Chapter 21 Outline warranties and product liability

Chapter 21 Outline warranties and product liability -...

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Chapter 21 Outline warranties and product liability I. Product liability a. -refers to goods that have caused an injury b. Three types: b.i. Warranty – assurance provided in a sales contract; contractual assurance that goods will meet certain standards b.ii. Negligence-refers to unreasonable conduct by defendant b.iii. Strict liability-prohibits defective products even if defendant acted reasonably II. Express Warranty a. One that seller creates with his words or actions b. Ex: sales clerk saying that the paint will not fade for three years even in direct sunlight c. Affirmation of Fact or Promise - can create an express warranty c.i. Simple statement about the nature or quality of product c.ii. Make distinction between these and puffery c.iii. More likely an affirmation of fact if: c.iii.1. Specific and can be proven true or false c.iii.2. Written c.iii.3. Defects are not obvious c.iii.4. Seller has great expertise d. Description of goods - could be written or oral ex: labels on products; particular characteristics or qualities e. Sample or model -demonstrating quality of goods to customers f. Basis of Bargain- seller’s conduct must have been a part of the basis of bargain; must demonstrate that the two parties included the statements or acts in their seller’s bargain; buyer must have relied to the seller’s statements f.i. Ex: seller makes assurances about quality of goods but the buyer never sees the brochure. Should the seller be held for express warranty? Some courts say no, some say yes. f.ii. Seller who chooses to make statements about his goods will be held to them unless the seller can convince a court that he should not be liable. III. Implied Warranties a. Those created by the Code itself not by any act or statement of the seller; the Code concludes that goods should generally meet certain standards of quality, regardless of what the seller did or did not say b. Implied warranty of merchantability b.i. 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 b.ii. Merchantable- means that the goods are fit for the ordinary purposes for which they are used b.iii. Ex: manu. Sells to retailer children’s bicycles; no brochures and no
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This note was uploaded on 11/06/2011 for the course FIN 3055 taught by Professor Cgiles during the Fall '08 term at Virginia Tech.

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Chapter 21 Outline warranties and product liability -...

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