Warranty Case


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Warranty Case

  1. 1. UTAL v. Dickens & Matson <ul><li>Background and facts </li></ul><ul><li>Ukraine Telparts </li></ul><ul><li>resale sale </li></ul><ul><li>UTAL used telephone / sample D & M ( a mail order com .) </li></ul>
  2. 2. <ul><li>UTAL specified the goods in contract and D & M provided UTAL with samples. </li></ul><ul><li>UTAL discovered the nonconformity of goods and notified the rejection of the shipment by fax. UTAL sued for breach of contract. </li></ul><ul><li>The contract specified it should be interpreted according to the law of England. </li></ul><ul><li>(the choice of law clause) </li></ul>
  3. 3. 2. What is the legal issue of this case? <ul><li>Whether the defendant breached the contract? </li></ul><ul><li>Whether the defendant breached the condition of the contract or the warranty of the contract? </li></ul>
  4. 4. <ul><li>3. Legal principles </li></ul><ul><li>The English law of contract: English Sale of goods Act of 1979 ( 货物买卖法案) </li></ul><ul><li>(1) If a term in a contract constitutes a substantial ingredient in identifying the thing sold, it is a “condition”. A term in the contract that is relatively unimportant is a “warranty”. </li></ul>
  5. 5. <ul><li>(2) The effect of breaching a condition: </li></ul><ul><li>The innocent party can rescind the contract and sue for damages. It is excused from performance of the contract. </li></ul><ul><li>The effect of breaching a warranty: </li></ul><ul><li>The innocent party can sue for damages but it is not excused from performance. </li></ul>
  6. 6. <ul><li>(3) How to determine whether a breach of a term in a contract is a breach of condition rather than a breach of warranty---- </li></ul><ul><li>whether the innocent party is deprived of the benefit it bargained for when it entered into the contract. </li></ul><ul><li>(making a comparison to Art. 25 of the CISG) </li></ul>
  7. 7. <ul><li>4. Reasoning </li></ul><ul><li>Judge’s point of view: Defendant’s shipment of nonconforming goods amounts to a breach of condition of the contract. </li></ul><ul><li>A breach of an express condition----defendant’s action of shipping unusable and damaged phone parts </li></ul><ul><li>(1) UTAL’s purpose (2) D&M’s attitude: admitted, conceded (3) UTAL’s benefit deprived (4) conclusion </li></ul>
  8. 8. <ul><li>A breach of the implied conditions from three different perspectives: </li></ul><ul><li>(1) breach of implied condition of correspondence with description-- two-piece push button telephone </li></ul><ul><li>(2) breach of implied condition of merchantability-- phones could work </li></ul><ul><li>(3) breach of implied condition of fitness for a particular purpose ---- UTAL could sell working phones in the UKraine </li></ul>
  9. 9. <ul><li>Decision: </li></ul><ul><li>Judgment for the plaintiff. </li></ul><ul><li>The defendant breached both express and implied conditions in the contract. </li></ul><ul><li>Comment: </li></ul><ul><li>If this case involved fraud, the plaintiff could ask for punitive damages, which are usually associated with torts. </li></ul>
  10. 10. <ul><li>GmbH (the buyer) v. Rockland (the seller) </li></ul><ul><li>Facts </li></ul><ul><li>Legal issues: Whether the buyer can recover on the seller’s breach of the warranty ( nonconformity of goods)? </li></ul><ul><li>Whether the buyer should bear the burden of proving the exact nature of the defect in the goods in order to recover for breach of warranty ? </li></ul><ul><li>Whether the buyer has reasonably relied on the seller’s representations that the goods was suitable for particular purpose </li></ul>
  11. 11. <ul><li>3. Reasoning: CISG Art.35 “nonconformity of goods” </li></ul><ul><li>A. seller’s argument ---- buyer must prove… </li></ul><ul><li>B. buyer’s argument ----all it need show…, and it need not show… </li></ul><ul><li>C. Judge’s attitude -- </li></ul><ul><li>Buyer can recover for breach of warranty if it can show the goods were unfit for the particular purpose warranted </li></ul><ul><li>Buyer does not need introduce evidence to prove why or how the fabric was unfit </li></ul><ul><li>Buyer still must prove the transfer printing process was well-performed. (enough evidence) </li></ul><ul><li>---- Judge is in favor of the buyer’s claim. </li></ul>
  12. 12. <ul><li>(2) seller’s argument—buyer did not rely on its advice </li></ul><ul><li>Judge’s attitude—court found that buyer relied on the seller’s statements proclaiming the goods’ suitability for particular purpose. </li></ul><ul><li>4. Decision: (1) (2) (3) </li></ul>