Article II WARRANTIES

Question 1

Warranty Defintion

Answer 1

Contractual obligation by the seller to remedy certain possible defects in the goods

Question 2

Warranties of Title Guarantees:

Answer 2

There is in a contract for a sale a warranty by the seller that
1) Title conveyed shall be goods
2) It’s transfer rightful and
3) Free from any security interest, lien or encumbrance the buyer doesn’t have knowledge of

• Triggered at time of sale
• Applies to all kinds of sellers

Question 3

Exclusion/Modification of Warranties of Title

Answer 3

Only be specific language or circumstances which give buyer reason to know the seller does not claim title themself OR
That he purporting to sell only such right or title as he or 3rd person may have

Question 4

Express Warranties Creation

Answer 4

Any affirmation of fact, promise, description, sample or model which become a basis of the bargain become an E.W. requiring goods conform to that affirmation, promise, etc

• Has to be more than mere puffery - must have substance to create buyer expectations about characteristics or performance of the goods
• Basis of the bargain = it has a natural tendency to induce buyer to purchase

Question 5

Implied Warranties exist become part of the K when:

Answer 5

!Automatically part of the contract unless seller or circumstances do something affirmative to remove them!

Question 6

Implied Warranty of Merchantability

Answer 6

There is implied in every contract for sale a warranty that the goods sold will be merchantable, if the seller is a merchant of that kind of goods

Merchantable = - Goods must at least be fit for the ordinary purposes for which goods of that kind are used and
- Must be adequately contained, packaged, and labeled as the contract may require

Question 7

Implied Warranty of Merchantability What Constitutes a Breach

Answer 7

a product’s defect must be so fundamental that it affects the core functionality of the product

BUT a breach can be found if the product can be used at a baseline level but still fails to perform in a way expected by a reasonable consumer

Question 8

Implied Warranty of Merchantability - FOOD

Answer 8

• The presence of a foreign substance in food that ultimately injures the plaintiff will constitute a breach of the implied warranty of merchantability
  EXCEPTION = Where the presence of a foreign substance is reasonably foreseeable and should be expected given the nature of the food

Question 9

Implied Warranty of Fitness for a Particular Purpose EXISTS WHEN:

Answer 9

i) Seller @ contracting has reason to know any particular purpose for which the goods are required and
ii) Buyer is relying on the seller’s skill or judgment to select or furnish suitable goods

Question 10

Disclaiming Express Warranties

Answer 10

If there are words/conduct tending to negate or limit warranty + words/conduct creating - creation will prevail

Question 11

Disclaiming Implied Warranties

Answer 11

1) § 2-316(3)(c) allows an implied warranty to be modified by course of performance or usage of trade
2) In writing & Conspicuous (for I.W Merch must expressly mention merchantability)

Conspicuous = written in a way that attention can reasonably be expected to be called to it (objective reasonable person standard )
- NOT required if buyer has actual knowledge of the waiver
- A warranty disclaimer is not inconspicuous simply because it is located inside the packaging of a product

Question 12

Timing of Disclaimers

Answer 12

• Post deal disclaimers are ineffective
• A buyer accepts goods & warranties sent with product when: after an oppt to inspect they fail to make an effective rejection

Question 13

Limitations on Warranties: consequential damages

Answer 13

UCC § 2-719(3) consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable

1) Majority approach - is to apply § 2-719(3) to enforce a bar on consequential damages unless it is unconscionable
2) Minority approach - 2-719(2) should apply to restore a buyers right to seek all remedies including consequential damages

Unconscionability = a courts look to whether the parties could competently agree on allocation of risk at time of contracting
- More likely to be found if: one party is a consumer, disparity in bargaining power, bar was on a pre-printed form, unreasonably harsh to one party, was no meaningful choice on the part of one party
- Depends on circumstances that existed at the time the K formed

Question 14

Defenses in Warranty Actions - list them

Answer 14

1) notice
2) privity

Question 15

Defense in warranty actions - NOTICE (Definition, purposes, etc)

Answer 15

In all warranty actions - a buyer loses all UCC rights if they fail to give seller notice of the breach within a reasonable period of time after the breach was/should have been discovered

Purpose:
(1) cure any breach by making adjustments or replacements in order to minimize the buyer’s damages and the seller’s liability,
(2) learn the facts in order to prepare for negotiation and litigation, and
(3) protect himself from old claims that are asserted after it is too late for the seller to investigate them

A party is justified in relying on a representation of fact when an investigation would be required to prove the representation false

Question 16

Defenses in Warranty Actions: Privity

Answer 16

Privity = there was in fact and in law a contract between the two parties

Horizontal privity = identifying to whom the retail seller is liable other than the immediate purchaser (alt 1= family/house guest, alt 2 = foreseeable persons, alt 3 = nonpersons)
Vertical Privity = How far back up the distribution chain the buyer can go (manufacturer, wholesaler, retailer, buyer)

Warranty applies not only to buyer but any natural person in family/household, guest in home if reasonable to expect the person may use the goods, person injured