LS311_Chapter_17 - arranty is an age-old concept. In sales...

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Unformatted text preview: 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 purchase or lease their goods that the goods are as represented or will be as promised. The Uniform Commercial Code (UCC) has numerous rules governing product warranties as they occur in sales and lease contracts. Those rules are 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 its use? Product liability encompasses the contract theory of warranty, as well as the tort theories of neg- ligence and strict liability (discussed in Chapter 4). Most goods are covered by some type of warranty designed to protect buyers. 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 W warranties, and implied warranties. We discuss these types of warranties in the following subsections, as well as a federal statute that is designed to prevent deception and make war- ranties more understandable. Warranties of Title Title warranty arises automatically in most sales contracts. The UCC imposes three types of warranties of title. Good Title In most sales, 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)]. 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 conveyed was valid and that its transfer was rightful. Because this was not in fact the case, Sharon breached the warranty of title imposed by UCC 2–312(1)(a) and became liable to the buyer for the appropriate damages. ■ ■ EXAMPLE 17.1 323 AFTER READING THIS CHAPTER, YOU SHOULD BE ABLE TO ANSWER THE FOLLOWING QUESTIONS: 1 What factors determine whether a seller’s or lessor’s statement constitutes an express warranty or mere puffery? 2 What implied warranties arise under the UCC? 3 Can a manufacturer be held liable to any person who suffers an injury proximately caused by the manufacturer’s negligently made product? 4 What are the elements of a cause of action in strict product liability? 5 What defenses to liability can be raised in a product liability lawsuit? L E A R N I N G O B J E C T I V E S 95735_17_Ch17_323-344.qxp 11/6/08 7:51 AM Page 323 Express Warranties A seller or lessor can create an express warranty by making representations concerning the quality, condition, descrip- tion, or performance potential of the goods. Under UCC 2–313 and 2A–210, express warranties arise when a seller or...
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