Performance and Breach: Implied Warranties of Merchantability and Fitness for a Particular Purpose

To be merchantable, goods must at least:

1. i. Pass without objection - in the trade under the contract description 2. ii. In the case of fungible goods, be of fair average quality within the description 3. iii. Be fit for the ordinary purposes for which such goods are used [MOST IMPORTANT TEST] 4. iv. Be within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved v. Be adequately contained, packaged, or labeled according to the contract vi. Conform to any promises or affirmations of fact made on the label. Other warranties of merchantability may arise from the course of dealing or usage of trade

UCC 2-314(1) - Implied Warranty of Merchantability

Implied in every contract for sale by a merchant who deals in goods of the kind sold, there is a warranty that the goods are merchantable. The serving of food or drink for consumption on the premises is a sale of goods subject to the warranty of merchantability. (when does the contract attach)

What's the goal of establishing implied warranties?

The goal of establishing implied warranties [of merchantability and fitness for a particular purpose] is to prevent merchants from hiding disclaimers for warranties inconspicuously in a mass of boilerplate [usual writing in terms and conditions].

Seller's knowledge of Defect Not Relevant

i. As in all implied warranty cases, it makes no difference that the seller himself did not know of the defect or that he could not have discovered it. Implied warranties are not based on negligence but rather on absolute liability that is imposed on certain sellers

Implied warranty of fitness for a particular purpose

warranty stipulating that if a seller knows or has reason to know of a particular purpose for which some item is being purchased by the buyer, the seller is guaranteeing that the item is fit for that particular purpose. § 2-315.

Remedy for breach of implied warranties

§ 2-714: measure of damages is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been warranted, unless special circumstances show proximate damages of a different amount.

Hypo encompassing both implied warranties:

» A sells to B a saw used to cut trees. » B uses the saw to cut wood. The wood explodes. » B sues A for breach of implied warranty. » A was not a merchant. » B does not have a claim for breach of [both] implied warranty, because: 1. The merchandise was sold for an ordinary purpose, not a particular purpose. 2. There was no merchant. ⇨ Therefore, both implied warranties are eliminated.

Step-Saver Data Systems, Inc. v. Wyse Technology

• Implied warranties of merchantability applies only to merchants. • Test: the merchandise need only be of reasonable quality [including adequate packaging and labeling] within expected variations and for the ordinary purposes for which they are used. The warranty of goods must pass in the trade without objection under the contract description. • In Step-Saver, D passed the test because P put forth: 1) no evidence as to any defect in packaging; 2) no evidence as to unusual variations in quality; and 3) no evidence that D's product would not be acceptable.