1. 25-1 Chapter 21 Warranties

2. Introduction to Warranties  Caveat emptor: “Let the buyer beware”  Governed law of sales and leases since Roman times  Warranties that apply under UCC give buyers more protection 21-2 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

3. Express Warranty  Created when seller/lessor affirms goods meet certain standards of quality, description, performance, or condition  May be written, oral, or inferred from conduct  Sellers and lessors are not required to make express warranties 21-3 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

4. Express Warranty  Created when seller/lessor indicates goods will conform to:  All affirmations of fact or promise made about the goods  Any description of the goods  Any model or sample of the goods 21-4 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

5. Express Warranty  Recovery for breach of warranty  Warranty must be a contributing factor that enticed buyer/lessee to enter the contract  A retailer is liable for the express warranties made by manufacturers of goods it sells 21-5 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

6. Express Warranty  Statement of opinion: A commendation of goods, made by a seller or lessor, that does not create an express warranty  Puffing or commendation of goods 21-6 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

7. Damages Recoverable for Breach of Warranty  Compensatory damages: Difference between value of goods as warranted and and the actual value of the goods accepted at the time and place of acceptance  Purchaser or lessee can recover for personal injuries 21-7 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

8. Warranties Implied By Law Implied Warranty of Merchantability Implied Warranty of Fitness for Human Consumption Implied Warranty of Fitness for a Particular Purpose 21-8 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

9. Implied Warranty of Merchantability  Standards  The goods must be fit for the ordinary purposes for which they are used  The goods must be adequately contained, packaged, and labeled  The goods must be of an even kind, quality, and quantity within each unit 21-9 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

10. Implied Warranty of Merchantability  The goods must conform to any promise or affirmation of fact made on the container or label  The quality of the goods must pass without objection in the trade  Fungible goods must meet a fair average or middle range of quality Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 21-10

11. Case 21.1: Implied Warranty of Merchantability  Case  Denny v. Ford Motor Company  87 N.Y.2d 248, 662 N.E.2d 730, 639 N.Y.S.2d 250, Web 1995 N.Y. Lexis 4445  Court of Appeals of New York  Issue  Has Ford Motor Company breached the implied warranty of merchantability? Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 21-11

12. Implied Warranty of Fitness for Human Consumption  Applies to food or drink obtained from restaurants, grocery stores, fast-food outlets, vending machines  Tests  Foreign substance test: To determine merchantability based on foreign objects found in food  Consumer expectation test: To determine merchantability based on what the average consumer would expect to find in food products 21-12 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

13. Implied Warranty of Fitness for a Particular Purpose  Arises where a seller/lessor warrants that the goods will meet the buyer/lessee’s expressed needs  Applies to both merchant and nonmerchant sellers/lessors  Breached if the goods do not meet the buyer’s or lessee’s expressed needs 21-13 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

14. Case 21.2: Implied Warranty of Fitness for a Particular Purpose  Case  Mack Massey Motors, Inc. v. Garnica  814 S.W.2d 167, 1991 Tex. Lexis 1814  Court of Appeals of Texas  Issue  Have the defendants made and breached an implied warranty of fitness for a particular purpose? Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 21-14

15. Warranty Disclaimers  Warranty disclaimer: A statement that negates express and implied warranties  Rules:  “As is” disclaimer  Disclaimer of the implied warranty of merchantability  Disclaimer of the implied warranty of fitness for a particular purpose  Written disclaimers must be conspicuously displayed to be valid 21-15 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

16. Warranties of Title and Possession Good Title Good Title No Security Interests No Interference No Infringements 21-16 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

17. Warranties of Title and Possession Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 21-17

18. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 21-18