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The Importance of Warranties

The Importance of Warranties. Chapter 14. Express & Implied Warranties. Have you ever bought an IPod that wouldn’t work when you took it home? Have you found an impurity or a foreign substance in a salad you were served in a restaurant?

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The Importance of Warranties

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  1. The Importance of Warranties Chapter 14

  2. Express & Implied Warranties • Have you ever bought an IPod that wouldn’t work when you took it home? • Have you found an impurity or a foreign substance in a salad you were served in a restaurant? • Have you experienced technical problems with a new computer? The UCC provides protection in these and other situations under its law of warranties. A warranty is another name for a guarantee.

  3. Express Warranties • An express warranty is an oral or written statement, promise, or other representation about the quality, ability, or performance of a product. Express warranties apply to goods that are sold or leased. These warranties are conveyed in 3 ways:

  4. (1) Statement of Fact or Promise Express warranty is created when a private party or a merchant sells goods and makes a statement about the fact or promise to the buyer. • Something that may happen in the future • Often found in sales brochures and advertisements • Must be stated in precise & understandable terms • Always seek written warranties—although express are valid, they are tough to prove

  5. (2) Availability before Sale • Written warranties on consumer products costing more that $15 must be made available before you buy the product • Manufacturer’s must provide retailers materials needed to meet their warranty requirements • Manufacturer’s must also print the warranty on the product’s package

  6. Advertising Express Warranties • An advertisement stating that a product is warranted must tell you how to get a copy • Advertisers who warrant products for a lifetime must fully explain the terms of their promises. • “Satisfaction Guaranteed”, “Money-back Guarantee”, and “Free Trial Offer” must refund the full purchase price • Rule applies to place an order through mail, Internet, or telephone

  7. Full vs. Limited • A full warranty promises to fix or replace a defective product at no charge to the consumer. • Example: A broken washer on full warranty must be fixed at no cost or replaced • A limited warranty is any written warranty that does not meet the requirements for a full warranty. • Example: covers parts replaced on an auto but does not cover labor

  8. Implies Warranties • An implied warrantyis a guarantee of quality imposed by law. • There are 3 types: • Warranty of fitness for a particular purpose • Warranty of merchantability • Warranty that comes from a course of dealing with or usage of trade

  9. Warranty of Fitness for a Particular Reason • This is created when the seller knows the purpose for which the goods are needed. • The seller advises buyer and buyer relies on the seller’s knowledge • Seller warrants that the goods will be fit for the purpose • Example: special paint need for outdoor concrete patio

  10. Warranty of Merchantability • The merchant warrants that the goods being sold are merchantable • Is only given when the seller regularly sells goods of that kind • Giving assurance that the products are fit for the purpose of which they are purchased • Example: Sue buys a VCR from Tom. At home, VCR does not work. Tom does not normally sell VCR’s and is not a merchant – no warranty of merchantability

  11. Usage of Trade • Arises from the customary ways in which the parties have dealt in the past. Example: when a person sells a thoroughbred horse, there is an implied warranty that the seller will provide papers certifying that the horse is a thoroughbred. The reason this implied warranty arises is that providing such papers has become a well-established custom among people who trade horses.

  12. Warranty of Title • When a merchant or a private party sells goods, the seller warrants that the title being conveyed is good and that the transfer is lawful. • Includes an implied promise that, to the seller’s knowledge, the goods will be delivered free from any lien, or claim by another.

  13. Exclusion of Warranties • The exclusion must be in writing • Implied warranties can be excluded by the words “as is” and “with all faults”

  14. Duty to Notify and Remedies of Breach • This duty requires that the buyer notify the seller within a reasonable time after the defect is discovered. • When the warranty of title is breached, the buyer has a claim against the seller for damages.

  15. POP QUIZ • Sara selected a couch and arm chair from the showroom samples at Furniture Gallery and scheduled delivery to her home in 3 weeks. What type of warranty is Sara relying on to make her purchase? A. limited warranty B. express warranty C. full warranty

  16. ANSWER B Express warranty based on a sample or model Express – provided by the seller Implied – imposed by law

  17. POP QUIZ • Harriet loves to shop at the outlet stores. Her favorite name brand store has an “as is” rack. After returning home from shopping there one day, she discovered the skirt she bought off the “as is” rack had a large tear. Can Harriet take this skirt back? YES or NO Why or why not?

  18. ANSWER NO! This is an example of an excluded implied warranty

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