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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

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14.1 Express and Implied Warranties

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  1. 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

  2. Warranty- SELLER’S GUARANTEE THAT THEIR PRODUCT IS NOT DEFECTIVE AND THAT IT IS SUITABLE FOR THE USE FOR WHICH IT WAS INTENDED

  3. Warranties are intended to: • PROVIDE AN INCENTIVE TO BUY • IMPROVE THE QUALITY OF PRODUCTS

  4. There are 2 types of warranties under the UCC: • Express warranty • Implied warranty

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. A GUARANTEE NEEDS TO BE STATED CLEARLY • FTC- FEDERAL AGENCY SET UP IN 1914 TO ENSURE FAIR ECONOMIC PRACTICES

  11. 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

  12. 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

  13. 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

  14. 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

  15. Implied warranty- GUARANTEE OF QUALITY IMPOSED BY LAW • NOT IN WRITING • ONLY WITH A SALE OF GOODS

  16. There are two principal types of implied warranties: • WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE • WARRANTY OF MERCHANTABILITY

  17. 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

  18. 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

  19. ONLY GIVEN BY A MERCHANT • Example 9 • NEW OR USED GOODS • Example 10

  20. 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

  21. Assignment • Page 304 • Reviewing What You Learned • #1-5

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