Chapter 25
Warranties
McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Warranty (Definition):
Seller’s promise(s) regarding certain
characteristics of good(s) sold
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“Express” Warranty Versus “Implied”
Warranty

Express Warranty: Explicitly stated in contract

Implied Warranty: Automatically (by operation of law)
applied to contract
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Types of Warranties
Warranties of Title

Passage of good title

Implied promise of no liens/judgments against title

Implied promise that title not subject to claims of intellectual
property (copyright, patent, or trademark) infringement
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Types of Warranties
Express Warranties

Description of good’s physical nature or its use

May be found in advertisements or brochures

May be material term of contract

Salesperson’s oral promise concerning good can give rise to express warranty

Buyer’s reliance on seller’s representations generally means those
representations become express warranties, and part of contract
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Sales “Puffery”

Definition: Salesperson’s mere statement of opinion,
rather than representation of facts

“Puffing” generally does not create express warranty
liability
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Types of Warranties: Implied Warranties

Implied Warranty of Merchantability (Definition): Warranty based on
reasonable expectation of product performance

Good purchased must:

Pass without objection in trade/market for similar goods

Be of fair quality (within the product’s description)

Be fit for “ordinary use”

Have “even kind, quality and quantity”

Be adequately packaged and labeled

Conform to promises made on package/product label
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Types of Warranties: Implied Warranties
Implied Warranty of Fitness For Particular Purpose
(Definition): Warranty that arises when seller knows purpose for
which buyer purchasing goods, and buyer relies on seller’s
judgment to recommend/select certain product
Seller does not have to be merchant to make this warranty
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Types of Warranties: Implied Warranties
Implied Warranty of Trade Usage
(Definition): Warranty that arises as result of generallyaccepted trade practices
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Warranty Rights of Third Parties:
Third Party Beneficiaries of Warranties
Seller’s warranties may extend to:

Buyer’s household members and guests

Any “reasonable and foreseeable” user

Anyone injured by good
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Warranty Disclaimers and Waivers
Methods of Disclaiming/Waiving Warranties:

Seller does not make express warranties

Seller disclaims implied warranties in clear, unambiguous, conspicuous
language

Buyer fails/refuses to examine goods

Buyer fails to file suit within applicable statute of limitations period
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Magnuson-Moss Warranty Act
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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