ES 6 UNDERSTAND
SALES, CONSUMER,
PROPERTY,
AND CYBER LAWS
BB30 Business Law 6.01
Summer 2013
WARRANTIES
• Express
• Implied
• Warranty of Title
• Exclusions
BB30 Business Law 6.01
Summer 2013
Express Warranty
Express warranty is also called a guarantee
• The promise or assurance of the quality or life of a product
• “Guaranteed satisfaction or your money back”
• “Lifetime guarantee”
BB30 Business Law 6.01
Summer 2013
Express Warranty
• Can be oral or written
• Written form recommended
• Parol evidence rule applies: evidence of oral statements made
before signing a written contract cannot be presented in court to
change or add to the terms of that written agreement
• Magnuson-Moss Act – requires that written warranties be labeled
as full or limited
BB30 Business Law 6.01
Summer 2013
Express Warranty
• Puffery by salesman is not a warranty, but an opinion of the
salesperson.
• Express warranties are created by:
• Statement of fact or promise by seller
• Description of goods
• Use of same item or model
BB30 Business Law 6.01
Summer 2013
Implied Warranty
A guarantee of quality imposed by law but not in writing
• Implied warranty deals with sale of goods
• Regulated by UCC
• Given by all sellers
BB30 Business Law 6.01
Summer 2013
Implied Warranties
• Warranty of fitness for a particular purpose
• Seller knows the purpose for which goods are needed
• Seller advises buyer in making purchase
• Buyer relies on seller’s advice to make decision
• Seller infers that the goods are fit for a particular purpose
• A warranty exists
BB30 Business Law 6.01
Summer 2013
Implied Warranties
• Warranty of Merchantability
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Given by a merchant only
Merchant infers that goods pass in the trade without objection
Goods are fit for the ordinary purpose such goods are used for
Conform to any promises or statements made on the container or label
BB30 Business Law 6.01
Summer 2013
Implied Warranties
Usage of Trade
An implied warranty that is a well established custom or practice
among people in specific trades or businesses
• Example: When a person sells a thoroughbred horse
there is an implied warranty that papers are provided
to prove the animal’s pedigree as a thoroughbred. It
is expected in the horse trading business
BB30 Business Law 6.01
Summer 2013
Warranty of Title
Seller warrants that the title is good and transfer is rightful
Seller warrants that goods will be delivered free of any financial
obligations about which the buyer had no knowledge
BB30 Business Law 6.01
Summer 2013
Warranty of Title
• Sale of Stolen Goods
• If stolen goods are sold to an innocent purchaser, the true owner is
entitled to return of the goods
• The buyer can pursue remedy against the seller for breach of warranty of
title
BB30 Business Law 6.01
Summer 2013
Full Warranty
A full warranty requires that the defective product be
repaired or replaced for free within a reasonable
length of time after complaint is made.
• If the product cannot be fixed, the consumer has the
option to get their money refunded.
• Have you ever tried to return merchandise that you
thought was under warranty but was not?
BB30 Business Law 6.01
Summer 2013
Limited Warranty
A limited warranty provides a restricted guarantee.
• Must state “Limited” Warranty
• Be sure to read and understand the limits of the warranty before
purchasing…caveat emptor!
BB30 Business Law 6.01
Summer 2013
Limited Warranty
Caveat Emptor - Latin for “Buyer Beware”
• It is the duty of the consumer to make informed decisions.
• Be sure to read labels and research products before buying. Comparison
shop.
• It is the duty of the seller to provide appropriate information for the
consumer.
BB30 Business Law 6.01
Summer 2013
Limited Warranty
Caveat Venditor - Latin for “Seller Beware”
• It is the duty of the seller to make informed decisions.
• Example: Banks, credit card companies and businesses who extend credit
to customers check credit histories and applications before extending
credit.
BB30 Business Law 6.01
Summer 2013