Warranties and Product Liability
OBE 118, Section 3, Fall 2004
Professor McKinsey
Warranties
• A contractual theory of responsibility for
sellers for how a good performs
• Often the UCC is involved
• Two Categories of warranties:
3 ways to create:
Statement of fact
Description of goods
Samples or models
3 types:
Express Warranties
• Opinions and Puffing are not warranty
• Statement of fact that a product will meet a
standard or do a specific thing.
Examples (yes or no?)
This blade will last for over 100 hours
Will kill any weed you spray it on
I think this car is the best
I think this car will last another 100,000 miles
without any major maintenance
This is the best product on the market
Implied Warranties
• Title Warranties – with nearly all sales of goods
• Implied Warranty of Merchantability –
only possible when merchant seller
• Implied Warranty of Fitness for a Particular
Purpose – certain circumstances
Implied Title Warranties
Three types:
• Good Title – sellers owns the goods
• No Liens – good is free of claims by others
• No Infringements – good is free from
Intellectual Property(IP) claims
Implied Warranty of
Merchantability
• When a merchant sells a good, it is warranted to
be fit for use in general purpose
“
”
• Goods must be reasonably fit for the ordinary
purposes for which such goods are used, meet
label expectations and be safe
• Victim must have harm caused by the breach of
warranty
Implied Warranty of Fitness
for a Particular Purpose
Arises when any seller recommends goods to the
buyer for a particular purpose:
1) Seller aware of particular use
2) Buyer relies on seller’s knowledge or skill
3) Seller aware of buyer’s reliance
4) Seller recommends goods for particular use
Handling Warranties
A warranty creates terms in the contract
Warranty failure is a potential breach of contract
The act of ensuring no warranties is called “disclaiming”
Warranty disclaimers often have to meet requirements to
be effective
Disclaiming Warranties
• Merchantability
Conspicuous disclaimer with “
” in it
• Fitness for a Particular Purpose
Use the words: “
” and “
”
Product Liability
• Contractual theory- using warranties
(express and implied) within a contract
• Negligence theory- was product
negligently made or sold?
• Strict liability theory – does product fall
under the strict liability doctrine
Product Liability using Negligence
• To prove negligence the part must show a
breach of the duty of care.
• Proximate cause may limit the number of
people in the chain of commerce that can be
held liable
• Key part is finding a “smoking gun” or
other evidence showing fault.
PL based on Strict Liability
1. D sold product in defective condition
2. D normally in business of selling product
3. Product unreasonably dangerous*
4. P suffers physical harm through use of
product
5. Defective condition is proximate cause
6. No substantial changes to product since
sold
PL using Strict Liability Theory
• Advantages: lots of possible parties to sue,
no need to show fault
• Disadvantages: has to meet one of three
types of “defective products”