Express Warranties
When a salesperson discusses a warranty, he or she is usually referring to an express warranty. An express warranty is an affirmative promise about the quality or features of the goods. This type of warranty can appear in an advertisement, a certificate or even be an oral statement.
For example, if a car salesman tells me that a particular car has eight airbags, then he's promising me the car has eight airbags. He's made an express warranty regarding the features of the car. Specific statements, like 'this car has a V6 engine,' or 'this car can fly,' are also express warranties.
Note that the use of the word 'warrant' or 'guarantee' is not necessary to create a warranty. Though note that general statements, like 'this is the best car,' or 'this car will last forever,' are not express warranties. These general statements are instead considered to be typical salesperson 'puffing.'
Note that express warranties also include descriptions of the goods and samples shown to the buyer. For example, let's say the salesperson shows me a shiny new red car parked on the showroom floor. This is the same type of car I want to buy. The sample on the showroom floor serves as an express warranty. It's a guarantee that the car sold to me will be that same type and that same quality.
Implied Warranties
The second type of UCC warranty is an implied warranty. An implied warranty is a guarantee made without being specifically mentioned. Note that these warranties automatically exist any time goods are sold. A salesperson doesn't have to make a specific promise or affirmation. These warranties allow buyers to purchase goods that meet certain minimum standards, without securing guarantees on each individual standard.
There are two types of implied warranties. They are:
- Warranty of merchantability
- Warranty of fitness for a particular purpose
Let's take a look at each of these implied warranties.
Warranty of Merchantability
Let's first explore the UCC's warranty of merchantability. This implied warranty means that the goods must be fit for the ordinary purpose they are intended to serve. In other words, the goods must be of average quality or better and able to be used as expected. The goods must also be packaged and labeled properly.
This implied warranty only applies to people who normally sell goods of that kind. For example, my new car must be average quality or better, as compared to other cars of the same type and in the same price range. The car salesperson warrants that the car is capable of starting and traveling in a safe manner since that's what cars are usually used for.
Remember that this is an implied warranty, so the salesperson doesn't have to make this guarantee to me. He's already obligated to follow these standards.
Note, though, that the car salesperson isn't held to this same standard for the matching coffee cup I also buy at the dealership since he doesn't normally sell goods of that same kind.
Remember that the implied warranty of merchantability also applies to labeling and packaging. This means my new car can't be labeled 'Cadillac' if it isn't a Cadillac. Any mislabeling will be considered a breach of the warranty and a breach of the sales contract.
Warranty of Fitness
Now let's take a look at the UCC's warranty of fitness. This implied warranty means that a seller guarantees that the goods are suitable for a particular purpose. It only applies when a seller knows or has reason to know that the buyer will be using the goods for a particular purpose that isn't the ordinary purpose of the goods. In such a case, the seller guarantees that the goods can successfully be used for the particular purpose.
For example, let's say I don't intend to drive my new car. Instead, I'm buying it so that I can use the parts to refurbish an older model car. I tell the salesperson that I intend to strip the car and use the parts on a 1960s model Cadillac. However, when I get the new car to my garage, I realize the parts on the new model won't fit the older model. The salesperson violated the implied warranty of fitness and breached our sales contract.
The implied warranty of fitness exists because buyers rely on sellers' skills and knowledge when selecting goods. The UCC places an extra burden on sellers to help buyers select what they need, rather than simply 'make sales' regardless of the buyers' needs.
Lesson Summary
Let's review. The Uniform Commercial Code's, or UCC's, Article 2 addresses contracts for the sale of goods. Part of Article 2 addresses warranties. Warranties are guarantees included in a sale of goods. A warranty is a promise made by the person who makes or sells the goods that he or she stands behind those goods.
There are two main categories of UCC warranties. The first is an express warranty. An express warranty is an affirmative promise about the quality or features of the goods. The second is an implied warranty. An implied warranty is a guarantee made without being specifically mentioned.
There are two types of implied warranties. The UCC's warranty of merchantability means that the goods must be fit for the ordinary purpose they are intended to serve. The UCC's warranty of fitness, on the other hand, means that a seller guarantees that the goods are suitable for a particular purpose.
Learning Outcomes
After you've reviewed this video lesson, you should be able to:
- Define warranties under the Uniform Commercial Code (UCC)
- Differentiate between express and implied warranties under the UCC
- Describe the two types of implied warranties and explain who they apply to
