Chapter 13

An express warranty is created when the SL indicates the goods will conform to:

-All affirmations of fact or promise made about them -Any description of them -Any model or sample of them

IMPLIED WARRANTY OF MERCHANTABILITY

-The good must fit the ordinary purposes for which they are met -The goods must be adequately contained, packaged, and labeled -The goods must be of an even kind, quality, and quantity within each unit -The goods must conform to any promise or affirmation of fact made on the container or label -The quality of the goods must pass without objection in the trade -Fungible goods must meet a fair average or middle range of quality

affirmation of fact

-creates express warranty -this car has been driven 20,000 miles

statement of opinion

-does not create express warranty -this is the best used car available in town

implied warranty of fitness for human consumption

-foreign substance test -consumer expectation test

implied warranty of fitness for a particular purpose is implied at the time of contracting if:

1. The seller or lessor has reason to know the particular purpose for which the buyer is purchasing the goods or the lessee is leasing the goods. 2. The seller or lessor makes a statement that the goods will serve this purpose. 3. The buyer or lessee relies on the seller's or lessor's skill and judgment and purchases or leases the goods.

Magnuson-Moss Warranty Act

A United States federal law (15 U.S.C. § 2301 et seq. ). Enacted in 1975, it is the federal statute that governs warranties on consumer products. Does not cover commercial and industrial transactions Does not require the DL to make express written warranties - but if they do are subject to the provisions of the act If made 0 the act requires that the warranty be labeled as either "full" or "limited"

Warranty

A buyer's or lessee's assurance that the goods meet certain standards. A representation of the insured that is expressly incorporated in the insurance contract. Can be expressly stated or implied by law B can sue S for breach of warranty if S does not meet requirements

limited warranty

A product guarantee that is limited or restricted in some way. Ex. return of purchase price or replacement

conspicuous

A requirement that warranty disclaimers be noticeable to the average person.

warranty against infringements

A seller or lessor who is a merchant who regularly deals in goods of the kind sold or leased automatically warrants that the goods are delivered free of any third-party patent, trademark, or copyright claim.

puffing

A seller's opinion on the quality of goods; usually overpraise, exaggeration, or hype. Do not create an express warranty**

foreign substance test

A test to determine merchantability based on foreign objects that are found in food. A food product is unmerchantable if a foreign object in that product causes injury to a person Ex. a nail found in a cherry pie - if the same injury was caused by a cherry pit in the pie, the pie would be unmerchantable

consumer expectation test

A test to determine merchantability based on what the average consumer would expect to find in food products. Most states have adopted this -EX. choke on chicken bone in fried chicken - not actionable -Ex. choke on chicken bone in chicken salad-not expected - actionable

implied warranty of fitness for human consumption

A warranty that applies to food or drink consumed on or off the premises of restaurants, grocery stores, fast-food outlets, and vending machines.

compensatory damages

An award of money intended to compensate a nonbreaching party for the loss of the bargain; they place the nonbreaching party in the same position as if the contract had been fully performed by restoring the "benefit of the bargain." When a K has been breached, the BL may sue the SL

warranty of no interference

An implied promise that there are no conflicts that will encroach upon a contract. the lessor warrants that no person holds a claim or an interest in the goods that arose from an act or omission of the lessor that will interfere with the lessee's enjoyment of his or her leasehold interest

warranty of no infringement

An implied promise that there are no interferences or interventions that will affect the contract.

implied warranty of fitness for a particular purpose

An implied warranty that information is fit for the licensee's purpose that applies if the licensor (1) knows of any particular purpose for which the computer information is required and (2) knows that the licensee is relying on the licensor's skill or judgment to select or furnish suitable information. This implied warranty is breached if the goods to not meet the BL's expressed needs Applies to both merchants and nonmerchant sellers**

express warranty

Any affirmation of fact or promise by the licensor about the quality of its software or information. A warranty that is created when a seller or lessor makes an affirmation that the goods he or she is selling or leasing meet certain standards of quality, description, performance, or condition.

Basis of the bargain

BL's can recover damages for breach of an express warrant if the warranty was a contributing factor that induced the B to purchase the product or lease the product Not necessarily the sole factor Manufacturers are not liable for express warranties made by wholesalers and retailers unless the manufacturer authorizes or ratifies the warranty. Retailers are generally liable for the express warranties made by manufacturers of goods it sells

fungible

Goods consisting of identical and interchangeable particles or components. **does not apply to sales or leases by nonmerchants or casual sales**

Basis of the bargain

Majority statements made by SL prior to or at the time of contracting are presumed to be part of the basis of bargain Unless good reason is shown to the contrary Post sale statements that modify the K are part of the basis of the bargain

The act does not create any implied warranties**

Modifies the state law of implied warranties in one crucial aspect: SL's who make express written warranties relating to consumer products are forbidden from disclaiming or modifying the implied warranties of merchantability and fitness for a particular purpose. A SL may set a time limit on implied warranties, but this time limit must correspond to the duration of any express warranty.

MAGNUSON-MOSS WARRANTY ACT

Must be conspicuously displayed if full or limited and in understandable language A consumer may bring a civil action against a defendant for violating the provisions of the act. The act authorizes warrantors to establish an informal dispute resolution procedure Must be conspicuously described in the written warranty Aggrieved consumers must assert their claims through this procedure before they can take legal actions

IMPLIED WARRANTY

Not expressly stated in a sales K - implied by law Most common: implied warranty of merchantability the implied warranty of fitness for human consumption , and the implied warranty of fitness for a particular purpose

express warranty

Oldest form of warranty Can be written, oral or inferred from the seller's conduct Formal words are not required - guarantee or warrant Can be made by mistake because the SL does not have to intend specifically to make a warranty Not required - created to entice consumers to buy or lease their products Often in the form of advertisements, brochures, catalogs, pictures, blueprints, etc.

warranty of no security interests

Sellers of goods warrant that the goods they sell are delivered free from any third-party security interests, liens, or encumbrances that are unknown to the buyer.

warranty of good title

Sellers warrant that they have valid title to the goods they are selling and that the transfer of title is rightful. Unless properly disclaimed

warranty disclaimer

Statements that negate express and implied warranties. All implied warranties of quality may be disclaimed by expressions such as as is , with all faults , or other language that makes it clear to the buyer that there are no implied warranties. Often included in the sales K for used products If the preceding language is not used, disclaimers of the implied warranty of merchantability must specifically mention the term merchantability . may be oral or written.

implied warranty of merchantability

Unless properly disclosed, a warranty that is implied that sold or leased goods are fit for the ordinary purpose for which they are sold or leased, and other assurances. If the SL of a good is a merchant

Warranty

a party's express of implied representation about the quality or other characteristic of the goods or services being provided Accompanied usually by a promise that a payment of other remedy will be given if the goods or services do not conform to the terms of the K

Basis of the bargain

all statements by the SL prior to or at the time of contracting This test is broadly applied by the courts

Software license

complex contract that contains the terms of the license Most software licenses contain a warranty disclaimer and limitation on liability clauses that limit the licensor's liability if the software malfunctions.

statement of value

does not create an express warranty Ex. others would gladly pay $20k for this car

Caveat emptor

let the buyer beware

Full warranty

warrantor must guarantee free repair or replacement of the defective product Must indicate whether there is a time limit on the full warranty