Chapter 20.docx - Chapter 20 Sales Warranties and Product Liability WARRANTIES assurance or guarantee that goods will conform to certain standards buyer

Chapter 20.docx - Chapter 20 Sales Warranties and Product...

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Chapter 20: Sales: Warranties and Product Liability WARRANTIES: assurance or guarantee that goods will conform to certain standards; buyer can recover damages if standards are not met (under breach of warranty theory) Express Warranties: those that originate from words or actions of the seller (seller doesn’t have to use words “warranty” or “guarantee”, and buy does not have to show that the seller intended to make a warranty) Three ways to create an express warranty Affirmation of Fact or Promise relating to the goods: seller tacitly guarantees that the goods will conform to the specifics he or she sets forth ex) Seller might claim “this boat is equipped with a 2-year old, 100-horsepower engine that was overhauled last month (Affirmation) The statement contains several affirmations of fact: (1) the boat is equipped with an engine, (2) the engine is 2 years old, (3) it generates 100 horsepower, and (4) it was overhauled last month The seller could also say: “I assure you that this boat will not stall when run in choppy water” (Promise) Neither a seller’s commendation or expression of opinion or statement that relates to value constitute an express warranty Specific and absolute statements are are likely to be construed as warranties than indefinite ones Description of Goods ex) word “seedless” warrants that the grapes won’t have seeds Trade terms can also constitute descriptions (ex: Scotchguard) Sample or Model of the goods — warranty arises that goods will conform to sample or model Sample more likely than model to create warranty because samples are taken from actual inventory and it’s easier to prove that sample was intended to establish standard for the sale Basis of the Bargain — an express warranty is created only if the affirmation/promise, description, or sample/model is part of the “basis of the bargain” Applied to two circumstances: Seller makes a statement about the goods, and circumstances indicate that both parties intended the statement to be a part of the agreement Statements of fact contained in brochure, provided to the buyer by the seller (courts assume that statement became a part of contract unless the seller can show “good reason” for the contrary) If after a sale has been made, the buyer requests a promise from the seller that the gods meet certain standards, this promise becomes a party of basis of the bargain During sales negotiations, if a statement fails to make it into the contract, too bad so sad (written form intended for final expression of agreement) Implied Warranties: Introduction Implied warranty created through mere act of selling and is imposed on the seller by law (protects buyers when products fail to serve their needs) Specific representations about a product have not been made
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UCC creates 2 kinds: implied warranty of merchantability and implied warranty of fitness for a particular use Implied Warranty of Merchantability:
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  • Spring '08
  • Baker
  • Contract Law, Implied warranty, Product liability

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