14 1 express and implied warranties
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14.1 Express and Implied Warranties . After finishing this section, you will know how to: Describe the three ways an express warranty can be made State the obligations of merchants under the Magnuson Moss Warranty Act Contrast a full warranty with a limited warranty

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14 1 express and implied warranties
14.1 Express and Implied Warranties
  • After finishing this section, you will know how to:
    • Describe the three ways an express warranty can be made
    • State the obligations of merchants under the Magnuson Moss Warranty Act
    • Contrast a full warranty with a limited warranty
    • Differentiate between the implied warranty of fitness for a particular purpose and the implied warranty of merchantability
slide2
Warranty- SELLER’S GUARANTEE THAT THEIR PRODUCT IS NOT DEFECTIVE AND THAT IT IS SUITABLE FOR THE USE FOR WHICH IT WAS INTENDED
slide3
Warranties are intended to:
  • PROVIDE AN INCENTIVE TO BUY
  • IMPROVE THE QUALITY OF PRODUCTS
slide4
There are 2 types of warranties under the UCC:
  • Express warranty
  • Implied warranty
slide5
Express warranty- ORAL OR WRITTEN GUARANTEE BY THE MANUFACTURER OR SELLER
  • There are 3 types of express warranties:
    • STATEMENT OF FACT OR PROMISE BY THE SELLER
    • DESCRIPTION OF THE GOODS
    • USE OF SAMPLE OR MODEL
slide6
Statement or promise
  • STATEMENT OF AN EXISTING FACT:
  • Example 1
  • PROMISE OF SOMETHING THAT MAY HAPPEN IN THE FUTURE:
  • Example 2
  • EXPRESS WARRANTIES ARE OFTEN FOUND IN SALES BROCHURES, CIRCULARS, AND ADVERTISEMENTS.
  • Example 3
slide7
STATED IN CLEAR, PRECISE, AND UNDERSTANDABLE TERMS
  • TRY TO GET THE WARRANTY IN WRITING
  • DOESN’T HAVE TO BE WRITTEN, BUT IT MAKES IT EASIER TO PROVE
  • PAROL EVIDENCE RULE APPLIES
  • OPINIONS ARE NOT WARRANTIES
slide8
Description of the goods- THE SELLER WARRANTS THAT THE GOODS WILL BE THE SAME AS THE DESCRIPTION
  • Example 4
  • Sample or model- THE SELLER WARRANTS THAT THE GOODS WILL BE THE SAME AS THE SAMPLE OR MODEL
  • Example 5
slide9
Consumer protection
  • Guarantee- A PROMISE OR ASSURANCE OF THE QUALITY OR LIFE OF A PRODUCT
  • ANOTHER NAME FOR EXPRESS WARRANTY
  • Guarantor- ONE MAKING THE PROMISE
  • Example 6
slide10
A GUARANTEE NEEDS TO BE STATED CLEARLY
  • FTC- FEDERAL AGENCY SET UP IN 1914 TO ENSURE FAIR ECONOMIC PRACTICES
slide11
Magnuson-Moss Warranty Act (1975)- FTC CAN DEVELOP RULES REGUALTING THE ADVERTISEMENT OF GRARANTEES AND TO ENFORCE THESE GUIDELINES
  • PRODUCT OR PART COVERED BY THE GUARANTEE
  • TIME LIMIT WHEN THE PRODUCT IS ADVERTISED WITH A “LIFETIME GUARANTEE” OF PRODUCT LIFE OR THE LIFETIME OF THE PERSON
  • HOW THEY WILL SETTLE THE CLAIM
  • IDENTITY OF WHO IS THE GUARANTOR
slide12
Full or Limited Warranty ($10 or more)
  • Full warranty-ONE IN WHICH A DEFECTIVE PRODUCT WILL BE FIXED OR REPLACED FREE WITHIN A REASONABLE TIME AFTER THE COMPLAINT HAS BEEN MADE ABOUT IT.
  • THE CONSUMER DOESN’T HAVE TO ANYTHING UNREASONABLE- SHIP HEAVY PRODUCTS BACK TO THE FACTORY
  • GOOD NO MATTER WHO OWNS IT
  • IF IT CAN’T BE FIXED- NEW ONE OR MONEY BACK
slide13
Limited warranty- A WARRANTY THAT PROVIDES RESTRICTED PROTECTION
  • MUST BE LABELED
  • WHEN YOU SEE THIS ON A LABEL IT’S A GOOD IDEA TO READ THE WARRANTY
slide14
Magnuson-Moss Warranty Act- $15 or over the warranty must be:
  • AVAILABLE FOR THE CUSTOMER TO READ
  • FULLY DISCLOSED IN SIMPLE, EASILY UNDERSTANDABLE LANGUAGE AND TERMS AND CONDITIONS OF THE WARRANTY
  • Example 7
slide15
Implied warranty- GUARANTEE OF QUALITY IMPOSED BY LAW
  • NOT IN WRITING
  • ONLY WITH A SALE OF GOODS
slide16
There are two principal types of implied warranties:
  • WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
  • WARRANTY OF MERCHANTABILITY
slide17
Warranty of Fitness for a particular purpose- THE SELLER GUARANTEES THAT GOODS ARE SUITABLE AND FIT FOR THE PURPOSE FOR THE BUYERS NEEDS
  • THE SELLER ADVISES THE BUYER AND THE BUYER RELIES ON THAT RECOMMENDATION
  • Example 8
slide18
Warranty of Merchantability- IMPLIED WARRANTY THAT MAKES MERCHANT OR SELLER LIABLE FOR GOODS THAT ARE NOT FAIR OR AVERAGE QUALITY AND FIT FOR ORDINARY PURPOSES FOR WHICH SUCH GOODS ARE USED
  • To be merchantable, goods must be:
  • PASS WITHOUT OBJECTION IN THE TRADE
  • BE FIT FOR ORDINARY PURPOSE
  • ADEQUATELY CONTAINED, PACKAGED, AND LABELED
  • CONFORM TO THE PROMISE
slide19
ONLY GIVEN BY A MERCHANT
  • Example 9
  • NEW OR USED GOODS
  • Example 10
slide20
Usage of trade- COMMON PRACTICE- WHEN SELLING A PUREBREAD DOG: THE ANIMAL IS ACCOMPANIED BY PAPERS
  • Warranty of title- SELLER WARRANTS THAT THE TITLE IS GOOD AND DELIVERED FREE OF ANY FINANCIAL OBLIGATIONS
  • Example 11
assignment
Assignment
  • Page 304
  • Reviewing What You Learned
  • #1-5
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