Warranties

Affirmation of fact or promise

2-313(a) Main provision to determine an express warranty Analysis: How do we distinguish promises and affirmations of fact from opinions? 1) Specific language is much more likely to be deemed an express warranty than is vague language : I.e. "Car gets 22 MPG" vs "this car has good gas mileage" 2) All other things being equal, a written statement is more likely to be considered an express warranty than an oral statement 3) Parties' relative knowledge and sophistication 4) The context in which the seller's statement was made will normally be important in deciding whether the statement is an express warranty rather than puffing

Model

2-313(c) A representation of the goods that are for sale "creates an express warranty that the whole of the goods shall conform"

Sample

2-313(c) A unit drawn from the bulk of goods that are for sale "creates an express warranty that the whole of the goods shall conform"

Implied warranty of fitness for a particular purpose

2-315 (Remedy: 2-714) o Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under section 1302.29 of the Revised Code an implied warranty that the goods shall be fit for such purpose.

Express warranty

A seller's or lessor's oral or written promise, ancillary to an underlying sales or lease agreement, as to the quality, description, or performance of the goods being sold or leased. 2-313 (1) Express warranties by the seller are created as follows: ▪ (a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise. ▪ (b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description. ▪ (c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model. (2) It is not necessary to the creation of an express warranty that the seller use formal words such as "warranty" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty. ▪ In other words: any description of the goods which is made = part of the basis of the bargain (even just describing)

Implied warranty of merchantability

An implied warranty that a product is fit for the ordinary purpose for which it is used. Expressly for Merchants (annual sale can be argued) 2-314 (Remedy: 2-714) o (1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in the K for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale. o (2) Goods to be merchantable must be at least such as ▪ (a) pass without objection in the trade under the K description; and ▪ (b) in the case of fungible goods, are of fair average quality within the description; and ▪ (c) are fit for the ordinary purposes for which such goods are used; and ▪ (d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each units and among all units involved; and ▪ (e) are adequately contained, packaged, and labeled as the agreement may require; and ▪ (f) conform to the promise of affirmations of fact made on the container or label if any. o (3) Unless excluded or modified (Section 2-316) other implied warranties may arise from course of dealing or usage of trade 1) the goods being sold are at least as good as other, similar goods in the trade, and 2) that the goods are fit for the ordinary purposes for which goods of that description are used

Breach of warranty of merchantability

Comment 14 to 2-314 a. In an action based on breach of warranty, it is of course necessary to show not only the existence of the warranty but the fact that the warranty was broken and that the breach of the warranty was the proximate cause of the loss sustained. In such an action an affirmative showing by the seller that the loss resulted from some action or event following his own delivery of the goods can operate as a defense. Equally, evidence indicating that the seller exercised care in the manufacture, processing or selection of the goods is relevant to the issue of whether the warranty was in fact broken. Action by the buyer following an examination of the goods which ought to have indicated the defect complained of can be shown as matter bearing on whether the breach itself was the cause of the injury. b. If you don't act in good faith, that's a breach of obligation and can be a formal complaint under the code

Merchantability of second hand goods

Comment 3 of 2-314 A specific designation of goods by the buyer does not exclude the seller's obligation that they be fit for the general purposes appropriate to such goods. A contract for the sale of second-hand goods, however, involves only such obligation as is appropriate to such goods for that is their contract description. A person making an isolated sale of goods is not a "merchant" within the meaning of the full scope of this section and, thus, no warranty of merchantability would apply. His knowledge of any defects not apparent on inspection would, however, without need for express agreement and in keeping with the underlying reason of the present section and the provisions on good faith, impose an obligation that known material but hidden defects be fully disclosed.

Puffing

Determination in express warranty Extravagant claims made by sellers in order to attract buyers. Exaggeration of the good points of a product, a business, real property, and the prospects for future rise in value, profits and growth. ● must come down to the reasonableness of the buyer's reliance on the seller's statement. - Ex: horse case ● What if he said this way before the deal making? Is a statement in the course of a bargain part of the basis of the bargain?

Basics of implied warranty of merchantability

Item must be sellable and conform to the normal expectations of the parties (1): If the dealer is a merchant (dealer in goods of the kind) then IWM arises - goods being sold are at least as good as other, similar goods in the trade 2(c): Goods must be fit for ordinary purpose for which such goods are used

Analysis of warranty of merchantability

a. A warranty that the goods shall be merchantable is implied in a contract for their sale IF THE SELLER IS A MERCHANT WITH RESPECT TO GOODS OF THAT KIND Goods to be merchantable must be AT LEAST such as (focus on c and e of 2-314(2)): C. Are fit for the ordinary purposes for which such goods are used Reasonable foreseeability is important for determining whether the buyer was using the good "for its ordinary purpose" a. Ask: is this a reasonably foreseeable way this good will be used on the market? i. And then it still f'ed up ii. The thing sold must be reasonably fit for its ordinary use. E. Are adequately contained. Packaged, and labeled as the agreement may require ● A claim for breach of an implied warranty of merchantability will not stand if the good was used for an improper purpose that does not constitute an ordinary use.

Comments

o Comment 1: ▪ Express warranties rest on dickered aspects of the individual bargain and go so clearly to the essence of the bargain that words of disclaimers are repugnant to the basic dickered terms. o Comment 3 ▪ The present section deals with affirmations of fact by the seller, descriptions of the goods or exhibitions of samples, exactly as any other part of a negotiation which ends in a contract is dealt with. No specific intention to make a warranty is necessary if any of these factors is made part of the basis of the bargain. In actual practice affirmations of fact made by the seller about the goods during a bargain are regarded as part of the description of those goods; hence no particular reliance on such statements need be shown in order to weave them into the fabric of the agreement. ▪ Rather, any fact which is to take such affirmations, once made, out of the agreement requires clear affirmative proof. The issue normally is one of fact. o Comment 8 ▪ Concerning affirmations of value or a seller's opinion or commendation under subsection (2), the basic question remains the same: What statements of the seller have in the circumstances and in objective judgment become part of the basis of the bargain? As indicated above, all of the statements of the seller do so unless good reason is shown to the contrary. The provisions of subsection (2) are included, however, since common experience discloses that some statements or predictions cannot fairly be viewed as entering into the bargain. Even as to false statements of value, however, the possibility is left open that a remedy may be provided by the law relating to fraud or misrepresentation.

Analysis for express warranty

o Factors to evaluate whether there was this ▪ (1) Level of reliance on the part of the buyer (sort of goes to the basis of the bargain) · Comment 3 expressly states that the buyer does NOT have to prove that he relied on the seller's statements for there to have been an express warranty; however, courts usually take this into consideration ▪ (2) Seriousness of the injury ▪ (3) Whether or not the seller's responses were in response to specific questions from the buyer o Counter argument ▪ though may have just been expressing an opinion, "puffing"

Analysis for warranty of a particular purpose

o Not expressly limited to merchants ▪ Where the seller at the time of contracting has reason: ● (1) TO KNOW any PARTICULAR PURPOSE for which the goods are required AND; ● (2) THE BUYER is RELYING on the seller's skill or judgement ▪ There is, unless EXCLUDED OR MODIFIED, an implied warranty that the goods shall be fit for such purpose o EXAMPLE: ▪ Particular purpose is distinguished from ordinary purpose ● I want a horse for breeding (PARTICULAR PURPOSE) ● I want a horse as a pet, to ride and have fun (ORDINARY PURPOSE) If a seller should know the buyer's particular purpose for purchasing goods and that the buyer is relying on their expertise, then the transaction is subject to the implied warranty for a particular purpose, provided the buyer actually relies on the seller's expertise.

Strict liability for 2-314

· If something happens that breaches one of these, it's a breach of implied warranty of merchantability a. It must be at the time of the sale. i. If there is evidence that there was no breach at the time of sale, it can help you prove there was no breach ii. EVEN IF SOMEONE INTERVENES you are still implying warranty of merchantability at the TIME OF SALE.

Ads as express warranties

▪ Buyer's argument · The seller's promises were a "basis of the bargain" because I wouldn't have purchased the product if I hadn't seen the advertisement and heard the promises regarding the quality of the product ▪ Seller's argument · Ads are invitations for offers; therefore, they are not a part of the "basis of the bargain"

Ordinary vs particular purpose

▪ Comment 2 to 2-315 —how to distinguish between ordinary purpose + particular purpose (this comment is not law everywhere)→ envisages a special use by buyer Ex: pair of shoes generally used for purpose of walking but seller may know that a particular pair of shoes was selected to be used for climbing mountains. The purpose must be something idiosyncratic, unique... other jurisdictions say that if you as the seller know that a buyer has a particular purpose then you might be found to have known that the goods were meant for a particular purpose.

Statements after the sale

▪ May become express warranties IF they were considered to be part of the contract · E.g. after paying for 12 Ford trucks (deal is closed), Les calls up Ford Motor Co. and increases his order to 15 trucks; Ford agrees and also promises that the trucks will get 25 mpg · This modification, under 2-209, would be an express warranty because it has become part of the contract · E.g. Prior to shipment of goods, seller tells buyer that the cars will get 41 mpg highway