Warranties, Product Liability and
Consumer Law
Chapter 13
Express Warranties
• A seller’s or lessor’s oral or written promise
in connection with a sales or lease
agreement, as to the quality, description, or
performance of the goods being sold or
leased.
Express Warranties
• Under the U.C.C., express warranties arise
when a seller indicates to the buyer that the
goods conform to any affirmation or
promise of fact made about the goods.
• “Sales talk” and matters of opinion or
“puffing” are not considered warranties
(includes statement of opinions and value of
goods).
Magnusson-Moss Act
• No written warranty is required, but if there
is it must comply.
• For an express warranty to be a “full
warranty” it must provide unlimited repair
or replacement of any defects at no charge
to the consumer.
• Otherwise, a “limited warranty” is any
warranty which does not meet all of the
requisites for a full warranty.
Implied Warranties
• A warranty imposed by law or by
implication or inference from the nature of
the transaction or the relative bargaining
positions or circumstances of the parties.
Implied Warranties
• Good Title
• No Liens
• Fitness for a Particular Purpose
(These warranties apply to all sellers)
Implied Warranties
• Merchantability (Fit for Normal Use)
• No Infringements
• Prior Dealings or Trade Custom
(These warranties only apply to merchants)
Merchant defined under the UCC as a person
who deals in the kind of good involved in
the contract or a person who himself out as
having a particular skill or knowledge
peculiar to the practices or use of the goods
Disclaimers Of Warranties
• Waiver of Express Warranty
– Any oral or written express warranty may
be disclaimed by a clear and conspicuous
written disclaimer which is called to the
buyer’s attention at the time the contract
is formed.
Disclaimers Of Warranties
• Waiver of Implied Warranty
– Disclaimer must be clear and
conspicuous
– AS IS or WITH ALL FAULTS
– Specifically mention “merchantability” if
for implied warranty for merchantability
*Concept of unconscionability applies
Strict Product Liability
• A manufacturer, distributor or seller of
goods will be strictly liable, regardless of
intent or negligence, for any personal injury
or property damage to consumers, users,
and by-standers caused by the goods it
manufactures, distributes or sells.
Strict Product Liability
• Requirements -- Plaintiff must show:
– Product was defective when the defendant sells
it
– Defendant is in the business of selling product
– The product must be unreasonably dangerous
– Proximate cause
– Damages
– Goods were not changed between the time that
they were sold and when injury occurs
Strict Product Liability
• Unreasonably Dangerous-The product is dangerous beyond the expectation
of the ordinary consumer
-There was a commercially feasible less dangerous
alternative that was not produced.
Can be due to: Manufacturing Defects
Design Defects , or
Inadequate Warning
Strict Product Liability
• Defenses
– Product Misuse
– Assumption of the Risk
– Commonly known dangers
– Knowledgeable user
Other Consumer Protection Laws
• Deceptive Trade Practices Act (DTPA)
– Deceptive Advertising- occurs when a
reasonable consumer would be misled by the ad
– “Bait and Switch” advertising
(fails to show the advertised item, fails to have
sufficient quantity, fails to reasonably deliver,
or discourages salespeople from selling
- FTC can issue cease and desist or require
counteradvertising
Other Consumer Protection Laws
• Telemarketing - cannot use automatic dialer (or fax
without permission
- must inform that it is a sales call
- must inform of total cost of goods and
whether a sale is final and non-refundable
- must take consumer of call list if asked
Other Consumer Protection Laws
• Fair Packaging & Labeling Act
– name of manufacture or distribution
– net quantities and contents
Other Consumer Protection Laws
• Door-to-Door Sales- “cooling off period”
• Mail order sales- must ship orders within
time specified in catalog and notify if they
cannot
-Unsolicited sales attempts by shipping
goods become gifts
Other Consumer Protection Laws
Truth in Lending Act (“TILA”)
• Regulation Z
– requires disclosures in loan transactions,
standardized interest rates, etc.
– applies to loan transactions with more
than four installments
• Equal Credit Opportunity Act
• Credit Card Rules
Other Consumer Protection Laws
• TILA Credit Card Rules
$50 Maximum for unauthorized use (0$ if
Card improperly issued)
See new rules (page 383)
Other Consumer Protection Laws
• Fair Credit Reporting Act
– right to see credit reports
– right to include explanation
• Fair Debt Collection Practices Act
– prohibits late night calls, contacts at
work, fake court proceedings, etc.
Warranties, Product Liability and
Consumer Law
End of Chapter 13