There are three implied warranties under the Uniform Commercial Code. Section 314 is the implied warranty of merchantability, section 315: warranty of fitness for a particular purpose and section 312: warranty of title. Most contracts courses will only focus on the first two. Here is what you need to know about them:
Implied warranty of merchantability
- To be merchantable, the goods must be such as would “pass without objection in the trade” and as “are fit for the ordinary purposes for which such goods are used.”
- In order to prove that a product is not merchantable, the complaining party must first establish the standard of merchantability in the trade.
- Must first establish that the seller is a “merchant” with respect to the goods sold (regularly deals in goods of the kind or holds itself out as having particular knowledge about the kind of goods)
Implied warranty of fitness for a particular purpose
- To establish an implied warranty of fitness for a particular purpose, the buyer must prove as a threshold matter that he made known to the seller the particular purpose for which the goods were required.
- The elements to create an implied warranty of fitness for a particular purpose:
- Seller knows:
- Buyer will use goods for a particular purpose
- That the buyer is relying on their expertise
- Buyer actually relies on the seller’s skill or judgment
- The warranty is created only when the buyer relies on the seller’s skill or judgment to select suitable goods for the buyer’s particular purpose and the seller has reason to know of this reliance
- Liability under this warranty is not limited to merchant sellers
- Breach of the warranty does not require a showing that the goods are defective in any way – merely that the goods are not fit for the buyer’s particular purpose. (Most courts also hold that the buyer’s particular purpose must be one other than the ordinary use of the goods).