Sales and Lease Warranties
Overview <ul><li>A warranty is an assurance of fact upon which a party may rely.  </li></ul><ul><ul><li>Warranty of Title....
§1: Warranty of Title <ul><li>Automatically arises in most commercial sales transactions. </li></ul><ul><li>UCC-312 create...
Warranty Title Disclaimer  <ul><li>Title warranty can generally be disclaimed only with specific language in contract. </l...
§2: Express Warranties <ul><li>Can be oral or written-- don’t have to use the words “warrant” or “guarantee.” </li></ul><u...
Express Warranties  [2] <ul><li>To create an express warranty, the affirmation of fact must become the “basis of the barga...
Express Warranties  [3] <ul><li>Statements of Opinion and Value. </li></ul><ul><ul><li>Generally excludes “puffing” – “Bes...
§3: Implied Warranties <ul><li>Warranty inferred at law based on the circumstances or nature of the transaction.  </li></u...
Implied Warranty of Merchantability <ul><li>Automatically arises from merchants. </li></ul><ul><li>Goods are of average, f...
Implied Warranty of Fitness  for a Particular Purpose <ul><li>Arises by any Seller who:  </li></ul><ul><ul><li>Knows the p...
Implied Warranty Arising  from Course of Dealing or Trade Usage <ul><li>Arises when both parties to a contract have knowle...
§4: Overlapping Warranties <ul><li>Occurs when two or more warranties made in a single transaction: </li></ul><ul><ul><li>...
§5: Warranties  and Third Parties <ul><li>At common law only the Buyer could sue the Seller because she is the one in priv...
§6: Warranty Disclaimers <ul><li>Express Warranties can be disclaimed: </li></ul><ul><ul><li>If they were never made (evid...
Warranty Disclaimers  [2] <ul><li>Implied Warranties: </li></ul><ul><ul><li>Merchantability: “As Is,”  “With All Faults.” ...
§7: Statute of Limitations <ul><li>Action for Breach of Warranty : </li></ul><ul><ul><li>Begins to toll at tender. </li></...
§8: Magnuson-Moss  Warranty Act <ul><li>FTC enforces; Attorney general or consumer can bring action. </li></ul><ul><li>Mod...
Magnuson-Moss  [2]   <ul><li>Full Warranty: Seller must repair or replace. </li></ul><ul><li>Limited Warranty must be cons...
§9: Warranties  Under the CISG <ul><li>Art. 35: uses the word “conformity” instead of warranty, but very similar to UCC. <...
Upcoming SlideShare
Loading in …5
×

Contract & warranties

673 views

Published on

Contract & warranties

Published in: Business, Real Estate
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
673
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
16
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • Courts say people can reasonable expect bones in fish, cherry pits in cherry pies, nutshells in packages of shelled nuts not worms
  • Contract & warranties

    1. 1. Sales and Lease Warranties
    2. 2. Overview <ul><li>A warranty is an assurance of fact upon which a party may rely. </li></ul><ul><ul><li>Warranty of Title. </li></ul></ul><ul><ul><li>Express Warranty. </li></ul></ul><ul><ul><li>Implied Warranty of Merchantability. </li></ul></ul><ul><ul><li>Implied Warranty of Fitness for a Particular Purpose. </li></ul></ul><ul><ul><li>Implied warranty arising from the course of dealing or trade usage. </li></ul></ul>
    3. 3. §1: Warranty of Title <ul><li>Automatically arises in most commercial sales transactions. </li></ul><ul><li>UCC-312 creates 3 warranties: </li></ul><ul><ul><li>Good Title. </li></ul></ul><ul><ul><li>No Liens. </li></ul></ul><ul><ul><li>No Infringements. </li></ul></ul>
    4. 4. Warranty Title Disclaimer <ul><li>Title warranty can generally be disclaimed only with specific language in contract. </li></ul><ul><li>Circumstances may be obvious to clearly indicate disclaimer of title, such as a sheriff’s sale. </li></ul>
    5. 5. §2: Express Warranties <ul><li>Can be oral or written-- don’t have to use the words “warrant” or “guarantee.” </li></ul><ul><ul><li>Any Affirmation or Promise. </li></ul></ul><ul><ul><li>Any Description. </li></ul></ul><ul><ul><li>Any Sample or Model. </li></ul></ul>
    6. 6. Express Warranties [2] <ul><li>To create an express warranty, the affirmation of fact must become the “basis of the bargain.” </li></ul><ul><li>And Buyer must rely on warranty when he enters into contract. </li></ul><ul><li>Case 23.1: Genetti v Caterpillar Inc (1999). </li></ul>
    7. 7. Express Warranties [3] <ul><li>Statements of Opinion and Value. </li></ul><ul><ul><li>Generally excludes “puffing” – “Best car in town”, not an express warranty. </li></ul></ul><ul><ul><li>However, expert opinion is not puffery. </li></ul></ul>
    8. 8. §3: Implied Warranties <ul><li>Warranty inferred at law based on the circumstances or nature of the transaction. </li></ul><ul><li>Under the UCC, merchants warrant the goods they sell are “merchantable”, i.e., fit for ordinary purpose for which such goods are sold. </li></ul>
    9. 9. Implied Warranty of Merchantability <ul><li>Automatically arises from merchants. </li></ul><ul><li>Goods are of average, fair, or medium-grade. </li></ul><ul><li>Adequately packaged and labeled. </li></ul><ul><li>Conform to promises on label. </li></ul><ul><li>Have a consistent quality and quantity among the commercial units. </li></ul><ul><li>Case 23.2: Webster v. Blue Ship Tea Room (1964). </li></ul>
    10. 10. Implied Warranty of Fitness for a Particular Purpose <ul><li>Arises by any Seller who: </li></ul><ul><ul><li>Knows the particular purpose for which the goods are being bought; and </li></ul></ul><ul><ul><li>Knows the buyer is relying on seller’s skill and judgment to select suitable goods. </li></ul></ul>
    11. 11. Implied Warranty Arising from Course of Dealing or Trade Usage <ul><li>Arises when both parties to a contract have knowledge of a well-recognized trade custom. Courts infer that both meant this custom to apply to their transaction. </li></ul>
    12. 12. §4: Overlapping Warranties <ul><li>Occurs when two or more warranties made in a single transaction: </li></ul><ul><ul><li>If warranties are consistent, they are construed as cumulative. </li></ul></ul><ul><ul><li>If inconsistent: </li></ul></ul><ul><ul><ul><li>First: implied warrant of fitness for a particular purpose. </li></ul></ul></ul><ul><ul><ul><li>Then: express. </li></ul></ul></ul>
    13. 13. §5: Warranties and Third Parties <ul><li>At common law only the Buyer could sue the Seller because she is the one in privity of contract with the Seller. </li></ul><ul><li>UCC 2-318 provides 3 alternatives from which the states may choose. </li></ul>
    14. 14. §6: Warranty Disclaimers <ul><li>Express Warranties can be disclaimed: </li></ul><ul><ul><li>If they were never made (evidentiary matter). </li></ul></ul><ul><ul><li>If a clear written disclaimer in contract with specific, unambiguous language and called to Buyer’s attention ( BOLD CAPS UNDERLINED ). </li></ul></ul>
    15. 15. Warranty Disclaimers [2] <ul><li>Implied Warranties: </li></ul><ul><ul><li>Merchantability: “As Is,” “With All Faults.” </li></ul></ul><ul><ul><li>Fitness for a Particular Purpose: must be in writing and conspicuous. </li></ul></ul><ul><ul><li>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. </li></ul></ul><ul><li>Case 23.3: International Turbine Services v. Vasp Brazilian Airlines (2002). </li></ul>
    16. 16. §7: Statute of Limitations <ul><li>Action for Breach of Warranty : </li></ul><ul><ul><li>Begins to toll at tender. </li></ul></ul><ul><ul><li>Buyer must notify Seller within a reasonable time. </li></ul></ul><ul><ul><li>Buyer must sue within four years after cause of action accrues. </li></ul></ul><ul><li>If warranty is for future performance, action accrues when performance happens and breach is discovered. </li></ul>
    17. 17. §8: Magnuson-Moss Warranty Act <ul><li>FTC enforces; Attorney general or consumer can bring action. </li></ul><ul><li>Modifies UCC for consumer sales. </li></ul><ul><li>Only applies when written warranties are made by Seller (including a service contract). </li></ul><ul><ul><li>If goods > $10 label “full” or “limited.” </li></ul></ul><ul><ul><li>If goods > $15 Seller must make additional disclosures. </li></ul></ul>
    18. 18. Magnuson-Moss [2] <ul><li>Full Warranty: Seller must repair or replace. </li></ul><ul><li>Limited Warranty must be conspicuous. </li></ul><ul><ul><li>If limit of time only must say, e.g., “full twelve-month warranty.” </li></ul></ul><ul><li>UCC Implied Warranties: </li></ul><ul><ul><li>May not be disclaimed, but can be limited, but must correspond with time of express warranty. </li></ul></ul>
    19. 19. §9: Warranties Under the CISG <ul><li>Art. 35: uses the word “conformity” instead of warranty, but very similar to UCC. </li></ul>

    ×