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Flashcards in Chapter 23 Deck (49)
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1
Q

Warranty

A

assurances, guarantees, promises about the title, express, and implied

2
Q

What is the source of warranty law?

A

UCC

3
Q

Warranty of Title

A

arises automatically on the sales of goods contract (have all of these if it is goods (not if it is real property))

4
Q

Good Title

A

lawful, rightful ownership (evidence of ownership) so that you have the lawful right to sell it to someone else

5
Q

No Liens

A

liens are rights to others (bank or dealership). If I sell, we need to protect the lienholders’ rights. Predators that have rights in the good.

6
Q

What is a good example of No Liens?

A

Car. We get a loan for the car. We need to verify that we are not violating the lien holders’ rights. If you steal the car you breached “good title”.

7
Q

No Infringements

A

Only a part of warranty and title if the sale is from a merchant. Infringements (copyrights, trademarks, patent…intellectual property rights).

8
Q

First Sale Doctrine

A

you have the right to resale it after you bought it and you don’t have to worry about the patent holder’s rights

9
Q

A seller can disclaim or modify the warranty of title by including specific language in the contract. What is the wording of disclaimer of the warranty of title?

A

Seller asserts they are transferring only such rights, title and interest as they have in the goods. “I warrant only such right, title and interest as I may own.”

10
Q

Who creates Express Warranties?

A

Created by the seller who makes representations concerning the quality, condition, description, or performance potential of the goods.

11
Q

Express Warranties:

A
  1. The goods will conform to an affirmation or promise of fact which relates to the goods.
  2. The goods will conform to a description of the goods.
  3. The goods will conform to a sample or model of the goods.
12
Q

What are some examples of “The goods will conform to an affirmation or promise of fact which relates to the goods?”

A

“these drill bits will penetrate stainless steel without dulling.”
“100% genuine mink”

13
Q

What form does a promise of fact have to be?

A

Can be oral, said in writing, or said in advertisements. The seller never has to use the words “I warrant” or “I promise.”

14
Q

What kind of statement is puffery?

A

An opinion statement

15
Q

What is an example of “the goods will conform to a description of the goods?”

A

“this crate contains a 150 horse-power diesel engine.”

16
Q

Basis of the Bargain

A
  1. An affirmation or promise becomes the basis of the bargain if it comes at such a time that the buyer could have relied on it when he agreed to the contract.
  2. The buyer does not have to show that he actually relied upon the affirmation or promise.
17
Q

Reasonable Reliance by Buyer is a Statement of…

A

value (does not fall under express warranty)

18
Q

Texas Deceptive Trade Practices Act (DTPA)

A

Laundry list of deceptive practices. Can enhance your remedy in an ordinary breach of contract/breach of warranty case. Treble damages. Attorney’s fees. Cost of court.

19
Q
  1. Husband bought a new car (Ford Bronco 2). The salesman is talking about how harsh the air is in Houston – corrosive on paint jobs. The dealership is selling paint sealer with a lifetime warranty. 1994. The paint starts to chip. The dealership said they never sold anything with a lifetime warranty.
A

Seller breached warranty and didn’t hold their end of the bargain. Companies will see how far you will go.

Fraud and deceptive. Demand letter has to be sent when there is a statute violated before you can file a lawsuit. Found the DTPA. 5 to 6 hours of attorney’s fees. If the paint job was worth $1,000 they could have received $3,000 (treble damages).

20
Q

What are the three types of implied warranties?

A
  1. Implied Warranty of Merchantability
  2. Implied Warranty of Fitness for a Particular Purpose
  3. Implied Warranty from Prior Dealings or Trade Custom
21
Q

Implied Warranty of Merchantability.

A

Goods are merchantable if the goods are “reasonably fit for the ordinary purposes for which they are used.”

22
Q

If the merchant deals in goods of the kind then they are…

A

warranting the merchantability.
Arises every time there is a sale of goods by a merchant.

23
Q

In order to be merchantable, the goods must at least:

A
  1. Be of average, fair, or medium grade quality;
  2. Pass, without objection in the trade or market, for goods of the same description;
  3. Be adequately packaged and labeled as provided by the agreement; and
  4. Conform to the affirmations of fact or promise made on the label or container.
24
Q

The merchant seller is liable for breach of the warranty of merchantability, without regard to…

A

whether the seller knew of or could have discovered a defect which caused the goods not to be reasonably fit for the ordinary purpose for which they are used

25
Q

What is an example of not having ordinary purpose?

A

Roommate tried to fry an egg in an oil popcorn machine. And then tried to fry an egg on her iron. (people do crazy things).

26
Q

Joy Pipe, USA, L.P., is in the business of selling steel couplings for use in oil field drilling operations. Joy Pipe entered into a contract with Fremak Industries (a broker) to purchase grade P-110 steel made in India by ISMT Limited. When the steel arrived, Joy Pipe machined it into couplings, which it then sold to its customers. Two companies that used these couplings in oil wells had well failures and notified Joy Pipe.

Joy Pipe then discovered that the ISMT steel it had purchased was of a much lower grade than P-110. It was the lower quality that had caused the couplings to fail.

A

After Joy Pipe paid another company to locate and replace the nonconforming steel, it sued ISMT, in part for breach of the implied warranty of merchantability. A jury awarded Joy Pipe nearly $3 million in damages, and an appellate court affirmed the jury’s award.

27
Q

Ilan Brand leased a new Hyundai Genesis from Allen Hyundai. The next day, when he was driving on an interstate highway, the sunroof began opening and closing, although Brand was not pushing the sunroof buttons. He immediately returned the vehicle to the Hyundai dealer. He was told it had a defective sunroof switch, which would be repaired within twenty-four hours. In spite of the dealer’s assurances, however, the problem was not repaired. Ten days later, Brand—who still had not been able to pick up the vehicle—attempted to rescind the lease. Hyundai would not allow him to do so.

A

Brand then filed an action for breach of the implied warranty of merchantability in state court. The trial court dismissed the case, but the appellate court reversed. The reviewing court held that a reasonable jury could conclude that the unintentional opening and closing of the sunroof constituted a safety hazard and therefore breached the implied warranty of merchantability. The court remanded the case for a jury trial.

28
Q

Sellers can be sued by any foreseeable user of a product for breach of the warranty of merchantability without regard to….

A

privity of contract

29
Q

Merchantable Food

A

if there are things in the food that are naturally occurring (even if you would rather not eat it) it is still merchantable

30
Q

What is an example of merchantable food?

A

Cherry pie – pits of the cherry are naturally occurring…still merchantable. If you broke a tooth on the cherry pit the restaurant may comp your meal but they aren’t legally required to pay for your $3k crown.

31
Q

Implied Warranty of Fitness for a Particular Purpose

A

The implied warranty of fitness for a particular purpose is made by a seller who has reason to know (but not necessarily actually knows) the particular use for which the buyer is purchasing the goods and that the buyer relies on the skill and judgment of the seller in selecting suitable goods.

32
Q

What is a critical component of an implied warranty of fitness for a particular purpose?

A

Comes from something the buyer tells the seller at the time of the deal. The buyer’s particular purpose. The seller makes a recommendation to attempt to fulfill the buyer’s communicated purpose.
*need to see dialogue between buyer and seller

33
Q

Implied warranties of fitness for a particular purpose and merchantibility may…

A

both be included in a contract for the sale of goods

34
Q

Moon, a farmer, needs to install a two-thousand-pound piece of equipment in his barn. This will require lifting the equipment thirty feet up into a hayloft. Moon goes to Davidson Hardware and tells Davidson that he needs some heavy-duty rope to be used on his farm. Davidson recommends a one-inch-thick nylon rope, and Moon purchases two hundred feet of it. Moon ties the rope around the piece of equipment; puts the rope through a pulley; and, with a tractor, lifts the equipment off the ground. Suddenly, the rope breaks. The equipment crashes to the ground and is severely damaged. Moon files a suit against Davidson for breach of the implied warranty of fitness for a particular purpose. Discuss how successful Moon will be in his suit.

A

Moon won’t be very successful at all. Moon didn’t actually express the real purpose “I need to lift a 2,000lb piece of equipment 30 feet in the air.”

35
Q

Implied Warranty from Prior Dealings or Custom Trade

A

If both parties to a sales/lease contract have knowledge of a well-recognized trade custom, the courts will infer that both parties intended for that custom to apply to their contract. Not as common as the other implied warranty.

36
Q

Hailey’s son in 8th grade had a size 14 cleats. Nike shock tennis shoes ordered in a size 14. They come in and the box says exactly what we ordered. We opened the box and find a ladies pair of high heel shoes.

A

Express warranty is breached.

37
Q

If the shoes are right. He’s been wearing them for 2 weeks and the toe cap starts pealing. Call EastBay and see what they do…”we will send you a brand new pair of shoes.” Why did they do that?

A

Implied Warranty of Merchantability is breached (the glue should last for more than 2 weeks – ordinary purpose).

38
Q

Academy: wanting to take up marathon running. Asks salesperson to help her find shoes that are good for marathon running. The shoes fall apart after 2 weeks of running. What breach occurred?

A

(Both merchantability and fitness could be claimed – but what was said to the seller hints fitness.)

39
Q

Lemon Laws

A
  1. (in addition to UCC remedies) state laws providing remedies to consumers who buy cars that repeatedly (usually 4 times) fail to meet standards or quality and performance.
  2. buyer may be entitled to a new car, replacement of defective parts, or return of all consideration paid, in addition to attorney’s fees
  3. binding arbitration is often required
40
Q

Overlapping warranties

A

More than one warranty may be made by a seller in a sales transaction.

41
Q

A sales contract for a new car states that “this car engine is warranted to be free from defects for 36,000 miles or thirty-six months, whichever occurs first.”

A

This statement creates an express warranty against all defects, as well as an implied warranty that the car will be fit for normal use.

42
Q

If multiple warranties are consistent with each other, a buyer can base an action for breach of warranty against the seller based upon all of the warranties; the warranties are construed to be _____________.

A

cumulative

43
Q

If multiple warranties are inconsistent, the intention of the parties will determine which will prevail. The following rules are used as guides in order to determine the parties’ intentions:

A
  1. Express warranties displace inconsistent implied warranties, except implied warranty of fitness for a particular purpose.
  2. Samples prevail over inconsistent general descriptions.
  3. Exact or technical specifications prevail over inconsistent models, samples, or general descriptions.
44
Q

Express Warranties

A
  1. A seller can avoid making any oral express warranties.
  2. A seller may effectively disclaim those oral express warranties which the seller has made with unambiguous language to that effect in the written contract for the sale of goods.
45
Q

Implied Warranties

Warranty of Merchantability may be disclaimed or modified by:

A
  1. Using conspicuous language which must include the word “merchantability.”
  2. Need not be in writing.
46
Q

Implied Warranties

Warranty of Fitness for a Particular Purpose may be disclaimed or modified by:

A
  1. Using expressions such as “as is” or “with all faults.” By selling things “as is.”
  2. A written, conspicuous disclaimer.
47
Q

Buyer’s Examination of (or refusal to inspect) the Goods

A
  1. If a buyer has examined the goods or a sample as fully as the buyer desires, or has refused to examine the goods, there is not implied warranty with respect to defects that a reasonable examination would reveal.
  2. Seller is liable for breach of warranty for defects that an ordinary inspection would not reveal.
48
Q

Unconsionability

A

A court may refuse to enforce a warranty disclaimer clause in a contract for the sale of goods if the clause in unconscionable

49
Q

Statute of Limitations

A
  1. Actions for breach of contract brought under the UCC must be commenced within four years after the cause of action arose.
  2. Parties may not extend the four-year period but may reduce the period to not less than one year.
  3. Cause of action for breach of warranty accrues when the seller makes tender of delivery, even though the buyer did not know of the defect.