warranties Archives

July 26, 2011

Disclaimer of Warranties

Disclaimers of Warranties (Section 316 of the Uniform Commercial Code).

Express Warranty

Express warranties are inoperative if the disclaimer cannot be construed as “consistent” with terms in the contract that would create the express warranty. You should the parol evidence to bar any express warranties that were created outside the document:

If it is an integrated agreement, then no warranties outside of the agreement are actually enforceable (parol evidence)

If it is not an integrated agreement, Apply Article 2, 316:

A disclaimer is only ineffective if it conflicts with the warranty

Therefore, you can have a disclaimer that limits the warranty but does not conflict it

Implied warranty of merchantability

Can also be disclaimed; however, the disclaimer has to mention merchantability. Furthermore, if it is in writing, the disclaimer has to be conspicuous (the disclaimer can be oral). In order to disclaim the implied warranty of mechantability, the disclaimer:

Cannot just state “all warranties are disclaimed”

Does not have to be in writing but must mention warranty of merchantability

Implied warranty of fitness for a particular purpose

Can also be disclaimed; but, the disclaimer must be in writing and must be conspicuous. The written disclaimer does not have to mention fitness. This implied warranty does not require a conspicuousness requirement, but most courts agree that one should be implied to carry out the section’s purpose of avoiding surprise to buyers.

Finally, it is important to note that an “As is” magically disclaims all warranties.

July 26, 2011

Express Warranties

Contract law has express warranties and implied warranties. Express Warranty is found in Section 313 of the Uniform Commercial Code. An express warranty is created as follows:

Any affirmation of fact or promise 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
Any description of the goods which is made a part of the basis of the bargain creates an express warranty that the goods shall conform to the description

To make it easier, you can just remember three elements that are needed to create an express warranty:

Statement regarding quality or description

Fact, promise, or description

Basis of the bargain

Implied Warranties

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:
1. Seller knows:
1. 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).