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Chapter
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WARRANTIES IN SALES OF GOODS
[1] Warranty of Good Title and Against Infringement
[a] Good Title
Unless such warranty is disclaimed (see § 14.02[1]), in all transactions for the sale of goods, the seller warrants that:
Proposed revised UCC § 2-312(1) adds that the seller warrants that transfer of the title will not unreasonably expose the buyer to litigation arising from any colorable claim to or interest in the goods .
The UCC abolished the common law warranty of "quiet possession" which assured the buyer that no one would later assert a claim to such goods.
[b] Against Infringement
If a seller is a merchant that regularly deals in goods of the kind that are the subject of the contract, the seller furthermore warrants that the goods are delivered free of any rightful claim of copyright, patent or trademark infringement. However, if the goods are made according to specifications furnished by the buyer, the buyer must hold the seller harmless against any such claims for infringement that arise out of compliance with such specifications. [UCC § 2-312(3)]
[2] Implied Warranty of Merchantability
Contracts for the sale of goods by a merchant of goods of such kind include an implied warranty that the goods are "merchantable," unless such warranty is modified or excluded (see § 14.02[2]). This warranty also applies to the service for value of food or drink.
Goods that may be deemed merchantable include those that:
[3] Implied Warranty of Fitness for a Particular Purpose
Unless excluded or modified (see § 14.02[3]), a sale of goods includes an implied warranty that the goods will be fit for a particular purpose where:
1) the seller, at the time of contracting, has reason to know of the buyer's particular purpose for which he seeks to purchase the goods; and
2) the buyer relies on the seller's skill or judgment to select or furnish goods suitable for such purpose. [UCC § 2-315]
[4] Express warranties
Where a seller:
that becomes part of the basis of the bargain, the seller creates an express warranty that the goods will so conform. The seller need not use terms such as "warranty" or "guarantee" or possess a specific intention to make a warranty.
No express warranty is created by the seller's affirmation of the value of the goods, opinion or commendation of the goods. [UCC § 2-313]
The proposed revision limits the application of § 2-313 to express warranties made by a seller to "an immediate buyer," defined as "a buyer that enters into a contract with the seller." New sections govern what are now referred to as "obligations" of a seller to remote purchasers created by (1) a record packaged with or accompanying the goods, and (2) advertising or other communication to the public. "Remote purchaser" is defined as "a person that buys or leases goods from an immediate buyer or other person in the normal chain of distribution."
[a] Express Warranties in Record Packaged with Goods
Where a seller, in a record packaged with or accompanying goods:
to a remote purchaser, and the seller reasonably expects the record to be furnished to a remote purchaser, and the record is in fact furnished to the remote purchaser, the seller has an obligation to such purchaser that:
1) the goods will conform to the affirmation of fact, promise, or description, unless a reasonable person in the position of the remote purchaser would not believe that an obligation was created; and
2) the seller will perform the remedial promise. [UCC § 2-313A]
[b] Express Warranties in Advertisements
Where a seller makes an affirmation of fact or promise that relates to goods, provides a description of the goods, or makes a remedial promise to a remote purchaser in an advertisement or other communication to the public, and the remote purchaser enters into a transaction of purchase with knowledge of and with the expectation that the goods will conform or that the seller will perform the remedial promise, the seller has an obligation to the remote purchaser that the goods will conform and that the seller will perform the remedial promise. [UCC § 2-313B]
§ 14.02 Disclaimer of Warranties
The warranty of good title may only be disclaimed or modified by specific language or by circumstances that give the buyer reason to know that the seller does not claim title in himself, or that he is purporting to sell only such right or title as he or a third person may have. [UCC § 2-312(2)]
A disclaimer or limitation of this warranty must expressly mention "merchantability," and if in writing, this term must appear conspicuously. [UCC § 2-316(2)] The proposed revision distinguishes between consumer contracts and other contracts, adding the requirement in cases of consumer contracts that the exclusion or limitation be in a record, be conspicuous and state "The seller undertakes no responsibility for the quality of the goods except as otherwise provided in this contract."
The implied warranty of merchantability may be furthermore excluded with respect to obvious defects if the buyer had an opportunity to inspect the goods before entering into the contract (see § 14.02[4]).
[3] Implied warranty of fitness
Any exclusion or modification of the implied warranty of fitness must be in writing and must appear conspicuously. The statement, "There are no warranties which extend beyond the description on the face hereof," for example, is sufficient to exclude all implied warranties of fitness. [UCC § 2-316(2)] The proposed revision adds that in order to exclude all implied warranties of fitness, a consumer contract must state "The seller assumes no responsibility that the goods will be fit for any particular purpose for which you may be buying these goods, except as otherwise provided in the contract."
Implied warranties of fitness are also subject to further limitation as set forth in § 14.02[4].
[4] Implied Warranties Generally
[a] "As is" and Other Similar Language
Unless the circumstances indicate otherwise, all implied warranties are excluded by expressions such as "as is," "with all faults," or other language which makes plain that there is no implied warranty. [UCC § 2-316(3)(a)] Under the proposed revision, where a consumer contract is in a record, such terms must appear conspicuously in the record.
[b] Discoverable Defects Upon Inspection
When the buyer, before entering into the contract, has examined the goods or a sample or model, or has refused to examine the goods, there is no implied warranty with regard to defects which the buyer should have discovered upon examination. [UCC § 2-316(3)(b)] The proposed revision puts the onus on the seller to demand such examination in order for the refusal to examine the goods to negate the implied warrant.
"The particular buyer's skill and the normal method of examining goods in the circumstances determine what defects are excluded by the examination. . . . A professional buyer examining a product in his field will be held to have assumed the risk as to all defects which a professional in the field ought to observe, while a nonprofessional buyer will be held to have assumed the risk only for such defects as a layman might be expected to observe." [UCC § 2-316, comment 8]
[5] Express Warranties
Where a contract contains both an express warranty and a disclaimer of warranty, they are to be construed as consistent with each other wherever reasonable, but the disclaimer will be denied effect if inconsistent with the express warranty. [See UCC § 2-316(1)]
§ 14.03 Implied Warranties Arising from Course of Dealing or Trade Usage
In addition to the implied warranties of merchantability and fitness, other implied warranties may arise from course of dealing or trade usage, and may be excluded by course of dealing, course of performance or trade usage, unless otherwise excluded or modified. [UCC §§ 2-314(3), 2-316(3)(c)]
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