21: Warranties

A seller's or lessor's statement of opinion of the goods does not create an express warranty.

TRUE

An express warranty can be created by a description of the goods.

TRUE

An express warranty can only be limited if the warranty disclaimer and the warranty can be reasonably construed with each other.

TRUE

An implied warranty of fitness for a particular purpose is breached if the goods do not meet the buyer's or lessee's expressed needs.

TRUE

Sellers and lessors are not required to make express warranties.

TRUE

The implied warranty of fitness for human consumption applies to vending machines.

TRUE

The implied warranty of merchantability does not apply to sales or leases by non-merchants or casual sellers.

TRUE

Which of the following is correct regarding how an implied warranty of merchantability is created? A) It is made by the buyer or lessee. B) It is implied by law if the seller or lessor is a non-merchant. C) It is implied by law if the seller or lessor is a merchant. D) It must be specifically referenced in a contract.

C) It is implied by law if the seller or lessor is a merchant.

A disclaimer of the implied warranty of fitness for a particular purpose may be oral.

FALSE

A disclaimer of the implied warranty of merchantability must be in writing to be valid.

FALSE

A manufacturer is liable for express warranties made by wholesalers and retailers.

FALSE

A retailer is not liable for the express warranties made by manufacturers of the goods it sells.

FALSE

An affirmation of the value of goods creates an express warranty.

FALSE

A statement that negates express and implied warranties is known as a ________. A) warranty disclaimer B) limited warranty C) warranty infringement D) warranty of no interference

A) warranty disclaimer

The Magnuson-Moss Warranty Act is a federal statute that covers ________ warranties related to ________ products. A) written; consumer B) oral; non-consumer C) written; non-consumer D) oral and written; consumer and non-consumer

A) written; consumer

The implied warranty of ________ is a warranty that arises where a seller or lessor warrants that the goods will meet the buyer's or lessee's expressed needs. A) merchantability B) fitness for a particular purpose C) fitness for human consumption D) good title

B) fitness for a particular purpose

A warranty that guarantees a defective product will be repaired or replaced free during the warranty period is known as a(n) ________ warranty. A) implied B) full C) voidable D) limited warranty

B) full

Joe's Alternative Realty (Joe's) leased a piece of real estate to Speculative Builders (Speculative). While still on lease, Joe's gave that same piece of real estate as security interest to procure a loan from Prime Interest Bank. The real estate, which was collateral, was eventually repossessed by the bank from Speculative after Joe's defaulted on its loan payment. What warranty had Joe's Alternative Realty breached with Speculative? A) the warranty against infringements B) the warranty of good title C) the warranty of no interference D) the warranty of no security interests

C) the warranty of no interference

Which of the following is an implied warranty? A) an affirmation of the facts pertaining to the goods B) a description of the goods C) a model or sample of the goods D) adequate packaging and labeling of the goods

D) adequate packaging and labeling of the goods

Express warranties are always implied by law.

FALSE

Express warranties must contain the word "express" in writing to be legitimate.

FALSE

Implied warranties are expressly stated in the sales or lease contract.

FALSE

Implied warranties of quality cannot be disclaimed.

FALSE

Only written express warranties are valid.

FALSE

Persons who transfer goods without proper title breach the warranty of quiet possession.

FALSE

The implied warranty of fitness for a particular purpose applies only to merchants.

FALSE

The warrantor of a limited warranty must guarantee that a defective product will be repaired or replaced free during the warranty period.

FALSE

An "as is" disclaimer asserts that all implied warranties are disclaimed.

TRUE

If a seller is a merchant with respect to certain goods, there is an implied warranty that the quality of the goods must pass without objection in the trade.

TRUE

The warranty ________ is a warranty in which 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 her leasehold interest. A) against infringements B) of good title C) of quiet possession D) of no security interests

C) of quiet possession

Which of the following constitutes an express warranty for goods? A) a description of the goods B) a commendation of the goods C) prior experience with the goods D) an affirmation of the value of the goods

A) a description of the goods

A full warranty is an example of ________. A) an express warranty B) a voidable warranty C) the implied warranty of fitness for a particular purpose D) the implied warranty of fitness for human consumption

A) an express warranty

Where there has been a breach of warranty, the buyer or lessee may sue the seller or lessor to recover ________ damages. A) compensatory B) statutory C) punitive D) liquidated

A) compensatory

What type of transaction is covered by the Magnuson-Moss Warranty Act? A) consumer transactions B) commercial transactions C) industrial transactions D) governmental transactions

A) consumer transactions

A test to determine merchantability based on unfamiliar objects found in food is known as the ________ test. A) foreign substance B) consumer nullification C) contamination D) contagion

A) foreign substance

The requirement that goods must be fit for the ordinary purposes for which they are used is a(n) ________. A) implied warranty B) explicit warranty C) express warranty D) warranty of good title

A) implied warranty

A commendation of goods made by a seller or lessor that does not create an express warranty is referred to as a(n) ________. A) statement of opinion B) implied warranty C) guarantee D) limited warranty

A) statement of opinion

Eliza buys a car from Sidewinder Auto Sales, L.L.C. (Sidewinder) with a warranty that says any defect of the car will be repaired or replaced free for a period of six (6) months after the sale. Sidewinder has taken a security interest in the car. Before completely paying off the car, Eliza sells the car to Mona for cash. Mona is unaware of Sidewinder's security interest in the car. After Eliza misses several of her payments, Sidewinder discovers that Mona has the car and repossesses it. Which warranty breach can Mona assert to recover from Eliza? A) the warranty of no security interests B) the warranty against infringements C) the warranty of good title D) the warranty of no interference

A) the warranty of no security interests

Express warranties can be all but which of the following? A) written B) inferred from the seller's conduct C) inferred from the buyer's conduct D) oral

C) inferred from the buyer's conduct

Which of the following is correct regarding express warranties? A) A manufacturer is liable for express warranties made by wholesalers. B) A retailer is liable for the express warranties made by manufacturers of the goods it sells. C) A retailer is not allowed to make warranties for manufactured goods. D) A manufacturer is obligated by law to make an express warranty for all the goods it produces.

B) A retailer is liable for the express warranties made by manufacturers of the goods it sells.

Which of the following is correct regarding the display of a warranty disclaimer? A) It can be implied as an understanding between the buyer and seller. B) It should be conspicuous and noticeable. C) It need only be present in the contract. D) It must be published in a local newspaper before actually being displayed.

B) It should be conspicuous and noticeable.

Which of the following is correct regarding express warranties? A) Sellers, but not lessors, are required by law to make express warranties. B) Neither sellers nor lessors are required by law to make express warranties. C) Lessors, but not sellers, are required by law to make express warranties. D) Both sellers and lessors are required by law to make express warranties.

B) Neither sellers nor lessors are required by law to make express warranties.

Tyesha just bought a car that had a one-year warranty stating it covered the cost of parts, but not the cost of labor. It also stated that the warranty only covered the powertrain and no other part. What kind of warranty does Tyesha's car have? A) a full warranty B) a limited warranty C) a voidable warranty D) a void warranty

B) a limited warranty

A warranty disclaimer is considered to be conspicuous when ________. A) the seller implies the disclaimer B) a reasonable person is able to notice it C) it is present in the contract D) it is expressed and approved by both seller and buyer

B) a reasonable person is able to notice it

An automatic warranty provided by a seller or lessor who is a merchant that regularly deals in goods of the kind sold or leased which warrants that the goods are delivered free of any third-party patent, trademark, or copyright claim is known as the warranty ________. A) of no security interests B) against infringements C) of good title D) of no interference

B) against infringements

StoryBoard Creatives approached Logos Studios with a script for a movie. Logos Studios liked the script and purchased the rights for the script from StoryBoard. Mr. Simpson, a former employee of StoryBoard, later claimed that he had the copyright to the script. Mr. Simpson proved his copyright in court. He then notified Logos Studios that it could not begin production on the script without his permission and a set payment of fees. Logos Studios then rescinded the contract with StoryBoard based on breach of the warranty ________. A) of no security interests B) against infringements C) of no interference D) of good title

B) against infringements

A statement of opinion may be which of the following? A) a type of guarantee B) an affirmation of the value of the goods C) an implied assurance not expressly stated D) an explicit description of the goods

B) an affirmation of the value of the goods

Sam expressed an interest in buying a painting from Jasper, who claimed that the painting was a family heirloom. Jasper's asking price was $15,000, but Sam was only willing to offer $13,000. Jasper told him that it was a very old painting worth a fortune and that others would gladly pay $20,000 for it. He also told him that he was only selling it under its market value because he needed the money immediately. He then implied that Sam could sell it for a higher rate if he wanted. Sam decided to buy the painting for $15,000 on the condition that if he found that the painting was worth less than $15,000, Jasper would take the painting back and refund Sam in full. Which of the following warranties did this sales contract include? A) an implied warranty of merchantability B) an express warranty C) a statement of opinion D) an implied warranty of fitness

B) an express warranty

A warranty in which the seller warrants that he has valid title to the goods he is selling and that the transfer of title is rightful is known as a warranty ________. A) of no security interests B) of no interference C) of good title D) against infringements

C) of good title

Which of the following is correct regarding the Magnuson-Moss Warranty Act? A) It requires all warrantors to make express written warranties. B) It obligates all warrantors to make disclaimer warranties for their products. C) It authorizes warrantors to establish an informal dispute-resolution procedure. D) It establishes a rebuttable presumption that all implied warranties are voidable.

C) It authorizes warrantors to establish an informal dispute-resolution procedure.

Which of the following is a similarity between the foreign substance food test and the consumer expectation test? A) They are both used to determine a buyer's knowledge of a particular food product. B) They are both used to determine a buyer's interest in a particular food product. C) They are both part of the implied warranty of fitness for human consumption. D) They are both part of the express warranty an eatery provides.

C) They are both part of the implied warranty of fitness for human consumption.

Damages that are generally equal to the difference between the value of the goods as warranted and the actual value of the goods accepted at the time and place of acceptance are known as ________ damages. A) punitive B) incidental C) compensatory D) future

C) compensatory

The Magnuson-Moss Warranty Act is a federal statute that regulates written warranties on ________. A) commercial products B) fitness for a particular purpose C) consumer products D) statements of opinion

C) consumer products

Sam expressed an interest in buying a painting from Jasper, who claimed that the painting was a family heirloom. Jasper's asking price was $15,000, but Sam was only willing to offer $13,000. Jasper told him that it was a very old painting worth a fortune and that others would gladly pay $20,000 for it. He also told him that he was only selling it under its market value because he needed the money immediately. He then implied that Sam could sell it for a higher rate if he wanted. In legal terms, Jasper's words to Sam most likely constitute a(n) ________. A) express warranty B) implied warranty of merchantability C) statement of opinion D) oral contract

C) statement of opinion

In a shipment of containers of widgets, which of the following would constitute an implied warranty? A) that the seller of the widgets has given an oral acknowledgement and approval of the widgets in the containers B) that the description of the uses of widgets is mentioned in the contract C) that the widgets are of an even kind, quality, and quantity within each unit D) that a sample of the widget was given to the buyer for inspection

C) that the widgets are of an even kind, quality, and quantity within each unit

Eliza buys a car from Sidewinder Auto Sales, L.L.C. (Sidewinder) with a warranty that says that any defect of the car will be repaired or replaced free for a period of six (6) months after the sale. Sidewinder has taken a security interest in the car. Before completely paying for the car, Eliza sells the car to Mona for cash. Mona is unaware of Sidewinder's security interest in the car. After Eliza misses several of her payments, Sidewinder discovers that Mona has the car and repossesses it. What kind of warranty did Sidewinder provide to Eliza? A) a limited warranty B) a full warranty C) a warranty of good title D) a warranty of no interference

D) a warranty of no interference

The ________ test is used to determine the merchantability of food products based on what the average buyer would assume to find in particular food products. A) foreign substance food B) contagion C) contamination D) consumer expectation test

D) consumer expectation test

A warranty that is created when a seller or lessor makes an affirmation that the goods he is selling or leasing meet certain standards of quality, description, performance, or condition is known as a(n) ________ warranty. A) implied B) conditional C) closed D) express

D) express

The implied warranty of ________ is a warranty that applies to food or drink consumed on or off the premises of restaurants, grocery stores, fast-food outlets, and vending machines. A) opinion B) fitness for a particular purpose C) value D) fitness for human consumption

D) fitness for human consumption

Unless properly disclaimed, a warranty is implied that sold or leased goods are fit for the ordinary purpose for which they are sold or leased, as well as other assurances. This is known as the implied warranty ________. A) of fitness for a particular purpose B) of title C) against encumbrances D) of merchantability

D) of merchantability

Mark goes to Tony's Lumber Yard to buy some lumber to build a new roof for his cabin in Forks, Washington. The town of Forks receives approximately 120 inches of rain per year. Mark tells Tony, the lumber yard owner, to provide him an exact type of wood that can resist the wood decay caused by the extremely damp environment at the cabin. Mark buys the lumber after Tony assures him that the wood is exactly what Mark needs. The dampness rots the wood and it eventually collapses. Which of the following warranties has Tony breached by not providing Mark the lumber he needed? A) the implied warranty of fitness for construction B) the implied warranty of merchantability C) the implied warranty of fitness for human consumption D) the implied warranty of fitness for a particular purpose

D) the implied warranty of fitness for a particular purpose

Which of the following is NOT one of the three (3) most common forms of implied warranties? A) the implied warranty of merchantability B) the implied warranty of fitness for human consumption C) the implied warranty of fitness for a particular purpose D) the implied warranty of reasonable care

D) the implied warranty of reasonable care

Monty, a career criminal, steals a diamond from Prime Cut Jewelers. He then sells it to Adamas Jewelers, who is unaware that the diamond is stolen. If Prime Cut discovers that the diamond is with Adamas and reclaims the diamond, what warranty breach can Adamas assert to recover the cost from Monty? A) the warranty against infringements B) the warranty of no security interests C) the warranty of no interference D) the warranty of good title

D) the warranty of good title

The ________ is a warranty in which 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. A) warranty of good title B) warranty of quiet possession C) warranty against infringements D) warranty of no security interests

D) warranty of no security interests

The warranty of no interference warrants that goods sold are free from any third-party security interests or encumbrances that are unknown to the buyer.

FALSE

Under the consumer expectation test, if a person were injured by eating a nail in a cherry pie, the implied warranty of fitness for a particular purpose would be breached.

FALSE

Under the foreign substance test, if a person were injured by a chicken bone while eating a chicken salad sandwich, the implied warranty of fitness for human consumption would be breached.

FALSE

Under the foreign substance test, the court asks what a consumer would expect to find in the food or drink that she consumes.

FALSE

Warranties are the buyer's or lessee's assurance that the goods meet certain standards.

TRUE

Written disclaimers must be conspicuously displayed to be valid, meaning these disclaimers must be noticeable to a reasonable person.

TRUE

Written disclaimers must be conspicuously displayed to be valid.

TRUE

A person selling stolen property would be breaching the warranty of good title.

TRUE

Limited warranties are made more often by sellers and lessors than are full warranties.

TRUE

The Magnuson-Moss Warranty Act does not govern warranties related to commercial or industrial transactions.

TRUE

The Magnuson-Moss Warranty Act does not require a seller or lessor to make an express written warranty.

TRUE

The foreign substance test is used to determine breaches of the implied warranty of fitness for human consumption.

TRUE

The implied warranty of merchantability warrants that goods must be fit for the ordinary purposes for which they are used.

TRUE

The three (3) most common forms of implied warranties are the implied warranty of merchantability, the implied warranty of fitness for human consumption, and the implied warranty of fitness for a particular purpose.

TRUE

The warranty against infringements protects trademarks and copyright claims.

TRUE

To be effective, a disclaimer of the implied warranty of merchantability must specifically mention the term merchantability.

TRUE