ch. 12 warranties
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• What factors determine whether a What factors determine whether a sellerseller’’s or lessors or lessor’’s statement s statement constitutes an express warranty or constitutes an express warranty or mere puffery?mere puffery?• What implied warranties arise under What implied warranties arise under
the UCC? the UCC?
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• Can a manufacturer be held liable to Can a manufacturer be held liable to any person who suffers an injury any person who suffers an injury proximately caused by the proximately caused by the manufacturermanufacturer’’s negligently made s negligently made product?product?• What are the elements of a cause of What are the elements of a cause of
action in strict product liability? action in strict product liability?
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• What defenses to liability can be raised What defenses to liability can be raised in a product liability lawsuit?in a product liability lawsuit?
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• A warranty is an assurance or A warranty is an assurance or guarantee by the seller or lessor of guarantee by the seller or lessor of certain facts concerning the goods certain facts concerning the goods being sold or leased. being sold or leased. • If seller breaches a warranty, buyer If seller breaches a warranty, buyer
can recover damages, or rescind the can recover damages, or rescind the contract.contract.
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• Warranties automatically arise in Warranties automatically arise in most commercial sales transactions.most commercial sales transactions.• Normally warranties can be Normally warranties can be
disclaimed or modified with specific disclaimed or modified with specific language in the contract. language in the contract.
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• Warranties of Title. UCC-312 can Warranties of Title. UCC-312 can creates three express warranties at creates three express warranties at sale:sale:–Good Title.–No Liens.–No Infringements.
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• Express Warranties.Express Warranties.–Representations concerning quality,
condition, description, or performance potential of goods.–Can be created by:• Any Affirmation or Promise.• Any Description.• Any Sample or Model.
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• Express Warranties (contExpress Warranties (cont’’d).d).–Basis of the Bargain. • Seller does not have to use the words
“guarantee” or “warranty.” • Buyer must rely on warranty when he
enters into contract.
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• Express Warranties (contExpress Warranties (cont’’d).d).–Statements of Opinion and Value. Only
statements of fact create express warranties.• Exception for Statements of Opinion by
Experts. • Puffery versus Express Warranties.
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• Implied Warranties.Implied Warranties.–Inferred at law based on the
circumstances or nature of the transaction. –Implied Warranty of Merchantability.• Automatically arises from merchants.
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• Implied Warranties (contImplied Warranties (cont’’d).d).–Implied Warranty of Merchantability.•Merchantable Goods:–Goods are of average, fair, or medium-grade.–Adequately packaged and labeled.–Conform to promises on label.–Have a consistent quality and quantity
among the commercial units.
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• Implied Warranties (contImplied Warranties (cont’’d).d).–Implied Warranty of Merchantability.
–Knowledge of Defect Not Required: warranty can be breached even if merchant did not know or could not have discovered product was defective.
•Merchantable Food.–CASE 21.1 Webster v. Blue Ship Tea Room, Webster v. Blue Ship Tea Room,
Inc.Inc. (1964). Was the soup fit to eat on the basis of consumer expectations?
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• Implied Warranties (contImplied Warranties (cont’’d).d).–Implied Warranty of Fitness for a
Particular Purpose: arises by any seller who: • Knows the particular purpose for which the
goods are being bought; and• Knows the buyer is relying on seller’s skill
and judgment to select suitable goods.
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• Implied Warranties (contImplied Warranties (cont’’d).d).–Implied Warranty of Fitness for a
Particular Purpose.• Particular vs. Ordinary Purpose: Differs from
ordinary purpose of merchantability. Goods can be merchantable but unfit for a particular purpose.• Knowledge and Reliance Requirements:
seller must have reason to know purpose, and buyer must have relied on the recommendation.
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• Implied Warranties (contImplied Warranties (cont’’d).d).–Implied Warranty From Prior Dealings or
Trade Custom.• Arises when both parties to a contract have
knowledge of a well-recognized trade custom. Courts infer that both meant this custom to apply to their transaction.
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• Overlapping Warranties.Overlapping Warranties.– Occurs when two or more warranties are made in
a single transaction:• When Warranties are Consistent.• When Warranties are Inconsistent:
– (1) Implied warrant of fitness for a particular purpose.
(2) Samples take precedence over inconsistent
descriptions. (3) Exact or technical specifications
displace inconsistent samples or descriptions.
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• Warranty Disclaimers.Warranty Disclaimers.–Express Warranties can be disclaimed:• If they were never made (evidentiary
matter).• If a clear written disclaimer in contract
with specific, unambiguous language and called to Buyer’s attention (BOLD CAPS UNDERLINED).
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• Warranty Disclaimers.Warranty Disclaimers.–Implied Warranties.• Unless circumstances indicate otherwise,
warranties of fitness and merchantability can be disclaimed with the words “As Is,” “With All Faults.”
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• Warranty Disclaimers (contWarranty Disclaimers (cont’’d).d).–Implied Warranties.• Disclaimer of the Implied Warranty of
Merchantability: must use the word merchantability.• Disclaimer of the Implied Warranty of
Fitness: must be in writing and conspicuous.
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• Warranty Disclaimers (contWarranty Disclaimers (cont’’d).d).–Implied Warranties.• Buyer’s Examination or Refusal to
Inspect. Warranties are disclaimed as to defects that could reasonably be found on examination. •Warranty Disclaimers and
Unconscionability.
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• Warranty Disclaimers (contWarranty Disclaimers (cont’’d).d).–Magnuson-Moss Warranty Act.•Modifies UCC for consumer sales. Does
not require a warranty.• Only applies when written warranties are
made by Seller (including a service contract).– If goods > $25label “full” or “limited.”–Full warranty provides free repair or
replacement.
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• Coverage of Lemon Laws.Coverage of Lemon Laws.–Generally manufacturer is given limited
number opportunities (usually four) to remedy the defect.–If manufacturer fails, buyer is entitled
to new car, replacement of defective parts, or return of all consideration.
• Arbitration is Typical Procedure.Arbitration is Typical Procedure.
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• Product Liability is not a new tort.Product Liability is not a new tort.• Liability can be based on:Liability can be based on:–Negligence; –Misrepresentation; –Strict Liability; –Warranty Theory.
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• Negligence. Negligence. –Based on a manufacturer’s breach of
the reasonable standard of care and failing to make a product safe.–Due Care Must Be Exercised in: design,
selection of materials, using appropriate production process, assembling and testing, adequate warnings, inspection, and testing.
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• Negligence (contNegligence (cont’’d).d).–Privity of Contract Not Required. No
privity of contract required between Plaintiff and Manufacturer. Liability extends to any person’s injuries caused by a negligently made (defective) product.
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• Misrepresentation.Misrepresentation.–Occurs when fraud committed against
consumer or user of product. Fraud must have been made knowingly or with reckless disregard for safety.–Plaintiff does not have to show product
was defective.
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• Strict Liability holds people liable for Strict Liability holds people liable for results of their acts, regardless of results of their acts, regardless of their intentions or exercise of their intentions or exercise of reasonable care. reasonable care.
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• Strict Liability and Public Policy. Strict Liability and Public Policy. –Consumers should be protected from
unsafe products;–Manufacturers and distributors should
be liable to any user of the product;–Manufacturers, sellers and distributors
can bear the costs of injuries.
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• Requirements for Strict Liability:Requirements for Strict Liability:1. Product must be in defective condition
when sold.2. Defendant is in the business of selling
the product.3. Product must be unreasonably
dangerous.
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• Requirements for Strict Liability:Requirements for Strict Liability:4. Plaintiff must be physically harmed5. Defective condition must be proximate
cause of injury.6. Goods are in substantially same
condition.
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• Requirements for Strict Liability (conRequirements for Strict Liability (contt’’d).d).–Proving a Defective Condition.• Plaintiff does not need to show product
or in what manner the product become defective. • But plaintiff must show product was
defective and “unreasonably dangerous” to the user.
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• Product Defects. Three types of Product Defects. Three types of product defects:product defects:–Manufacturing Defects. –Design Defects. –Warning Defects.
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• Product Defects (contProduct Defects (cont’’d). d). –Manufacturing Defects.• Occurs when a product “departs from its
intended design even though all possible care was exercised in the preparation and marketing of the product.”
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• Product Defects (contProduct Defects (cont’’d).d).–Design Defects.• Product is manufactured correctly, but
defect is based on design. • Test for Design Defects: plaintiff must
show defendant’s failure to use a reasonable alternative design rendered the product not reasonably safe.
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• Product Defects (contProduct Defects (cont’’d).d).–Design Defects.• Factors to be Considered. –Magnitude and probability of foreseeable
risks. –Relative advantages and disadvantages of
product.–Most courts use “risk-utility” analysis.
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• Product Defects (contProduct Defects (cont’’d).d).–Inadequate Warnings.• A product may be defective because of
inadequate warnings or instructions.• Liability based on foreseeability that
proper instructions/labels would have made the product safe to use.
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• Product Defects (contProduct Defects (cont’’d).d).–Inadequate Warnings.• Obvious Risks. No duty to warn.• Foreseeable Misuses. Seller must warn
about foreseeable misuse. • CASE 21.2 Wyeth v. Levin Wyeth v. Levin (2009). Federal
law did not preempt state claim for inadequate warning.
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• Market Share Liability.Market Share Liability.–Theory of liability when multiple
Defendants contributed to manufacture of defective product.–Liability of each Defendant is
proportionate to the share of the market held by each respective Defendant.
• Other Applications: to bystanders.Other Applications: to bystanders.
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• Assumption of Risk.Assumption of Risk.–CASE 21.3 Boles v. Sun Ergoline, Inc. Boles v. Sun Ergoline, Inc.
(2010). Why did court find the exculpatory clause unenforceable?
• Product Misuse. Plaintiff does not Product Misuse. Plaintiff does not know the product is dangerous for a know the product is dangerous for a particular use. particular use.
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• Comparative Negligence (Fault).Comparative Negligence (Fault).–Defendants may be able to limit
damages by apportioning fault.• Commonly Known Dangers.Commonly Known Dangers.• Knowledgeable User.Knowledgeable User.
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