The Seller warrants that it will convey good title, free from any security interest, lien or other encumbrance of which Buyer has no knowledge. 810 ILCS 5/2-312(1).
The warranty of title is not strictly an “implied warranty” and may only be disclaimed in accordance with the provisions of 810 ILCS 5/2-312(2), which requires language informing the buyer that the seller does not claim title and is selling only the right or title that he may have.
A merchant also warrants that goods will be delivered free of any rightful claim of infringement. 810 ILCS 5/2-312(3). However, a buyer must hold a seller harmless for infringement where it furnishes specifications. Id.
Words or conduct creating or negating express warranties are to be construed as consistent when possible but negations or limitations are inoperative if the provisions cannot be harmonized. 810 ILCS 5/2-316(1).
An integrated writing may exclude extrinsic evidence of other express warranties. 810 ILCS 5/2-202(b).
A seller can also limit warranty exposure by limiting remedies available for breach of warranty.
An agreement may provide for remedies in addition to or in substitution of those provided by the UCC, such as limiting remedies to repair or replacement or limiting damages to the purchase price. 810 ILCS 5/2-719(1)(a).
An agreement may limit or exclude consequential damages, unless that exclusion is unconscionable. 810 ILCS 5/2-719(3).
If the limited remedy “fails of its essential purpose” a buyer may resort to any UCC remedy. 810 ILCS 5/2-719(2).
Buyer may recover any loss “resulting in the ordinary course of events from the seller’s breach as determined in any manner which is reasonable.” 810 ILCS 5/2-714(1).
The standard formula for breach of warranty damages is the difference between the value of the goods accepted and the value the goods had they been as warranted, plus, in a proper case, incidental and consequential damages. 810 ILCS 5/2-714(2).
Buyer’s incidental damages are defined as “expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incidental to the delay or other breach.” 810 ILCS 5/2-715(1).
Buyer’s consequential damages are defined as “(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and (b) injury to person or property proximately resulting from any breach of warranty.” 810 ILCS 5/2-715(2).
The Illinois UCC extends warranty protection for personal injury to persons in the family or household of the buyer, or a guest in his home, if it is reasonable to believe such persons would use, consume, or be affected by the goods. 810 ILCS 5/2-318.
Some cases read section 2-318 narrowly citing a policy choice by the legislature, while other cases read section 2-318 more expansively.
Section 2-318 addresses only horizontal non-privity and Official Comment 3 states that the section is not intended to restrict further case law development in the area of vertical non-privity.
Sellers often voluntarily provide express warranties to others in the distribution chain such as end-users.
Seller’s may be liable to persons in the distribution chain when Seller knows “the identity, purpose and requirements of the [buyer’s] customer and manufactured goods specifically to meet those requirements.”
Other statutes, such as federal Magnuson-Moss Warranty Act may extend warranties to others in the distribution chain.
A lawsuit on a contract for the sale of goods must be filed within four years after the legal claim has accrued. 810 ILCS 5/2-725(1).
The claim accrues when the breach of contract occurs, even if the aggrieved party does not discover the breach until later. 810 ILCS 5/2-725(2). For a breach of warranty case, the claim accrues when the seller tenders delivery of goods to the buyer, unless the warranty expressly states that it extends to future performance of the goods. 810 ILCS 5/2-725(2).
If the warranty extends to future performance, however, the claim will accrue when the buyer discovered or should have discovered the breach. Id.
The date and place of the sale and delivery of the goods.
A description of the goods sold.
The price charged to and paid by plaintiff for the goods sold.
A statement that in consideration of and as part of the sale, a warranty arose.
If it is the case, that the Seller is a merchant with respect to goods of that kind.
A description of the warranty and how it arose (expressly given or stated, implied as part of the intended use of the goods, or implied as part of the ordinary course of business of the sale of the goods).
If an express warranty appears in a writing, it should be attached to the complaint.
Plaintiff’s reliance on the warranty in purchasing and paying for the goods.
A statement that the goods were not as warranted at the time of the sale and delivery.
A description of how the goods were not as warranted.
A statement of the damages resulting from the goods not being as warranted.