1. Warranties and Product
Liability

2. Sales and Lease Warranties
 Express warranty
 Implied warranty of merchantability
 Implied warranty of fitness for a
particular purpose
 Warranty of Title

3. Express Warranties
 Oral or in writing
 don’t have to use the words “warrant” or
“guarantee”
 any affirmation or promise
 any description
 any sample or model

4. What do you have with
you right now with a
warranty?

5. Express Warranties: Basis of The
Bargain
 Buyer must rely on warranty when he
enters into contract
 Statements of Opinion and Value
 usually just “puffing” - not an express warranty
 not puffing if given as opinion by an “expert”

6. Implied Warranties
 Merchantability
 Fitness for a Particular Purpose
 Arising out of Course of Dealing or Trade
Usage

7. Implied Warranty of Merchantability
 Made only by merchants
 Goods are of average, fair, or medium-
grade
 Adequately packaged and labeled
 Conform to promises on label
 Have a consistent quality and quantity
among the commercial units

8. Implied Warranty of Fitness for a
Particular Purpose
 Made by any seller who
 knows the particular purpose for which the
goods are being bought and
 knows the buyer is relying on seller’s skill and
judgment to select suitable goods

9. Implied Warranty Arising from
Course of Dealing or Trade Usage
 Both parties to a contract have
knowledge of a well-recognized trade
custom = courts infer that both meant
this custom to apply to their transaction

10. Warranty of Title
 Good Title
 No Liens
 No Infringements

11. How Is Warranty of Title
Disclaimed?
 By Specific Language
 Warranty doesn’t occur at sheriff’s sales

12. Overlapping Warranties
 Two or more warranties made in a
single transaction
 construed as cumulative if consistent
 if inconsistent?
 First: implied warrant of fitness for a particular
purpose
 Then: express
 samples over general descriptions
 technical over general descriptions

13. Warranties and Third Parties
 Common law: Only buyer because she
is the one in the contract w/ the seller =
buyer is in privity of contract w/ the
seller
 UCC: provides 3 alternatives from
which the states may choose
 UCC 2-318

14. Language of the UCC
 UCC § 2-318. Third Party Beneficiaries of
Warranties Express or Implied.
 [Note: If this Act is introduced in the Congress
of the United States this section should be
omitted. (States to select one alternative.)]

15. Language of the UCC
Alternative A Alternative B Alternative C
 A seller's warranty  A seller's warranty  A seller's warranty
whether express or whether express or whether express or
implied extends to any
natural person who is in implied extends to any implied extends to any
the family or household natural person who may person who may
of his buyer or who is a reasonably be expected reasonably be expected
guest in his home if it is to use, consume or be to use, consume or be
reasonable to expect
that such person may affected by the goods affected by the goods
use, consume or be and who is injured in and who is injured by
affected by the goods person by breach of the breach of the warranty.
and who is injured in warranty. A seller may A seller may not
person by breach of the
warranty. A seller may not exclude or limit the exclude or limit the
not exclude or limit the operation of this operation of this section
operation of this section. with respect to injury to
section. the person of an
individual to whom the
warranty extends.

16. Language of the UCC
N.J.S.A 12A:2-318. 13 Pa. Cons. Stat. § 2318
 A seller's warranty whether  The warranty of a seller
express or implied extends to whether express or implied
any natural person who is in extends to any natural person
the family or household of his who is in the family or
buyer or who is a guest in his household of his buyer or who
home if it is reasonable to is a guest in his home if it is
expect that such person may reasonable to expect that such
use, consume or be affected person may use, consume or
by the goods and who is be affected by the goods and
injured in person by breach of who is injured in person by
the warranty. A seller may not breach of the warranty. A
exclude or limit the operation seller may not exclude or limit
of this section. the operation of this section.

17. What is the difference?

18. Disclaimer of Warranties
 Express:
 don’t make any
 a clear written disclaimer in contract will over-
ride an express oral warranty because of the
parol evidence rule

19. Disclaimer of Warranties
 Implied
 merchantability: say exact work in disclaimer
clearly, or say “as is,” “with all faults”
 fitness for a particular purpose: must be in writing,
don’t have to say exact words “f.p.p.” in disclaimer
 seller demands buyer inspect or examine the
goods
 subject to skill of buyer
 Unconscionability

20. Video

21. Product Liability Based on
Negligence
 If a manufacturer fails to exercise due care
to make a product safe, a person who is
injured by the product may sue the
manufacturer for negligence

22. Types of Negligence
 Manufacturing Defects - when the
product, for some reason departs from
its intended design
 Design Defects - when the present
design is defective and a reasonable
alternative design exists which would
remedy or lessen the defect.
 Warning Defects - inadequate
instructions for use or prohibited use

23. Strict Product Liability
 When an article is placed into the stream
of commerce which causes injury because
it is in a defective condition unreasonably
dangerous.

24. Elements of Strict Liability
 Product was sold
 Product was defective
 Product placed into stream of commerce by
someone in the business of selling that product
 Product both
 Cause in fact
 Proximate cause
 Defect existed when it left Ds possession
 Product was manufactured or sold by D