Article 2 Warranties Flashcards
(23 cards)
General Elements of Warranty Recovery
1) Warranty was made
2) Warranty was breached
3) Breach caused the alleged harm
Notice of Warranties: UCC 2-607(3)(a)
Buyer must notify seller within a reasonable period of time in order to preserve its remedies
Three Approaches to Warranty Claims of Parties w/o Privity
(a) Family members and household guests who suffered injury from the breach
(b) Any natural person reasonably expected to use, consume, be affected–and suffers personal injury from the breach of warranty
(c) Expands (b) to all injuries
Implied Warranties
- Implied warranty of title
- Implied warranty of merchantability
Specific Purpose Warranties
(a) Product is used in a manner other than its ordinary purpose
(b) The seller knew that the buyer relied on their expertise and suggestion of the product for that particular purposes
(c) Buyer relied upon Seller’s representations
(d) The product was defective when used in the manner in which it was purchased
Creation of Express Warranties v. Puffery
(1) Specific v. Vague language
(2) Written v. Oral assurances
(3) The facts and context in which the statement is made
(4) Whether reliance on the statement was reasonable; whether it became part of the basis for the bargain
Finance Lease (Defined)
Lessor makes a purchase from the supplier, and leases the goods to the Lessee; and must be a true lease for the rules to be applicable.
Finance Lease Parties
Lessor: purchases goods and plays no role in manufacturing them, or selecting the supplier
Lessee: receives a copy of the contract for the goods, and their approval is a condition of the contract’s effectiveness
Supplier: shares similar liability with both the lessor and lessee for the implied warranty of merchantability
Rights under a finance lease
§2A-407: promises become irrevocable, and are not subject to cancellation, termination, modification, etc. without consent of the other party; and remain even if issues with the leased goods result
§2A-209(1): any warranty rights given to the finance lessor run directly to the finance lessee
§2A-103(1)(g)(iii): The lessee has a right to see a copy of the sales or lease contract before signing their lease with the finance lessor
Express Warranties are created by (UCC §2A-210) . . .
(a) Any affirmation of fact or promise made by the lessor to the lessee which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods will conform to the affirmation or promise.
(b) Any description of the goods that is made part of the basis of the bargain creates an express warranty that the goods will conform to the description.
(c) Any sample or model that is made part of the basis of the bargain creates an express warranty that the whole of the goods will conform to the sample or model.
Express Warranty words of creation
It is not necessary to the creation of an express warranty that the lessor use formal words, such as “warrant” or “guarantee,” or have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the lessor’s opinion or recommendation of the goods does not create a warranty.
Implied Warranty of Fitness for Particular Purpose (in a finance lease): §2A-213
In a finance lease, if the lessor knows of the particular purpose of use by the lessee, who relies on the lessor’s skill or judgment to select suitable goods, then there is an implied warranty that the goods will be fit for that purpose
Warranty Disclaimers
(1) Implied warranties may be excluded or modified if made in writing and must be conspicuous with the word “merchantability” included
(2) “As it” or “with all faults” or other language that this is common to bring attention to the exclusion of warranties may alternatively be used
Damages Reduction
Dependent Approach: If any remedy fails in its essential purpose, then any accompanying disclaimer is per se unconscionable under this provision
Independent Approach: requires application of a separate unconscionability test
UCC 2-613: Casualty to Identified Goods
Where the contract requires for its performance goods identified when the contract is made, and the goods suffer casualty without fault of either party before the risk of loss passes to the buyer , or in a proper case under a “no arrival, no sale “ term (Section 2-324 ) then . . .
Total losses: the contract is avoided completely
Partial losses: buyer may demand inspection and can either avoid the contract or accept the goods with due allowance
UCC 2-615: Excuse by Failure of Presuppossed Conditions (cannot supply all needs)
(a) Delay in delivery or non-delivery in whole or in part by a seller who complies with paragraphs (b) and (c) IS NOT A BREACH OF HIS DUTY under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faithwith any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.
(b) Where the causes mentioned in paragraph (a) affect ONLY A PART of the seller’s capacity to perform, he MUST allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture. He may so allocate in any manner WHICH IS FAIR AND REASONABLE.
(c) The seller MUST notify the buyer SEASONABLY that there will be a delay or non-delivery and, when allocation is REQUIRED under paragraph (b), of the estimated quota thus made available for the buyer.
Impracticability Defense (Simplified)
1) An event occurred without fault
2) The event made performance impracticable
3) The event’s occurrence was unforeseeable, and the nonoccurrence was a basic assumption for which the contract was made
Unconscionability with Sales of Goods – UCC 2-302 (what a judge may do)
Unconscionability is a determination as a matter of law
The time for measurement is the formation of the contract
A judge that finds unconconsionability may . . .
*Refuse to enforce the contract entirely
*Enforce the remainder of the contract without the unconscionable term
*Limit the application of any unconscionable clause to avoid an unconscionable result
Parties must be afforded a hearing and reasonable opportunity to present its commercial setting, purpose, and effect to aid the court in making a determination
Substantive Unconscionability
Defined: Unfair as to the terms of the agreement
Factors: commercial setting, background, effect and purpose of the challenged clause
Procedural Unconscionability
Defined: Unfair as to the bargaining process entering the agreement (absence of meaningful consent)
Factors: disparate bargaining power, hidden terms, unfair surprise or results
Implied Warranty of Title
Applied to all sellers and warrants that they have good title to the goods being transferred to the buyer
Warranty of Title UCC 2-312(1) (assertions)
Creates strict liability for a breach of warranty of title – (1) the title is good; (2) the transfer is rightful; and (3) the goods are free of any encumbrances of which the buyer is unaware
Voidable Title under UCC 2-403
A person with voidable title has the power to transfer the good title to a good faith purchaser for value. When the goods have been delivered, the purchaser has power even though (applicable to non-merchant transactions)
a) The transferor was deceived about the purchaser’s identity
b) The delivery was in exchange for a check that was later dishonored
c) It was agreed to be a cash sale
d) The deliver was procedure through fraud
Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in the ordinary course of business
