TEMA 4: WARRANTIES.
Most important terms in contract are warranties
Can include whether the seller has good title to the goods being sold
and also can promise that the goods will perform in a certain way.
Warranties can be express or implied
Tort: is public
Warranties: Automatically impose on private property.
The warranties can include whether the seller has good title being
sold and also can promise that the goods will perform in a certain
way.
I-
WARRANTY OF TITLE.
a. UCC treatment
Someone is selling you goods; have the right to sell you
because is mine.
2-312 (1).
Subject to subsection (2) there is in a contract for sale a warranty by
the seller that
(a) The title conveyed shall be good, and its transfer rightful; and
(b) The goods shall be delivered free from any security interest or
other lien or encumbrance of which the buyer at the time of
contracting has no knowledge.
When I sell you my car I’m guarantee that is free from secure interest
unless the buyer is knowledge. (I told you the bank have a right on
this car)
Sujeto a la subsección (2) que hay en un contrato de venta de una
garantía por parte del vendedor que
(a) El título será transmitido bien, y es la transferencia que le
corresponde, y
(b) Las mercancías se entregan libres de cualquier gravamen u otro
derecho de retención o gravamen de los cuales el comprador en el
momento de la contratación no tiene conocimiento.
I.
WARRANTIES OF TITLE
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SELLER IS COVEYING GOOD TITLE
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NO SECURITY INTEREST ENCUMBERS TITLE
-
NO INFRINGEMENT ON INTELLECTUAL PROPETY RIGHTS
II.
WARRANTIES OF QUALITY
-
EXPRES PROMISES REGARDING GOODS QUALITY OR
PERFORMANCE
-
IMPLIED WARRANTY OF MERCHANTABILITY
Cuando te vendo mi coche me garantiza que esté libre de intereses
seguro a menos que el comprador es el conocimiento. (Te dije que el
banco tiene el derecho de este coche)
Unless special circumstances, the seller gives a
warranty to the buyer that the seller rightfully
conveyed those goods title to the goods and those
goods and that the goods were transferred free of
any lien or encumbrance of which the buyer at the
time of contracting had no knowledge.
Warranty effect that the buyer receives the
goods free of any superior interest unless the
buyer knows otherwise.
Warranty of title protects the buyer against false
claims to title brought by a third party.
Problems with 3
rdpersons: seller would be
required to compensate the buyer for any
damages suffered in defending the title, even if
the buyer ultimately win. Even if the buyer wins
the lawsuit, the buyer will have gone thought the
time and expense of litigation.
A seller does not give warranty of title if the
circumstances exist that would give the buyer
reason to know that the seller is not warranting
that it I conveying good title.
If the seller wishes to disclaim the warranty of
title, the seller must use specific language such as
“ the goods are sold without any warranty of title”
( according to the coment of the article the seller
my not usea broad language such as “as is” or
“with all faults” which can be used to disclaim
implied warranties of quality.
COMENTARIOS ARTICULO.
Warranty extends to a buyer whether or not the
seller was in possession of the goods at the time
the sale or contract was made
Knowledge refer in this article is different from
notice
2-312 (2)
“A warranty under subsection (1) will be excluded or modified
only
by specific language
or by circumstances which give the buyer
reason to know that the person selling does not claim title in himself
or that he is purporting to sell only such right or title as he or a third
person may have”
en sí mismo o que se que pretende vender sólo tal derecho o título
como él o una tercera persona puede tener "
Disclaim guarantee title.
Use specific language
Example: “The warranty of title is hereby disclaimed.”
Language such as “as is” and “with all faults” does not disclaim
the warranty of title.
o
Circumstances:
You know that the person selling does not claim the title in
himself.
Sabes que esta robado y que no es el título propio.
4. 2-312 (3)
“(3) Unless otherwise agreed a seller who is a merchant regularly
dealing in goods of the kind warrants that the goods shall be
delivered free of the rightful claim of any third person by way of
infringement or the like but a buyer who furnishes specifications to
the seller must hold the seller harmless against any such claim which
arises out of compliance with the specifications.”
"(3) Salvo acuerdo en contrario de un vendedor que es un
comerciante trata regularmente en los bienes de las órdenes de esos
que los bienes se entregan sin el legítimo derecho de tercera persona
en concepto de infracción o similar, pero un comprador que
proporciona especificaciones para el vendedor debe tener el
vendedor indemne frente a cualquier reclamación que surja de
conformidad con las especificaciones
o
Infringements
•
“Infringement” in 2-312(2) refers to things like patent infringement.
•
The warranty is not given, however, if the buyer gave specifications
for the goods.
•
If the buyer gave specifications for the goods, he must hold the seller
harmless for any claims arising out of the seller’s manufacture of the
goods to those specifications.
o
HIPO1: A buyer purchase a Gismo GPS system from a retail store.
After the purchase, a third party wins patent infringement suit
against Gismo and, because of the ensuing injection the system
ceases to function. Does the buyer have a warranty claim against
the retail store?
A. Yes, because as matter of law, the seller gave a warranty that the
goods were free of infringement and claims.
o
HIPO 2. A buyer considering a car from a friend. The seller shows
the buyer the title of the car. The bank have the right. He sell it for
1.000 dollars. The bank after take it. Have rights to claim or have
the bank rights.
D. No he cannot claim
UCC also provides for warranties against infringement, for
example that good do not infringe on a patent. Such a
warranty is given by a seller who is in the business of selling
the kind of goods involved, unless the warranty is
disclaimed ( declinada)
II-
EXPRESS WARRANTIES BY AFFIRMATION, PROMISE,
DESCRIPTION, AND SAMPLE. (2-313)
Seller may make express promises regarding the quality of
the goods that will amount to express warranties.
One situation in which a warranty will be implied in some
cases is that the goods will be fit for the ordinary purpose
for which goods o the kind are used; the other is that the
goods will be fit for the particular purpose of the buyer if the
seller had reason to know of purpose and that the buyer
was relying on the seller to select suitable goods. We will
first consider the topic of express warranties.
Difference express warranties and puffing.
(1) description, promises regarding quality of goods, part of
the basis of the bargain
(2) statement of opinion or value, tend to be vague, not
actionable ( unless fraudulent)
(1)
Express warranties
by the seller are created as follows:
(a)
Any affirmation
of fact or promise made by the seller to the buyer
which relates to the goods and becomes part of the basis of the bargain
creates an express warranty that the goods shall conform to the affirmation
or promise.
o
The contract can be only for the shoes but the seller can say: the
shoes are made with leader.
(b)
Any description
of the goods which is made part of the basis of the
bargain creates an express warranty
that the goods shall conform to
the description.
o
The buyer will not have purchase the goods if is not without these
guarantees.
o
If the defects are obvious know by a reasonable man the court say
that the express guarantees don’t work
(c)
Any sample or model
which is made part of the basis of the bargain
creates an express warranty that the whole of the goods shall conform to
the sample or model.
(2) It is not necessary to the creation of an express warranty that the seller
use formal words such as "warrant" or "guarantee" or that he have a specific
intention to make a warranty, but an affirmation merely of the value of the
goods or a statement purporting to be merely the seller's opinion or
commendation of the goods does not create a warranty.
No es necesario la creación de una garantía explícita de que el vendedor
use palabras formales como "orden" o "garantía" o que tienen la intención
específica de hacer una garantía, sino una afirmación más que el valor de
los bienes o una declaración que pretende ser más que la opinión del
vendedor o el elogio de la mercancía no crea una garantía
In all cases UCC provides that such affirmations, promises
descriptions and samples or models must be part of the bases of the
bargain ( parte de la base de la negociacion)
o
Diference
puffing
and express warranties.
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Facts that a reasonable person will understand
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Facts vs Opinion
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Puffing is opinion
-
Warranties are facts.
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2-312 (2): affirmations of value of the goods or statement
purporting to be merely the seller’s opinion or commendation of
the goods are not express warranties.
-
“Puffing” does not give rise to a warranty.
o
Ask yourself “How could a judge decide whether the statement was
true?”
o
Whether a statement is puffing is fact specific, but some important
factors are
o
Specific language more likely to be an express warranty
o
Written statement more likely to be an express warranty
o
Statements about quality of product more likely to be an express
warranty
o
Context is important (such as buyer’s knowledge vs. seller’s or
obviousness of defect)
o
Did seller “hedge” statements?
o
Most importantly, was buyer’s reliance on statement reasonable?
pay much attention to any promises made by the seller that the good
will perform well.
If it was not obvious, a court might be inclined to find a seller’
statement that the good will perform well to be a warranty, as it is
easy to tell that the statement was false.
If the statement is writing, it is more likely that the buyer will pay
attention to it and it also shows that the seller really means what is
being said.
Compare carpenter v Chrysler Corporation
Ex: a car Is selled to a
non-merchant by a merchant and a non-merchant. The first one said
that the car is in a good condition= statement of warranty. On the
second one is not a statement.
If the statement is considered to be a value or opinion, does that
means that the buyer don’t have any other remedies when this
statement is false? Commentary 2-313 suggest that we might be able
to sue in tort for fraud or misrepresentation.
IMPLIED WARRANTY MERCHANTABILITY USAGE OF TRADE
DOES THE SELLER REGULARY SELL THE TYPE OF GOODS INVOLVED?
YES:
-
Goods must be merchantable.
o
Pass without objection in the trade
o
Fungible goods must be of fair average quality
o
Fit for ordinary purpose
o
Run within variations permitted by agreement
o
Adequately package
o
Conform to promises and descriptions on label
o Pase sin objeciones en el comercio
de los bienes fungibles deben ser de calidad media
aceptable
o para su propósito ordinario
o Ejecutar dentro de las variaciones permitidas por acuerdo
de empaquetar adecuadamente
Para cumplir con las promesas y las descripciones de la
etiqueta
NO:
-
No implied warranty of merchantability.
You don’t need to be a merchant
2-314 UCC
(1) Unless excluded or modified (Section 2-316), a warranty that the
goods shall be merchantable is implied in a contract for their sale
if the seller is a merchant with respect to goods of that kind. Under
this section the serving for value of food or drink to be consumed
either on the premises or elsewhere is a sale.
o
Serving of food comes under the warranties of
merchantability: groceries stores and restaurants.
(2) Goods to be merchantable must be at least such as
(a) Pass without objection in the trade under the contract description;
and
o Contract description: what goods we are talking about. If the contract is for golden delicious apples we don’t compare it with Fiji apples. What is normally done in this industry create warranties in the transactions.
(b) In the case of fungible goods, are of fair average quality within the
description; and
o Especially with organic materials two apples are not going to be the same. Fair average quality in the transcription
(c) Are fit for the ordinary purposes for which such goods are used;
and
(d) run, within the variations permitted by the agreement,
of even
kind, quality and quantity
within each unit and among all units
involved; and
(e) Are adequately
contained, packaged, and labeled
as the
agreement may require; and
(f) Conform to the promise or affirmations of fact made on the
container or label if any.
o If the package say a description, it have to respect this description. If you create this information it is part of the contract.
o
All this conditions are presents.
o
Other warranties may be implied depending of your industry.
(2) Unless excluded or modified (Section 2-316) other implied
warranties may arise from course of dealing or usage of trade.
Phillips v. Cricket Lighters
CASE:
A WOMAN BY A LIGHTER AND LET IT AT HOME. THE KIDS PLAY WITH
IT AND THE HOUSE GET INFIRE AND THE KIDS DIE. THEN, THE WOMEN SUE
THE COMPANY RECLAIMING A SECURITY SYSTHEM FOR THE KIDS.
Goods do not need to be the “best quality or the best obtainable…”
Keating at 156.
But, they do need to “have an inherent soundness which makes them
suitable for the purpose for which they are designed.” Id.
Ordinary purposes mean “common” or “average” purposes. Keating
at 156
The ordinary purpose of a lighter is to allow an adult user to produce
a flame, not for a two-year old child to play with. Id.
A product that is misused does not breach the implied warranty of
merchantability.
IF YOU MISSUSE GOODS IS NOT COVER BY IMPLIED WARRANTIE
MERCHANTABILITY.
Exercise 8.3.
o
Carrel reliable for rich warranties:
o
It would be usefull but she did not sell defectev pants. The difect have
to cause injurie.
-
Evidence subject that the pants were not defectev.
-
Have to be because the damages.
o
it doesn’t matter carol faults
Exercise 8.4
o
Misusing the goods do not always allow to aplly warranties
of merchantbility.
o
Assumption of risk argument.
o
Causation: the difect have to make the defect.
Implied Warranty: Fitness for Particular Purpose.
2-315
•
Where the seller at the time of contracting has reason to know any
particular purpose for which the goods are required and that the
buyer is relying on the seller's skill or judgment to select or furnish
suitable goods, there is unless excluded or modified under the next
section an implied warranty that the goods shall be fit for such
purpose.
-
Don’t need to be a marchant
-
Buyer is rellying on skill or judgment of the seller.
-
Seller have to have a reaon to know it.
Leal v. Holtvogt
o
Buyer must, in fact, rely on seller’s skill or judgment to furnish or
select goods for particular purpose. Keating at 161.
o
Three-part test to determine whether implied warranty of fitness for
particular purpose was created (161):
o
Seller has reason to know buyer’s purpose;
o
Buyer does, in fact, rely on seller.
Exclusions or modifications of warranties.
WARRANTY DISCLAIMERS. (Exenciones de responsabilidad)
A seller may disclaim the imply warranty of merchantability of the
implied warranty of fitness. Question: If the warranty is oral before
written in the contract it will be executed under the parole evidence
rule? 2-317 UCC
The written sales contract will state that no warranties other than
those contained in the contract exist.
If the seller’s statement is not contained in the written contract, it
could be viewed as attempting to disclaim the oral express warranty
given by the seller.
UCC 2-316 (1)
says that the seller cannot disclaim the express
warranty but the buyer may have a difficult time having it introduced
into evidence under the
parole evidence
rule.
2-316 (2) T
he UCC provides rules on how the seller must disclose
any disclaimer of implied warranties to the buyer.
a. Implied warranty of merchantability: must use word
“merchantability”, if in writing, disclaimer must CONSPICUOUS.
o
1-201 (B) (10). Whether a reasonable person against which
the warranty disclaimer is to operate ought to have noticed
it.
b. Implied warranty of fitness: must be in writing and must be
conspicuous. Code suggest “there are no warranties which extend
beyond the face hereof”
"No hay garantías que se extiendan más allá de la cara de esto"
2-316(3).
Ways of disclaiming implied warranties under the UCC
a.
Use language which in common understanding indicates that there
are no warranties, such as “as is”
b.
Demand that the buyer inspect the good before purchasing-
warranties are disclaimed with respect to defects discovered or
which should have been discovered through examination
c.
Warranties are disclaimed if the buyer should expect to take risk of
defect under course of performance, course of dealing or usage of
trade.
