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MGMT 212
Warranties (Ch. 23)
14
Management
Undergraduate 2
06/24/2009

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Term
Warranty of Title
Definition
Warrants 3 things: 1.) Good title (seller has valid, legal right to someone else). 2.) No Liens (no one else has right to the property). 3.) No Infringements: (Only there if seller is merchant: intellectual property)
Term
Disclaimer of Title Warranty
Definition
Warranty of Title can be disclaimed or modified in the sales contract only by specific language. "I transfer to you whatever rights I have in this property."
Term
Express Warranties
Definition
Created by the seller who makes representations concerning the quality, condition, description, or performance potential of the goods. 1.) The goods will conform to an affirmation or promise of fact which relates to the goods. 2.) The goods will conform to a description of the goods. 3.) The goods will conform to a sample or model of the goods. // An affirmation or promise becomes the BASIS OF BARGAIN if it comes at such a time that the buyer could have relied on it when he agreed to the contract. The buyer doesn't have to show that he actually relied upon the affirmation or promise. // Statements of opinion or value don't amount to express warranty.
Term
Implied Warranty (three kinds)
Definition
1.) Implied warranty of merchantability. 2.) Implied warranty of fitness for a particular purpose. 3.) Implied Warranty Arising from Course of Dealing or Trade Usage
Term
Implied Warranty of Merchantability
Definition
Comes automatically with ever sale of goods by a MERCHANT who deals in those goods. Good are merchantable if the goods are "reasonably fit for the ordinary purposes for which they are used." they must: a.) be of average/fair/medium grade quality. b.) pass, without objection in the trade or market, for goods of the same description. c.) be adequately packaged and labeled as provided by the agreement, and d.) conform to the affirmations of fact or promise made on the label or container. // The merchant seller is absolutely liable for breach of the warranty of merchantability, without regard to whether the seller knew or could have discovered a defect which caused the goods not to be reasonable fit for the ordinary purpose for which they are used. // Merchantable food: food fit to eat on basis of reasonable consumer expectation.
Term
Implied Warranty of Fitness for a Particular Purpose
Definition
Merchant or not. This warranty is made by a seller who has reason to know the particular use for which the buyer is purchasing the goods and that the buyer relies on the skill and judgment of the seller in selecting suitable goods.
Term
Implied Warranty Arising from Course of Dealing or Trade Usage
Definition
When both the buyer and seller have knowledge of a well-recognized trade custom or a prior course of dealings, it may be implied that they intended that the trade usage or course of dealings apply to their contract for the sale of goods.
Term
Overlapping Warranties
Definition
More than one warranty may be made by a seller in a sales transaction. If multiple warranties are consistent with each other, a buyer can base an action for breach of warranty against the seller based upon all of the warranties; the warranties are construed to be cumulative. // If there are multiple warranties, the intention of the parties will determine which will prevail: 1.) Technical specifications prevail over inconsistent models, samples, or general descriptions. 2.) Samples prevail over inconsistent general descriptions. 3.) The Implied Warranty of Fitness for a Particular Purpose takes precedence over express warranties. 4.) Express Warranties take precedence over implied warranties of title and merchantability.
Term
Warranties and 3rd Parties
Definition
Old rule: If Plaintiff didn't actually buy product, no privity of contract, so no standing. // New Rule: Any foreseeable user of a product can have standing and use warranties.
Term
Warranty Disclaimers
Definition
Warranties may be excluded, disclaimed, or modified by the parties. // Express Warranties: a seller can avoid making any express warranties w/ unambiguous language to that effect. // Implied Warranties: may be modified or disclaimed by saying "as is" or "with all faults" or with a boldly written, conspicuous disclaimer. // Warranty of Merchantability: may be disclaimed by using conspicuous language including the word "merchantability" and need not be in writing.
Term
Buyer's Examination of the Goods (Warranty Disclaimers)
Definition
If a buyer has examined the goods or a sample as fully as the buyer desires, or has refused to examine the goods, there is not implied warranty with respect to defects that a reasonable examination would reveal. Seller is liable for breach of warranty for defects that an ordinary inspection would not reveal.
Term
Unconscionability (Disclaimer of Warranty)
Definition
A court may refuse to enforce a warranty disclaimer clause in a contract for the sale of goods if the clause is unconscionable.
Term
Statute of Limitations
Definition
Actions for breach of contract under UCC must be commenced within 4 years after the cause of action arose. Parties may not extend the four year period but may reduce the period to not less than one year. Cause of action for breach of warranty accrues when the seller makes tender of delivery, even though the buyer didn't know of the defect. A breach of a future performance warranty doesn't occur until the time for performance begins.
Term
Texas Deceptive Trade Practices Act (DTPA)
Definition
Lists 25ish "deceptive acts." One is a statement of quality that isn't true. Plaintiff may get Treble Damages + attorney's fees + court costs.
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