particular Purpose

42. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Under an implied warranty of merchantability, the merchant warrants that the goods being sold are merchantable. Warranty of Merchantability

43. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties 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. Warranty of Merchantability

44. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties This gives assurance that their products are fit for the purpose for which they are purchased. Warranty of Merchantability

45. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Private parties do not provide the warranty of merchantability. Warranty of Merchantability

46. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Another implied warranty arises from the customary ways in which the parties have dealt in the past, or the usage of trade. Usage of Trade

47. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Pre-Learning Question What is a warranty of title?

48. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties 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. Warranty of Title

49. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned 1. 1.What are the three ways an express warranty can be made? Section 14.1 Assessment

50. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned 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. Section 14.1 Assessment Answer

51. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned 2. 2.What are the obligations of merchants under the Magnuson- Moss Warranty Act? Section 14.1 Assessment

52. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned Merchants must label written warranties as either “full” or “limited” for consumer products costing more than $10. Section 14.1 Assessment Answer

53. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned 3. 3.What is difference between a limited warranty and a full warranty? Section 14.1 Assessment

54. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned A limited warranty is one that does not meet all of the requirements for a full warranty. Section 14.1 Assessment Answer

55. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned 4. 4.What is the difference between the implied warranty of fitness for a particular purpose and the implied warranty of merchantability? Section 14.1 Assessment

56. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned A warranty of fitness for a particular purpose is created when the seller knows about a particular purpose for which the goods are needed. Section 14.1 Assessment Answer

57. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned 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. Section 14.1 Assessment Answer

58. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned 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. Section 14.1 Assessment Answer

59. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned Private parties do not provide the warranty of merchantability. Section 14.1 Assessment Answer

60. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned 5. 5.What is the warranty of title? Section 14.1 Assessment

61. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Reviewing What You Learned Guarantees that the title being conveyed is good, and the transfer is lawful. Section 14.1 Assessment Answer

62. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 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. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 Assessment Critical Thinking Activity Opinion or Fact Classify each statement as fact or opinion.

64. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 Assessment Critical Thinking Activity Opinion or Fact 1.These goods are 100 percent wool. This is the finest wool around.

65. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 Assessment Critical Thinking Activity Answer Opinion or Fact 1.These goods are 100 percent wool. (fact) This is the finest wool around. (opinion)

66. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 Assessment Critical Thinking Activity Opinion or Fact 2.This truck has never been in an accident. This truck is solid.

67. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 Assessment Critical Thinking Activity Answer Opinion or Fact 2.This truck has never been in an accident. (fact) This truck is solid. (opinion)

68. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 Assessment Critical Thinking Activity Opinion or Fact 3.This ink will not stain clothes. This ink is safe to use.

69. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 Assessment Critical Thinking Activity Answer Opinion or Fact 3.This ink will not stain clothes. (fact) This ink is safe to use. (opinion)

70. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 Assessment Critical Thinking Activity Opinion or Fact 4.This is an IBM-compatible computer. This computer is as good as any IBM.

71. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 Assessment Critical Thinking Activity Answer Opinion or Fact 4.This is an IBM-compatible computer. (fact) This computer is as good as any IBM. (opinion)

72. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 Assessment Critical Thinking Activity Opinion or Fact 5.This watch is waterproof. This watch is durable.

73. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 Assessment Critical Thinking Activity Answer Opinion or Fact 5.This watch is waterproof. (fact) This watch is durable. (opinion)

74. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 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. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 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. Understanding Business and Personal Law Express and Implied Warranties Section 14.1 The Importance of Warranties Section 14.1 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. Express and Implied Warranties End of Section 14.1