Exclusion of Warranties, Privity, and Duty to Notify Exclusion of Warranties, Privity, and Duty to Notify Section 14.1

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned 1. 1.What are the three ways an express warranty can be made? Section 14.1 Assessment

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned By a statement of fact or promise made by the seller, by a description of the goods, and by the use of a sample or model. Section 14.1 Assessment Answer

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned 2. 2.What are the obligations of merchants under the Magnuson- Moss Warranty Act? Section 14.1 Assessment

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned Merchants must label written warranties as either “full” or “limited” for consumer products costing more than $10. Section 14.1 Assessment Answer

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned 3. 3.What is difference between a limited warranty and a full warranty? Section 14.1 Assessment

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned A limited warranty is one that does not meet all of the requirements for a full warranty. Section 14.1 Assessment Answer

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned 4. 4.What is the difference between the implied warranty of fitness for a particular purpose and the implied warranty of merchantability? Section 14.1 Assessment

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned A warranty of fitness for a particular purpose is created when the seller knows about a particular purpose for which the goods are needed. Section 14.1 Assessment Answer

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned The seller advises the buyer in making a purchase and the buyer relies on the seller’s advice. This warranty exists whether the seller is a merchant or a private party. Section 14.1 Assessment Answer

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned In contrast, sellers who regularly sell goods of a particular kind imply a warranty of merchantability in every sale, assuring that their products are fit for the purpose for which they are purchased. Section 14.1 Assessment Answer

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned Private parties do not provide the warranty of merchantability. Section 14.1 Assessment Answer

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned 5. 5.What is the warranty of title? Section 14.1 Assessment

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned Guarantees that the title being conveyed is good, and the transfer is lawful. Section 14.1 Assessment Answer

Exclusion of Warranties, Privity, and Duty to Notify Exclusion of Warranties, Privity, and Duty to Notify Section 14.2

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties To exclude the warrant of merchantability, merchantability must be mentioned specifically. The warranty of title may be not excluded. Implied warranties can also be excluded by words such as “as is.” Exclusion of Warranties

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Under the Magnuson-Moss Warranty Act, any clause that excludes or limits consequential damages for breach of warranty must appear conspicuously on the face of the warranty. Exclusion of Warranties

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Consequential damages are losses that do not flow directly from an act but only from some of the consequences or results of the act. Exclusion of Warranties

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Harriet loves to shop at the outlet stores in Commerce. Her favorite name brand store has an As Is rack.

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties After returning home from shopping there one day, she discovered the skirt she bought off the As Is rack has a large tear. Can Harriet take the skirt back? Why or why not?

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties No. This is an example of an excluded implied warranty. ANSWER

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties The Magnuson-Moss Warranty Act limits the exclusions of implied warranties to consumers. Under this law, if a seller makes a written express warranty to a consumer, the implied warranties cannot be disclaimed or excluded. Consumer Protection

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Some states have gone further to protect consumers by saying that implied warranties cannot be excluded when goods are sold. Consumer Protection

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties People who contract directly with each other are said to be in privity of contract. In the past, warranties extended only to the actual buyer of a product. Privity of Contract Not Required

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties The UCC has abolished the requirement of privity of contract. Instead it provides states with three alternatives. Privity of Contract Not Required

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties In all of the three alternatives, express and implied warranties extend to people who would reasonably be expected to use, consume, or be affected by the goods purchased by the buyer. Privity of Contract Not Required

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties 14.2 Comparing the Alternatives Alternative AAlternative BAlternative C gives sellers’ warranties to any person injured by a breach of warranty who is in the family or household of the buyer, including guests gives sellers’ warranties to any person injured by a breach of warranty. gives sellers’ warranties to any person or corporation injured by a breach of warranty.

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties 14.2 Comparing the Alternatives Alternative AAlternative BAlternative C Sellers cannot exclude this provision. Sellers may exclude this provision with respect to injuries to corporations but not to individuals. Warranties are not extended to corporations.

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Most states have adopted one of the three alternatives, but a few states have written their own versions (OV). UCC Alternatives to Privity

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties 14.2 UCC Alternatives to Privity A B C OV NA AK, AZ, AR, CT, DC, FL, GA, ID, IL, IN, KY, MD, MI, MS, MO, MT, NE, NV, NJ, NM, NC, OH, OK, OR, PA, SC, TN, WA, WV, WI AL, CO, DE, KS, SD, VT, WY HI, IA, MN, ND, UT ME, MA, NH, NY, RI, TX, VA CA, LA

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties To succeed in a claim for breach of warranty, the buyer must satisfy his or her duty to notify. Duty to Notify and Remedies for Breach

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties This duty requires that the buyer notify the seller within a reasonable time after the defect is discovered. Failure to do so will prevent the buyer from recovering. Duty to Notify and Remedies for Breach

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Often, when sellers are notified that a product is defective or that a warranty has been breached, they will arrange to correct the situation. Duty to Notify and Remedies for Breach

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties When the warranty of title is breached, the buyer has a claim against the seller for damages. This could be the cost of clearing the title or the purchase price of the goods. Duty to Notify and Remedies for Breach

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Chunta bought a digital camera from his friend Thomas for $50 only to find out that it was stolen. What remedy does Chunta have?

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties ANSWER Chunta has a claim against Thomas for $50.

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned 1. 1.To whom are warranties made under the laws of your state? Section 14.2 Assessment

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned Answers will vary by state. Section 14.2 Assessment Answer

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned 2. 2.How may warranties be excluded under the laws of your state? Section 14.2 Assessment

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned Answers will vary by state. Section 14.2 Assessment Answer

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned 3. 3.What is the buyer’s duty to notify the seller of a defect? Section 14.2 Assessment

Understanding Business and Personal Law Exclusion of Warranties, Privity, and Duty to Notify Section 14.2 The Importance of Warranties Reviewing What You Learned The buyer must notify the seller within a reasonable time after the defect is discovered. Section 14.2 Assessment Answer

Exclusion of Warranties, Privity, and Duty to Notify Exclusion of Warranties, Privity, and Duty to Notify End of Section 14.2