Chapter 25
Warranties
Hypothetical
Aristotle Mythos is having a “mid-life crisis,” in large part because he is 50 years old, and he
realizes that most people do not live to be 100. In an attempt to conquer his depression, and
to prove that he is equivalent to a 20-year-old (at least in spirit,) Mythos plans to climb Mount
Zeus, the highest peak in his ancestor’s homeland of Greconia.
In preparation for his climb, Mythos patronizes the local “outdoors” shop, Athena’s Garden,
and asks to speak with a trained sales associate. Mythos specifies that he will be climbing
Mount Zeus, and that he will need a tent and sleeping bag to survive the wind and elements
on two nights during his ascent and descent. The associate selects a tent and sleeping bag
from a wide variety of possibilities, and Mythos leaves the store a “happy camper.”
Mythos begins his climb the following day, and successfully reaches his check point, halfway
to Zeus’ peak, before nightfall. He prepares his campsite, and looks forward to some muchneeded rest. Unfortunately, he has a fitful night, shivering in his sleeping bag below a
partially-collapsed tent, with the wind and the cold “getting the best of” Mythos and his
camping gear.
In the daylight of the following morning, Mythos fully awakens to realize that the toes on both
of his feet have turned a sickening shade of blue-purple, and he realizes with great
disappointment that he will not be able to fulfill his dream of climbing Mount Zeus. Further,
upon closer examination of his tent and sleeping bag, both are trademark-stamped “The
Young Mythologist,” gear intended for backyard camping by children.
As a result of his misfortune, Mythos must have four toes (two toes on each foot) amputated,
and he incurs medical expenses of $58,000 for treatment and rehabilitation. Mythos’ doctor
has rated him with 20% permanent partial disability as a result of his toe amputations.
Is Athena’s Garden legally responsible for Mythos’ medical expenses and partial disability? If
so, on what theory?
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Warranty (Definition)
o Seller’s promise(s) regarding certain
characteristics of good(s) sold
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Sales and Lease Warranties
o Warranty of Title.
o Express Warranty.
o Implied Warranty of Merchantability.
o Implied Warranty of Fitness for a Particular
Purpose.
o Implied warranty arising from the course
of dealing or trade usage.
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Warranty of Title
o Automatically arises in most
commercial sales transactions.
o UCC-312 creates 3 warranties:
o Good Title.
o No Liens.
o No Infringements.
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Disclaimer of Title Warranty
o Title warranty can generally be
disclaimed only with specific
language in contract.
o Circumstances may be obvious to
clearly indicate disclaimer of title,
such as a sheriff’s sale.
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Express Warranties
o Can be oral or written-- don’t have to use
the words “warrant” or “guarantee.”
o Any Affirmation or Promise.
o Any Description.
o Any Sample or Model.
o Description of good’s physical nature or its
use
o May be found in advertisements or
brochures
o May be material term of contract
o Salesperson’s oral promise concerning good
can give rise to express warranty
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Express Warranties
o To create an express warranty, the
affirmation of fact must become the
“basis of the bargain.”
o Buyer must rely on warranty when he
enters into contract.
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Express Warranties
o Statements of Opinion and Value.
o Generally excludes “puffing” – “Best car
in town”, not an express warranty.
o However, expert opinion is not puffery.
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Implied Warranties
o Warranty inferred at law based on the
circumstances or nature of the
transaction.
o Automatically applied to contract
o Under the UCC, merchants warrant
the goods they sell are
“merchantable”, i.e., fit for ordinary
purpose for which such goods are
sold.
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Implied Warranty of Merchantability
o Automatically arises from merchants.
o Goods are of average, fair, or
medium-grade (within the product’s
description).
o Adequately packaged and labeled.
o Conform to promises on label.
o Have a consistent quality and
quantity among the commercial
units.
o Be fit for “ordinary use”
o Applies to food products as well
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Implied Warranty of Fitness for a Particular Purpose
o Arises by any Seller who:
o Knows the particular purpose for which
the goods are being bought; and
o Knows the buyer is relying on seller’s skill
and judgment to select suitable goods.
o Seller does not have to be a merchant to
make this warranty.
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Implied Warranty Arising from Course of Dealing or
Trade Usage
o Arises when both parties to a contract
have knowledge of a wellrecognized trade custom.
o Courts infer that both meant this
custom to apply to their transaction.
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Warranty Rights of Third Parties:
Third Party Beneficiaries of Warranties
Seller’s warranties may extend to:
o Buyer’s household members and guests
o Any “reasonable and foreseeable” user
o Anyone injured by good
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Warranty Disclaimers
o Express Warranties can be
disclaimed:
o If they were never made
(evidentiary matter).
o 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
o Implied Warranties:
o Merchantability: “As Is,” “With All Faults.”
o Fitness for a Particular Purpose: must be in writing
and conspicuous.
o If Buyer has the right to fully inspect and either:
does so or refuses to do so, warranties are
disclaimed as to defects that could reasonably
be found.
o Buyer fails/refuses to examine goods
o Buyer fails to file suit within applicable
statute of limitations period
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Magnuson-Moss Warranty Act
o Provides that if seller decides to issue
written warranty for consumer good,
seller must specify whether warranty
is “full” or “limited”
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