Warranties

How do you create an express warranty?

1. Statements- written or oral about exact qualities of the product 2. Descriptions- the goods conform to the label from the packaging 3. Samples- the goods conform to any sample or model of the goods shown in order to maintain consistency and precedence

How do you disclaim an implied warranty of merchantability?

A seller or lessor must mention "merchantability" and be conspicuous (bold, set aside) if written.

What is a warranty?

A seller's assurance or guarantee of certain facts concerning the goods being sold

What is the statute of limitations for the breach of a warranty?

Action for breach of warranty must commence within four years after the breach occurs. Begin to toll for breach of warranty at tender when the buyer seller or lessor tenders delivery, even if the buyer or lessee is unaware of the breach at the time. In addition, the buyer must sue or notify the seller within a reasonable time.

What happens when a buyer argues that an express warranty was created by implication?

An implication is when a seller implies some fact which was untrue. An implied warranty is created by an unstated fact. On the other hand, an express warranty is created by a statement of fact. Therefore, you cannot create an express warranty with implication. You need an implied warranty for an implication of fact to occur.

What are the standards for an implied warranty of merchantability when it comes to restaurant food?

An implied warranty of merchantability for restaurant food is breached when it is unnatural, or unexpected. For example, a fish with a hook in its mouth would be an breach of an implied warranty of merchantability. On the other hand, a fish with a scale leftover when it is served would not be a breach of an implied warranty of merchantability.

What happens when dealing with warranty disclaimers and unconscionability?

Court cannot enforce a contractual clause. If a disclaiming warranty is unconscionable and can be proven, the court can strike the disclaiming warranty.

What is an express warranty?

Description of the quality, condition, description, or performance potential of goods that became a basis of the bargain.

What is the Magnuson-Moss Warranty Act (1975)

Federal law that applies to written warranties for consumer sales over $25. Must designate the warranty as: 1. Full- repair in reasonable time or replace 2. Limited- conspicuously stated Must also disclose who is the warrantor and what is covered. Note: the Magnuson-Moss Warranty Act does NOT create a warranty.

Valley Iron and Steel Co. v. Thorin (Oregon, 1977) Facts: Thorin showed Valley Iron a sample of "hoedad collar" to use as a guide. Thorin explained that it was used to plant trees and would hit rocks while doing so. Valley Iron suggested using a durable iron. The goods broke upon hitting rocks. Was there an implied warranty of merchantability? Ask yourself: 1. Merchant seller? 2. Fit for ordinary use? Was there an implied warranty of fitness for a particular purpose? 1. Should Valley Iron have known of the expected use? 2. Did Thorin rely on Valley Iron's knowledge?

For an implied warranty of merchantability... - The court says that "yes," you work with metal goods within particular industries. - Planting trees and hitting rocks meant that when the products broke, there was a breach of merchantability since the products were not merchantable goods (not foreseeable in ordinary use) For an implied warranty of fitness for a particular purpose... - The court says that the seller did know of the buyer's expected use of the product - Moreover, the buyer relied on the seller's knowledge

Does the seller have to have any knowledge of falsity in his/her statement of fact for an express warranty to be created?

If a car salesman tries to sell you a car under false statements that they thought were true, there is still an express warranty

What are the two different kinds of implied warranties?

Implied warranty of merchantability and fitness for a particular purpose.

What are Lemon Laws?

It is a state law that protects the buyer of a new car where it repeatedly fails and the seller/manufacturer can't/doesn't fix it.

A third type of warranty of title arises automatically when the seller or lessor is a merchant- what is it?

No infringements-A merchant-seller or lessor warrants that the buyer or lessee takes the goods free of infringements from any copyright, trademark, or patent claims of a third person.

Is there necessary language or a need to use the term "guarantee" for an express warranty?

No, but you need a statement of fact for an express warranty to be created (written or oral)

Does there have to be a necessary intent to create a warranty?

No, the seller will create a warranty whether they intended to create one just by making the statement of fact for a product.

What is the general rule for disclaiming warranties?

Rule: Express warranties can be disclaimed in a clear and reasonable manner. In many states, this requires the disclaimer to be "clear and conspicuous" in order to protect sellers from oral warranties.

What happens when a buyer or lessee is given a chance to inspect the goods as fully desired?

The buyer has a chance to inspect for any flaws or defects in the product and as such, this will get rid of the implied warranty.

What is the limitation for notice of infringement in sales and lease contracts?

The buyer provides specification for manufacturing the product: In this case, the buyer should be held liable because the seller did not create any infringements against the implied warranty.

Delano Growers Cooperative Winery v. Supreme Wine Co. (Mass. 1985) Facts: Supreme bought (in bulk) and bottled Delano Growers' wine. It had been doing this for decades. All of a sudden, the wine was being returned with a "cottony" substance in it ("Fresno Mold"). Was there an implied warranty of merchantability? 1. Was there a merchant-seller? 2. Is the wine merchantable or of average quality? Delano argues that there is a trade custom that shows that you could add a chemical to inhibit Fresno Mold. Trade customs can create an implied warranty in this case. Supreme argues course of dealing and argue specifically that they had been following the same procudures for decades. Who wins?

The court ruled that there was a breach of an implied warranty through a breach of consistency since there was a well-known trade custom that could have inhibited the growth of mold in the wine-bottling procedure.

What is the basis of the bargain in an express warranty? What happens when the basis of the bargain induced the buyer to enter into the contract?

The representation of the product induced the buyer to enter into the contract and became one of the considerations the buyer made to either purchase or not purchase the good.

How do you disclaim implied warranties?

There must be an "As Is" sales disclaim for implied warranties (fitness and merchantability). This means that the seller is selling the product in the current condition. Both parties must be able to clearly understand from the language used that there are no implied warranties.

Keith v. Buchanan (Cal Ct. of Appeals, 1985) Keith bought a yacht from Buchanan. A boat builder checked it out (before purchase) and said it was good. But the boat had problems after delivery. Keith sues for breach of express warranty. So the question is, was there an express warranty? We need to know two things: 1. Was there a statement of fact? 2. Did the boat become the basis of the bargain? How did the court hold? Was it right?

There was a brochure with descriptions about the boat that the court found to be statements of fact based on the level of specificity and equivocal manner of speech. The court said that the buyer's inspection qualified as the basis of the bargain. The court rules in favor of the buyer, which differs extremely from the prior case and is inconsistent but common in the 9th circuit.

Hypo: Bryers "All-Natural" Vanilla Ice Cream. Is this an express warranty?

"All-natural" points toward the natural ingredients in the ice cream; however, added gum and other chemicals made it unnatural. We need to look at the requirements for how an express warranty is created (statement of fact, descriptions and labels, and samples). When we look at the packaging, does it create an express warranty with labels and descriptions such as "all-natural?" Yes, this could be a statement of fact. The court would likely say yes, it is an express warranty (but we'll never know for sure).

Sessa v. Riegle (E.D. Penn, 1977) Sessa claimed that Riegle breached an express warranty. So the question is, was there an express warranty? We need to know two things: 1. Was there a statement of fact? 2. Did the product become the basis of the bargain? Was there a breach of an express warranty?

"The horse is sound" is not a statement of fact, but rather an opinion. Yes, the horse did become the basis of the bargain. There is not a very high standard for the seller's statement to become part of the basis of the bargain. No, because there was no statement of fact.

Warranty of title happens in all sales and lease contracts and necessitates two different types of title warranties- what are they? What additional condition is also implied?

1. Good title- In most sales, sellers warrant they they have good and valid title to the goods sold and that the transfer of the title is rightful. If the buyer subsequently learns that the seller did not have valid title to the goods that were purchased, the buyer can sue the seller for breach of this warranty. 2. No liens- Protects buyers who, for instance, unknowingly purchase goods that are subject to a creditor's security interest. (A security interest in this context is an interest in the goods that secures payment or performance of an obligation.) If a creditor legally repossesses the goods from a buyer who had no actual knowledge of the security interest, the buyer can recover from the seller for breach of warranty. (In contract, a buyer who has actual knowledge of a security interest has no recourse against a seller.) Express warranties are also possible, in which the seller specifically wants to sell without warranties and makes this clear to the buyer.

What are the requirements for an implied warranty of merchantability?

1. Only merchant sellers can create an implied warranty of merchantability 2. There must be merchantable goods a. Reasonably fit for ordinary purposes (as in they are foreseeable) b. Average quality c. Adequately packaged and labeled 3. The good(s) must conform to promises on label

What is the primary distinguishment between an implied warranty of merchantability and an express warranty?

An implied warranty of merchantability is always given, unless expressly disclaimed

What happens in a breach of warranty?

Buyer may recover damages or (in some instances) rescind a contract

What are the requirements of an implied warranty of fitness for a particular purpose?

Buyer must show: 1. Seller knew of buyer's particular purpose (either impliedly or expressly), 2. Buyer relied on seller's knowledge a. Seller should have known of reliance and purpose (again, either express or implied)

What happens when two or more warranties apply in a single transaction?

Consistent warranties are cumulative. Express warranties will always trump implied warranties with ONE exception... The only exception to this rule is when the implied warranty is an implied warranty of fitness for a particular purpose. In that case, the implied warranty of fitness for a particular purpose is more favorable than an express warranty. Exact specifications are favored over samples, and samples are favored over general descriptions.

How do you disclaim an implied warranty of fitness for a particular purpose?

It must be written and conspicuous.

An implied warranty must have strict liability, regardless of the seller's knowledge. What does this mean?

In other words, the seller doesn't have to know that the product is not of average quality. However, the seller is always liable if the product is defective

What is the distinction between puffing v. objective fact?

Remember, to create an express warranty we need a statement of fact. For example, Red Bull: "It gives you wings." You aren't actually going to sprout wings and fly away. As such, your reliance on an objective fact in an express warranty must be reasonable. If there is any puffing, there is no express warranty.

What is the rule for the prior dealings or trade custom as an additional implied warranty?

Rule: When both parties have knowledge of a well-recognized trade custom, infer that both meant a trade custom to apply to their transaction. The same applies for course of dealings.

Lewis v. Mobil Oil (8th Cir. 1971) Facts: Lewis changed his wood mill to a hydraulic system, which he bought used. He used Mobil oil for years, so he asked them to provide necessary oil. He told them it was a gear-type pump. His Mobil representative told him that he would determine and supply the right oil. The system broke. Over and over. The system was replaced. Mobil added chemicals to the oil. It worked. Lewis sued. Lewis sues for breach of warranty of fitness for a particular purpose due to the seller's knowledge of purpose and his reliance on the seller. So, we need to ask ourselves: "Was there an implied warranty of fitness for a particular purpose? 1. Did the seller know about the buyer's expected use of the product? 2. Did the buyer rely upon the seller's knowledge?

There was not information for the seller to determine the buyer's expected use of the product. However, the buyer did rely upon the seller's knowledge. The court says that if a buyer relies upon a seller's knowledge, it is the seller's responsibility to determine the particular product for the buyer. Therefore, there was indeed a breach of warranty of fitness for a particular purpose.

Notice of infringement in sales and lease contracts: If a merchant sells you a patent and you are sued for patent infringement, what happens next? What options does the merchant-seller have?

You have an obligation to give the merchant-seller prompt notice that you are being sued for patent infringement. The merchant-seller can defend you but if they lose, they must pay the damages for patent infringement because they had impliedly promised you that they goods were not subject to infringement. If they choose not to defend you, you must defend yourself and seek monetary support from them for legal fees and the damages that you have to pay.