MT211_Chapter17_eBook

MT211_Chapter17_eBook - C H A P T E R 17 Warranties and...

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315 W ARRANTIES OF T ITLE Title warranty arises automatically in most sales con- tracts. The UCC imposes three types of warranties of title. Good Title In most instances, sellers warrant that they have good and valid title to the goods sold and that transfer of the title is rightful [UCC 2–312(1)(a)]. 1 ± Sharon steals goods from Miguel and sells them to Carrie, who does not know that the goods are stolen. If Miguel reclaims the goods from Carrie, which he has a right to do, Carrie can then sue Sharon for breach of warranty. When Sharon sold Carrie the goods, Sharon automatically warranted to her that the title con- veyed was valid and that its transfer was rightful. Because this was not in fact the case, Sharon breached the war- ranty of title imposed by UCC 2–312(1)(a) and became liable to the buyer for the appropriate damages. ± EXAMPLE 17.1 CHAPTER 17 Warranties and Product Liability LEARNING OBJECTIVES After reading this chapter, you should be able to answer the following questions: What factors determine whether a seller’s or lessor’s statement constitutes an express warranty or mere “puffing”? What implied warranties arise under the UCC? Can a manufacturer be held liable to any person who suffers an injury proximately caused by the manufacturer’s negligently made product? What are the elements of a cause of action in strict product liability? What defenses to liability can be raised in a product liability lawsuit? 5 4 3 2 1 W arranty is an age-old concept. In sales and lease law, a warranty is an assurance by one party of the existence of a fact on which the other party can rely. Sellers and lessors warrant to those who pur- chase or lease their goods that the goods are as repre- sented or will be as promised. The Uniform Commercial Code (UCC) has numerous rules governing product warranties as they occur in sales and lease contracts. That is the subject matter of the first part of this chapter. A natural addition to the discussion is product liability: Who is liable to consumers, users, and bystanders for physical harm and property damage caused by a particular good or the use thereof? Product liability encompasses the contract theory of warranty, as well as the tort theories of negligence and strict liability (discussed in Chapter 4). Warranties Article 2 (on sales) and Article 2A (on leases) of the UCC designate several types of warranties that can arise in a sales or lease contract, including warranties of title, express warranties, and implied warranties. 1. Under the 2003 amendments to UCC 2–312(1)(a), good title also includes the warranty that the sale “shall not unreasonably expose the buyer to litigation because of any colorable [legitimate or reasonable] claim to or interest in the goods.” Thus, the buyer is entitled not only to a good title, but also to a mar- ketable title that is free of “colorable claims.”
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316 UNIT FOUR SALES AND LEASE CONTRACTS No Liens A second warranty of title provided by the UCC protects buyers who are unaware of any encum- brances, or liens
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MT211_Chapter17_eBook - C H A P T E R 17 Warranties and...

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