Fall 2010 Business Law and the Legal Environment - Week 9

Fall 2010 Business Law and the Legal Environment - Week 9 -...

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BUSINESS LAW AND THE  LEGAL ENVIRONMENT Week 9 Fall 2010
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WARRANTIES A warranty is a contractual assurance that goods  will meet certain standards. Express Warranties Implied Warranties Implied Warranty of Merchantability Implied Warranty of Fitness for a Particular Purpose
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EXPRESS WARRANTIES An Express Warranty is a statement by the seller  relating to the goods quality, capacity or other  characteristic that caused the buyer to purchase  the goods.  Ex. “This exterior paint will not fade for 2 years;”  “This cloth is all wool” Ex. “Toyota vehicles last forever” 
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AN EXPRESS WARRANTY IS  CREATED IN 3 WAYS: By affirmation of fact (representation) or  promise Distinguish from the sellers Opinion and Puffery  (Can the statement be proven true; Seller has  greater experience; Defects are not obvious) Ex. 0 to 60 in 7 seconds; highest grade of  commercial steel By a description of the goods Oral or written (labels, brochures, tags, etc.) By a sample or model– remote control car like  the store model--- or like the model tents and  etc. the little tents 
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EXAMPLE Shandra, a rock singer, went to Stereo  Shop to purchase recording equipment for  her home studio.  The sales clerk shows  her a $10K unit that records, edits, and  burns CDs.  The clerk says that it is “a  terrific unit,” and encourages Shandra to  record a CD at the store, which she does  and is pleased with the clarity.  However,  once the unit is set up at Shandra’s house,  there is frequently static on the recording  that requires Shandra to constantly  rerecord.  Did Stereo Shop breach an  express warranty?
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ANSWER Yes.  In allowing Shandra to try the unit at the  store as a model, the clerk would have expected  Shandra to rely on the demonstration.  A seller  who takes advantage of a model warrants that  the merchandise sold will be just as good.   However, the clerk’s statement would be mere  puffery.  
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IMPLIED WARRANTY OF  MERCHANTABILITY Unless excluded or modified, a warranty that the  goods shall be merchantable (goods are fit for  their normal purpose) is implied in a contract for  their sale, if the seller is a merchant (one who  routinely deals in these goods) with respect to  goods of that kind. Ex. Manufacturer of scuba equipment ordered  hoses from Supplier;  hori Ladder --- lowes people  promising itll work– perfectly aware of what  youre going to use it for --- breach!!
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IMPLIED WARRANTY OF  FITNESS FOR A PARTICULAR  PURPOSE Where the seller at the time of contracting knows  about a particular purpose for which the buyer 
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Fall 2010 Business Law and the Legal Environment - Week 9 -...

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