Chapter 22

Requirements of an express warranty

The seller does not need to formally use the words warranty or guarantee but it must be part of the basis of the bargain. Only statements of fact and not opinion create express warranties. However, an exception to this exists for experts on a subject who are speaking to a layperson.

3 rules court uses when express and implied warranties are inconsistent

1.) An express warranty displaces an inconsistent implied warranty unless it is an implied warranty for fitness of a particular purpose 2.) Samples take precedent over inconsistent general descriptions 3.) Exact or technical specifications displace inconsistent samples or general descriptions

Public Policy for strict liability rests on three assumptions

1.) Consumers should be protected against unsafe products 2.) Manufacturers should not escape liability just because they do not have a contract with the ultimate consumer of the product 3.) Manufacturers are in a better position to incur costs because they can pass them on to the consumer in the form of higher prices

Three types of Title Warranties

1.) Good Title- Seller warrants that they have good and valid title to the goods sold and that the title of the transfer is rightful 2.) No liens- Protects buyers who are unaware of any encumbrances such as claims, charges, or liability called liens. If creditor repossesses goods from a buyer who had no knowledge of liens on the seller then they can recover from seller for breach of warranty 3.) No infringements- When seller is a merchant they automatically warrant that the buyer takes the goods free of infringement (promise that goods are free from any claims of a third party)

3 ways a seller can indicate an express warranty

1.) Goods conform to any affirmation of fact or promise that the seller makes to the buyer about the goods 2.) Goods conform to any description of them 3.) Goods conform to any sample or model of the goods shown to the buyer

6 requirement under restatement of the law in 402A which if met can give almost unlimited liability to the manufacturer

1.) Product must be in a defective condition when sold by defendant 2.) Defendant must normally be engaged in the selling or distribution of that product 3.) Product must be unreasonably dangerous to the consumer as a result of the defect 4.) Plaintiff must incur some harm to self or property as a result of use of the product 5.) Defective condition must be the proximate cause of the injury or damage 6.) Goods must not have been substantially changed from the time the goods were sold to the time of the injury

2 factors used to determine if a product is unreasonably dangerous

1.) Product was dangerous beyond the expectation of the ordinary consumer 2.) Less dangerous alternative was economically feasible but was not produced

7 common defenses to product liability

1.) Proving that there is no basis for the plaintiff's claim 2.) Assumption of risk- Defendant must show that the plaintiff knew and appreciated the risk created by the defect and that the plaintiff voluntarily assumed the risk even if it was unreasonable to do so 3.) Product misuse- Applies if product was used for an unintended purpose, injured party does not know that the product is dangerous for a particular use, and it was not foreseeable 4.) Comparative negligence- Defendant can often limit at least some liability by showing that the plaintiff's misuse of the product contributed to injury. Does not completely absolve but can limit the damages awarded in some cases 5.) Commonly known dangers 6.) Knowledgeable user- Why you don't need to warn an electrician of potential electrical shock 7.) Statute of Limitations and repose (usually 2 to 4 years)- Make sure manufacturers aren't vulnerable forever. Often repose sets out a maximum amount of time that suit can be brought since the statute of limitations does not start until someone knows or should have known that an injury existed

Market Share liability

A controversial practice where if the plaintiff cannot determine which distributor of a harmful product is at fault then all producers can be assessed fault based on market share.

Magnuson-Moss Warranty Act

Designed to prevent deceptions in warranties by making them easier to understand. A full warranty requires either free repair or replacement of a defective part for either a limited or an unlimited time period. A limited warranty is one in which buyer's recourse is limited such as replacement of item only. Whether a full or limited warranty is being given must be stated on goods of more than $25 in value. Sellers also must make any necessary disclosures to buyers and state any limitations on the warranty in easy to read language.

Disclaiming implied warranties

Implied warranties can be disclaimed using common language that is understood by both parties such as "as is" or "without faults". To disclaim an implied warranty of merchantibility the word merchantability must be mentioned but not necessarily in writing. If the buyer looks at the goods as fully as they desire or refuses to check them for defect at request of the seller then there is no recourse for defects which the routine examination would have discovered.

Implied Warrant of Merchantibility

Is made by a merchant who deals in the kind of the goods sold. To be merchantable goods must be of average quality and have adequate packaging and labeling. The warranty can be breached even if the merchant did not know or could not have known that the product was defective. UCC considers food and drink to be subject to this standard as well.

Dealing with defects

Manufacturing defect exists when a product was made improperly and a design defect occurs if product was made in conformity with design but still causes an injury. Defect can also exist as a result of inadequate instructions or warnings

How to disclaim an oral express warranty

Must include in the contract a written disclaimer in clear language that is brought to the buyers attention and which was made at the time the contract was formed

Strict liability

People may be held responsible for the results of their acts regardless of their intentions or whether they exercise due care as a matter of public policy. There is no duty to risk about risks which are obvious or commonly known. It is the sellers duty to warn those who purchase a product of foreseeable misuse which can result from misuse of the product. Strict liability generally extends to both innocent buyers and suppliers of component parts (If GM is supplied brakes and brakes fail then both GM and the supplier of the component part can be sued)

Responsibility of the plaintiff for strict liability

Plaintiff does not need to show why the product was defective but does need to show that it was defective when it left the sellers hands and that made it unreasonably dangerous

Product liability

Those who make, sell, or lease goods can be held liable for physical harm or property damage caused by those goods to a consumer, user, or bystander. This can have basis of negligence, misrepresentation, or strict liability. If a manufacturer fails to exercise due care in making a product safe then they can be sued by anyone (not just those who entered into a contract). Meanwhile, product liability based on the facts must be made knowingly or with reckless disregard for the facts and must be of a material fact.

Implied Warranty for fitness of a particular purpose

When a seller knows the particular purpose for which a buyer is buying the product and knows that the buyer is relying on the skill and judgment of the seller to select goods that are suitable. Particular purpose for the goods need not be the ordinary purpose and something can be merchantable but not fit for a given purpose (such as good quality paint that does not match the room that the buyer wants the paint to match). Seller does not have to necessarily know the purpose if the purpose can be reasonably inferred. A warranty can also be implied by prior dealings or trade customs.