Because a warranty imposes a duty on the seller, a breach of warranty is a breach of the seller's promise. If the parties have not agreed to limit or modify the remedies available to the buyer and if the seller breaches a warranty, the buyer can sue to recover damages from the seller. Under some circumstances a breach can allow the buyer to rescind the agreement.
Warranty of Title
Disclaimer of Title WarrantyIn an ordinary slaes transaction, the title warranty can be disclaimed or modified only by specific language in a contract. For example, sellers may indicate in the contract that they are transferring only such rights, title and interests as they have in the goods. In certain cases, the circumstances surrounding the sale are sufficient to indicate clearly to a buyer that no assurances as to title are being made. The classic example is a sheriff's sale. Obviously the goods don't belong to the sheriff.
(1) That the goods conform to any affirmation or promise of fact that the seller makes to the buyer about the goods. Such affirmations or promises are usually made during the bargaining process. Statements such as "these drill bits will easily penetrate stainless steel, and without dulling" are express warranties.
(2) That the goods conform to any description of them. For example, a label that reads "Crate contains one 150-horsepower diesel engine" or a contract that calls for the delivery of a "wool coat" creates an express warranty that the content of the goods sold conforms to the description.
(3) That the goods conform to any sample or model of the goods shown to the buyer.
Express warranties can be found in a seller's advertisement, brochure, or promotional materials, in addition to being made orally or in an express warranty provision in a sales contract. To create and express warranty, a seller does not have to use formal words such as warrant or guarantee. It is only necessary that a reasonable buyer would regard the representation as part of the basis of the bargain. Therefore, if an express warranty is not intended, the marketing agent or salesperson should not promise too much.
Statements of Opinion and ValueIf the seller merely makes a statement that relates to the value or worth of the goods, or makes a statement of opinion or recommendation about the goods, the seller is not creating an express warranty.
The seller's opinion such as "this vehicle is the best used car to come along in years" is known as puffing and creates no warranty. Puffing is an expression of opinion by a seller that is not made as a representation of fact. It is not always easy to determine what constitutes an express warranty and what constitutes puffing. The reasonableness of the buyer's reliance appears to be the controlling criterion. The context within which a statement is made might also be relevant.
Implied Warranty of MerchantabilityAn implied warranty of merchantability automatically arises in every sale of goods made by a merchant who deals in goods of the kind.
To be merchantable, goods must be "reasonably fit for the ordinary purposes for which such goods are used." They must be of at least average, fair, or medium-grade quality. The quality must be comparable to quality that will pass without objection in the trade or market for goods of the same description. To be merchantable, the goods must also be adequately packaged and labeled as provided by teh agreement, and they must conform to the promises or affirmations of fact made on the container or label, if any.
An implied warranty of merchantability also imposes on the merchant liability for the safe performance of the product. It makes no difference whether the merchant knew of or cold have discovered a defect that makes the product unsafe. Of course, merchants are not absolute insurers against all accidents arising in connection with goods. For example, a bar of soap is not unmerchantable merely because a user could slip and fall by stepping on it.
Implied Warranty of Fitness for a Particular PurposeThe implied warranty of fitness for a particular purpose arises when any seller (mechant or nonmerchant) knows the particular purpose for which a buyer will use the goods and knows that the buyer is reling on the skill and judgment of the seller to select suitable goods.
A "particular purpose" of the buyer differs from the "ordinary purpose for which goods are used" (merchantability). Goods can be merchantable but unfit for a particular purpose. A seller does not need to have actual knowledge of the buyer's particular purpose. It is sufficient if a seller "has reason to know" the purpose. The buyer, however, must have relied on the skill or judgment of the seller in selecting or furnishing suitable goods for an implied warranty to be found.
(1) Express warranties displace inconsistent implied warranties, except implied warranties of fitness for a particular purpose.
Warranties & Third Parties
There is sharp disagreement among the states as to how far warranty liability should extend. In view of this disagreement, the UCC offers three alternatives for liability to third parties. All three alternatives are intended to eliminate enumerated types of injuries (personal versus property) for certain beneficiaries (for example, household members or bystanders).
Buyer's Examination of the GoodsIf a buyer actually examines the goods (or a sample or model) as fuly as desired before entering into a contract, or if the buyer refuses to examine the goods on the seller's demand that he do so, thereis no implied warranty with respect to defects that a reasonable examination would reveal or defects that are found on examination.
Magnuson-Moss Warranty Act
No seller is required to give a written warranty for consumer goods sold under the act. If a seller chooses to make an express written warranty, however, and the cost of the consumer goods is more than $10, the warranty must be labeled as either "full" or "limited." In addition, if the cost of the goods is more than $15, by FTC regulation, the warrantor must make certain disclosures fully and conspicuously in a single document in "readily understood language." This disclosure provides the names and addresses of the warrantor(s), what specifically is warranted, procedures for enforcing the warranty, any limitations on warranty relief, and that the buyer has legal rights.
A "full" warranty requires free repair or replacement of any defective part. If the product cannot be repaired within a reasonable time, the consumer has the choice of either a refund or a replacement without charge. The full warranty frequently does not have a time limit on it. Any limitation on consequential damages must be conspicuous. Additionally, the warrantor need not perform warranty services if the problem with the product was caused by damage to the product or unreasonable use by the consumer.
A "limited" warranty arises when the written warranty fails to meet one of the minimum requirements of a full warranty. If only a limited warranty is given, it must be conspicuously designated. If it is only a time limitation that distinguishes a limited warranty from a full warranty, the act allows the warrantor to identify the warranty as a full warranty bu such language as "full twelve-month warranty."
Implied warranties are not covered by the act.