Business Law Ch 21

Warranties

warranty

seller or lessors assurance that the goods meet certain standards

express warranty

created when a seller or lessor affirms that the goods being sold or leased meet certain standards of quality, description, performance, or condition

manufacturers warranty

express warranty given by a manufacturer of a product whereby the manufacturer agrees to repair a defective product during the warranty period

extended warranty

a warranty that a buyer of a good may purchase from the seller or a 3rd party that covers the costs of parts and repairs after a manufactures warranty has expired

replacement warranty

warranty where a manufacturer or seller agrees to replace a defective product

ststatement of opinion

does not create an express warranty, commendation of goods

Jerry, a car salesperson, tells Mauricio that "this is the best used car on the lot." If Mauricio drives the car off the lot and it immediately breaks down, Mauricio can ________.

recover nothing because the statement was mere puffery

Which of the following is an example of puffery?

"This painting is worth a fortune."

implied warranty

not expressly stated in the sales or lease contract but instead is implied by law

The most common forms of implied warranties are the implied warranty of ________ and the implied warranty of ________.

merchantability; fitness for a particular purpose

implied warranty of merchantability

unless properly disclosed, a warranty that is implied that sold or leased goods are fit for the ordinary purpose for which they are sold or leased, as well as other assurances

The following is an example of an implied warranty of merchantability

The goods conform to a promise on the label.

To be classified as a certain grade, fungible goods must meet the ________ range of quality of that grade.

average

implied warranty of fitness for human consumption

a warranty that applies to food or drink consumed on or off the premises of restaurants, grocery stores, fast food outlets, coffee shops, bars, vending machines, and other purveyors of food and drink

foreign substance test

test to determine merchantability based on foreign objects found in food

consumer expectation test

test to determine the merchantability of food products based on what a consumer would expect to find or not find in food or drink that is consumed

Under the ________ test, the implied warranty would be breached if a person were injured by eating a nail in an apple pie.

foreign substance

Under the ________ test, the implied warranty would be breached if a person were injured by a chicken bone while eating a chicken salad sandwich.

consumer expectation

implied warranty of fitness for a particular purpose

warranty that arises where a seller or lessor warrants that the goods will meet the buyer or lessee’s expressed needs

Suppose Anaya wants to buy lumber to build a small deck in her backyard. She goes to a lumberyard to purchase the lumber and describes to the salesperson the size of the deck she intends to build. Anaya also says that she is relying on the salesperson to select the right lumber for the project. The salesperson selects the lumber and states that the lumber will serve Anaya's needs. Amaya buys the lumber and builds the deck. The deck collapses because the lumber was not strong enough to support it. Anaya can sue the lumberyard for breach of which warranty?

Implied warranty of fitness for a particular purpose

Which of the following is an example of fitness for a particular purpose?

The goods conform to the needs the buyer expressed to the seller

warranty disclaimer

statement that negates implied warranties and sometimes express warranties if certain requirements are met

“as is” disclaimer

term that makes it clear tot the buyer of a good that no implied warranties attach to the sale of the good

conspicuous disclaimer

written disclaimer of an implied warranty associated with the sale of goods that must be noticeable to a reasonable person

If an express warranty is made, it can be limited only if the ________ and the warranty can be reasonably construed with each other.

warranty disclaimer

Expressions such as "as is," "with all faults," or other language make it clear to the buyer that there are no ________.

implied warranties

Magnuson-Moss Warranty Act

federal statute that covers written warranties related to consumer products

full warranty

express warranty made by a seller or lessor of goods that guarantees free repair or replacement of a defective product

limited warranty

express warranty made by a seller or lessor of goods that restricts or limits the remedy for the sale or lease of a defective product

The Magnus-Moss Warranty Act governs ________.

consumer transactions

If a warrantor chooses to make an express warranty, the Magnuson-Moss Warranty Act requires that the warranty be labeled as either ________.

full or limited

warranty of good title

warranty that is made by a seller of goods that warrants that the seller has valid title to the good and that the transfer of title is rightful

warranty of no security interests

automatic warranty that sellers of goods make that warrants that the goods they are selling are free from any 3rd party security interests, liens, or encumberances that are unknown to the buyer

warranty againts infringements

automatic warranty when a merchant warrants that the goods are delivered free from any 3rd party patent, trademark, or copyright claim

warranty of no interference

warranty made by the lessor of goods that no person holds a claim or an interest in the goods that will interfere with the lessee’s enjoyment of their leasehold interest

Equipment Corporation owns a concrete-mixer truck. A thief steals the truck and sells it to Construction Company. Construction Company does not know that the truck is stolen. If Equipment Corporation discovers that Construction Company has the truck, it can reclaim it. Construction Company, who bought the truck from the thief, can recover against the thief for breach of the ________.

warranty of good title

Robotic Inc. manufacturers and sells robotic equipment. UTV Company, which produces and sells Utility Terrain Vehicles (UTVs), purchases robotic equipment from Robotic Inc. to assemble its UTVs. Subsequently, Paloma claims to have a patent on the robotic equipment and proves the patent claim in court. Paloma notifies UTV Company that the robotic equipment used to assemble its UTVs can no longer be used without Paloma's permission and the payment of a fee. UTV Company may rescind the sales contract with Robotic Inc. and recover damages incurred based on Robotic Inc.'s breach of the ________.

warranty against infringement

What is one of the ways the United Nations Convention on Contracts for the International Sale of Goods (CISG) differ from the UCC?

Under the CISG, neither the express warranty nor the implied warranties may be disclaimed.

With the ________, the seller warrants that the goods sold are delivered free from any third-party security interests, liens, or encumbrances that are unknown to the buyer.

warranty of no security interests

Caroline purchases a Mayflower washing machine that has a sticker on the front indicating that this is the best washing machine in the world. This is known as ________.

puffing

Caroline purchases a Mayflower washing machine that has a sticker on the back indicating that if the washing machine breaks down within the first five years, that Mayflower will repair it at no cost. This is known as ________.

an express warranty

With the warranty of ________, the lessor warrants that no person holds a claim or an interest in the goods that arose from an act or omission of the lessor that will interfere with the lessee's enjoyment of his or her leasehold interest.

quiet possession

Which of the following is an example of an express warranty?

"This car will go 100 miles per hour."

Bad Truck Dealership sells a truck that it has stolen from another dealership down this street. They have breached the ________.

warranty of good title

Caroline purchases a Teslac washing machine that has a sticker on the back indicating that if the washing machine breaks down within the first five years, that Teslac will repair it at no cost. If the machine breaks down during the first year and Teslac refuses to make the repairs, Caroline is entitled to ________.

compensatory damages

Which of the following is correct regarding express warranties?

Neither sellers nor lessors are required by law to make express warranties

A warranty disclaimer is considered to be conspicuous when ______

a reasonable person is able to notice it

Which of the following is correct regarding how an implied warranty of merchantability is created?

it is implied by law if the seller or lessor is a merchant

Express warranties can be all but which of the following?

inferred from the buyers conduct