Contracts Chapter 8 -- Implied Warranties: Fitness for Particular Purpose, Title, and Disclaimers

What is the implied warranty of fitness for particular purpose? (§ 2-315)

A warranty that goods will be fit for the buyer's special, particular use, even if the goods are perfectly merchantable for their ordinary purpose.

What are the three requirements for fitness for particular purpose?

All three must be present:

1. Seller has reason to know buyer's particular purpose

2. Buyer relies on seller's skill or judgment to select goods

3. Seller has reason to know of that reliance

How does fitness for particular purpose differ from merchantability?

Merchantability:

• fit for ORDINARY purpose

• seller must be merchant with respect to goods of the kind

• no reliance required

Fitness for Particular Purpose:

• fit for BUYER’S SPECIAL purpose

• any seller (no merchant requirement)

• actual reliance IS required

What is the difference between "ordinary purpose" and "particular purpose"? Examples

Ordinary Purpose:

• AC unit to cool a bedroom

• boots for walking

• boat for offshore fishing

• oil for general lubrication

Particular Purpose:

• AC unit to cool a 2,000-seat auditorium

• boots for dancing in the nutcracker

• boat that must go 30+ mph to reach distant fishing grounds

• oil for specialized hydraulic equipment

What is the key case for fitness for particular purpose?

Lewis v. Mobil Oil Corp.: Buyer operated a sawmill and converted equipment to hydraulic operation. Seller recommended plain mineral oil without additives. The oil was fine for ordinary uses, but the buyer's hydraulic equipment needed additives. The court found breach of fitness for particular purpose, even though the oil was fit for its ordinary purpose.

What is the key case showing when fitness for particular purpose FAILS?

Bayliner Marine Corp. v. Crow (Va. 1999)

• Facts: buyer purchased offshore fishing boat; said he wanted it for “offshore fishing”

• Claim: breach of implied warranty of fitness for particular purpose

• Held: no breach

Why no breach?

• "Offshore fishing" is the ORDINARY purpose for that type of boat, not a particular

purpose

• Buyer never told seller he specifically required a boat capable of 30 mph

• Seller had no reason to know buyer's particular requirement

What is the lesson from Bayliner on fitness for particular purpose?

Telling a seller you want goods for their ordinary purpose does NOT create a fitness warranty. You must communicate your specific, particular requirements. If Crow had said "I need a boat that can go at least 30 mph because I fish 90 miles offshore," he might have had a claim.

When is there NO warranty of fitness for particular purpose?

• Buyer has more expertise than seller

• Buyer relies on third party (e.g., doctor prescribes medicine)

• Buyer provides specifications to seller

• Buyer makes own judgment about suitability

• Buyer never reveals intended use to seller

What is the case for buyer providing specifications?

Commonwealth v. Johnson Insulation: Buyer specified a particular brand and type of asbestos insulation. The seller just supplied what the buyer ordered. No warranty of fitness for particular purpose because the buyer hadn't relied on the seller's judgment.

What does the implied warranty of good title require?

The seller warrants:

1. Title is good and transfer is rightful

2. Goods are free from security interests or liens the buyer doesn't know about

Does the warranty of title require merchant status?

No. Every seller makes an implied warranty of good title, regardless of merchant status.

What is the classic title warranty scenario?

Sam steals a BMW from Orson and sells it to Barb. Orson (the true owner) recovers the car from Barb. Barb has a claim against Sam for breach of the implied warranty of good title.

Practical problem: Sam is probably in jail, has disappeared, or has no money. The warranty claim exists but may be worthless.

What is the warranty against infringement?

Section 2-312(3) provides an implied warranty protecting buyers against patent, trademark, or copyright infringement claims. But this warranty is made only by merchants regularly dealing in goods of the kind.

What is the key difference between disclaiming express and implied warranties?

Express Warranties:

• cannot disclaim once made

• immutable once created

Implied Warranties

• can disclaim with proper language

• default rules parties can alter

How do you disclaim the implied warranty of merchantability?

• must mention the word “merchantability”

• if in writing, must be CONSPICUOUS

How do you disclaim the implied warranty of fitness for particular purpose?

• must be in WRITING

• must be CONSPICUOUS

• sample language: “there are no warranties which extend beyond the description on the face thereof”

What does “conspicuous” mean?

Something a reasonable person would notice: bold text, larger font, different color, all caps. A disclaimer buried in fine print is NOT conspicuous.

What is the key case for the conspicuousness requirement?

American Aerial Services v. Terex USA, LLC, 39 F. Supp. 3d 95 (D. Me. 2014)

• facts: buyer purchased truck crane; manufacturer’s brochure contained warranty disclaimer

• claim: breach of implied warranty of merchantability

• held: disclaimer NOT effective

Why? The disclaimer was not conspicuous. It was buried in the document, not bold, not highlighted, nothing to make it stand out.

Takeaway: A disclaimer hidden in fine print doesn't work. The UCC requires that a buyer actually notice it.

What is the "as is" disclaimer?

Section 2-316(3) allows disclaimers using "as is," "with all faults," or similar language. This excludes ALL implied warranties. Common example: Used car sold "as is" means no implied warranty of merchantability or fitness.

Can buyer inspection exclude implied warranties?

Yes. If the buyer examines the goods before purchase (or refuses to examine when given the opportunity), there is no implied warranty for defects that examination ought to have revealed. (§ 2-316(3)(b))

Do implied warranties exist outside the UCC?

Yes. Common law implies warranties in construction contracts (habitability, sound workmanship, proper construction) and residential leases (habitability).

What is the key case for implied warranties in construction?

Bullington v. Palangio, 45 S.W.3d 834 (Ark. 2001)

• facts: builder constructed house; contract had express warranty on workmanship but no exclusion of implied warranties

• claim: breach of implied warranties of habitability and proper construction

• held: implied warranties not excluded

Why? An express warranty on one subject (workmanship) does NOT automatically exclude implied warranties on other subjects (habitability, proper construction). Implied warranties arise by operation of law and can only be excluded when circumstances are sufficient to call the buyer's attention to the exclusion.

How do you disclaim the warranty of title?

• Specific language excluding warranty, OR

• Circumstances giving buyer reason to know seller doesn't claim title:

  • Sheriff's sales

  • Foreclosure sales

  • Estate sales

How do you analyze implied warranty issues?

1. merchantability (§ 2-314)

2. fitness for particular purpose (§ 2-315)

3. good title (§ 2-312)

Merchantability (§ 2-314)

• is seller merchant with respect to goods of the kind?

• are goods fit for ordinary purpose?

• would they pass without objection in the trade?

• was warranty disclaimed? (mentions “merchantability” + conspicuous)

Fitness for Particular Purpose (§ 2-315)

• does buyer have a particular (not ordinary) purpose?

• did seller have reason to know of that purpose?

• did buyer rely on seller’s skill/judgment?

• did seller have reason to know of that reliance?

• was warranty disclaimed? (writing + conspicuous)

Good Title (§ 2-312)

• does seller have good title?

• is transfer rightful?

• are goods free from unknown security interests?

• was warranty disclaimed? (specific language or circumstances)

implied warranties of fitness and title one sentence takeaway

Implied warranties of fitness and title protect buyers who communicate special needs or expect clear ownership, but sellers can disclaim these warranties with conspicuous, specific language that actually calls the buyer's attention to the exclusion.