Warranties

In the last panel we discussed certain terms supplied by Article 2 Chapter 3 of the Uniform Commercial Code, price, delivery, and so on. Those terms may easily be supplanted by agreement, indeed, their principal purpose is to supply terms only in the absence of a specific agreement. In this panel, we continue with Article 2's supplied warranties.

Warranty of Title: The first is the warranty that the seller owns or has the right to convey the goods Without any specific undertaking in the contract, the seller automatically warrants under section 2-312 that it is conveying good title and that the transfer is otherwise rightful. The seller further warrants that the goods will be delivered "free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge." These warranties may be "excluded excluded or modified only by specific language or by circumstances which give the buyer reason to know" that there are limitations on the warranty. A merchant makes an additional warranty against infringement:

((3) Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.

Express Warranties of quality. The Code regulates the creation of both express and implied warranties. It is, however, not the only statute creating and regulating warranties. The laws of many states contain protections regarding the quality of consumer goods. Federal consumer protection laws also prevent the sale of unsafe products and seek to simplify the kinds of warranties which may be given to consumers. Express warranties are created when the seller makes a specific representation of quality by words or action. The Code says:

(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.

McDonalds advertisements create a warranty that the hamburgers have 1/4 pound of meat. When the salesman tells you a used car's brakes have just been relined, that is an express warranty. When a sales person brings along a sales brochure and shows pictures of a vacuum cleaner cleaning better than the competition, that may be an express warranty. The vacuum cleaner he brings to your home to show is a sample or model, constituting a warranty that the cleaner you receive will perform as well. The Code continues:

It is not necessary to the creation of an express warranty that the seller use formal words such as "warrant" or "guarantee" or that the seller 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.

Implied Warranty of Merchantability: Merchants (companies who regularly sell the goods in question) make an implied warranty, without any express representation. The implied warranty becomes part of the contract for sale unless properly disclaimed. The Code says:

1) Unless excluded or modified 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. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.
(2) Goods to be merchantable must be at least such as

(a) pass without objection in the trade under the contract 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 unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may require; and
(f) conform to the promises or affirmations of fact made on the container or label if any.

These are the warranties that protect consumers by implying a promise that the goods will conform to usual and customary quality specifications. A car has a working motor and four tires. A television works like an ordinary television. Seed corn produces an acceptable corn crop.

In addition, "unless excluded or modified other implied warranties may arise from course of dealing or usage of trade." Link to: Guide Business persons Guide to Warranty Laws Lexicon Implied Warranty

Implied warranty; fitness for particular purpose.

The implied warranty of merchantability promises that the product you buys meets usual and customary specifications. The product does what it should under ordinary use. You can't buy a four-wheel drive truck to pull a plow and then complain under the implied warranty. That's not what four-wheel drive trucks are manufactured for.

Suppose, on the other hand, that you visit your Ford dealer and specifically ask for an all purpose vehicle that can pull plows. If the dealer says, hey, I've got the best plow pulling little truck ever made, then that would be what: ____? That's right, an express warranty, because the dealer has expressly promised that the truck will function for that purpose. But suppose instead that you go to your dealer and tell him that you don't know a whole lot about trucks, and you are in the market for plow pulling vehicles. According to the UCC section 2-315, an implied warranty of fitness for particular purpose arises:

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 the next section an implied warranty that the goods shall be fit for such purpose.

The line between this implied warranty and the express warranty is at times hard to discern. The implied warranty arises without any statement on the part of the seller. It flows from the seller's knowledge of the buyer's reason for buying. The seller knows the nature of the buyer's operations and the seller selects the particular product in light of those needs.

In the next panel, we'll discuss the process by which a seller disclaims or limits warranties under the Code.