Exercise Care When Giving Warranties

In this segment, we’re going to take a closer look at contract warranties. Remember that contract warranties represent one of the three basic elements in a product liability lawsuit. And these are the types of contract warranties that arise in a product liability case. Some warranties are express warranties, expressly stated by the seller of the product. Others are implied warranties. And there are two types we’ll be looking at the implied warranty of merchantability and the implied warranty of fitness for a particular purpose. So let’s start with the express warranty. Express warranties are created through a statement of fact or a promise that you might make to the buyer. They apply when you describe goods to the buyer.

They are given when you provide a sample or a model to the buyer. I think the basic takeaway message here is that information in any form can constitute an express warranty. You don’t have to use the word express warranty. You don’t have to use the word warranty. Doesn’t have to be written on parchment. Any time you provide information in the form of fact to a buyer, then you’re giving an express warranty that can be the basis of liability. Question, is this coffee shop, making an express warranty? Please look at the video and then decide whether this is an express warranty or not.

You did it! Congratulations! World’s best cup of coffee. Great job everybody! It’s great to meet you. Hi.

And the answer is that when this coffee shop advertises the world’s best cup of coffee, it is not in fact giving an expressed warranty. This is what’s called puffing. Sellers are given some leeway when they state an opinion about their product that is not based on fact. Of course, this is a very common business practice and so courts have to draw a line between what’s intended as a statement of fact. Let’s say that the coffee shop, for instance, said that we’ve tested this coffee with 1,000 consumers and 990 of the consumers stated that it’s the best cup of coffee they’ve ever had. It’s better than x brand. Well, that case the company would have to stand behind that statement.

That would be an express warranty, an express statement of fact, as opposed to the statement it did make, which is that they’re selling the world’s best cup of coffee. How can you avoid express warranty liability? Well, the common sense answer is, don’t give them. You’re not liable for express warranties that you don’t give. You can also try to use language that negates or limits warranties, but if you have a conflict between the warranty and a disclaimer, the warranty will prevail. Also, they’re excluded when the buyer knows of a defect. And still uses the product. So what do you think about this case? Where we’ve got a product. I read about it a few years ago.

On the front of the watch package it says, water resistant to 100 feet. On the back of the package in fine print is says, any failure to function properly due to misuse such as water immersion is not covered. So let’s assume you buy this product, you wear the watch while taking a shower or taking a bath, and the product ceases to function. Would you be able to recover damages or not? Please hit pause and decide whether there’s liability or not.

The answer in this case is that there should be liability, because this is an example of bullet number two. Where on the front of the package, the company has given a warranty, water resistant to 100 feet. At the back of the package is attempted to limit the warranty but there’s a direct conflict. In that case, the direct warranty prevails. Let us now move on in our next segment to implied warranty, and we’ll be looking at two types of implied warranty, the implied warranty of merchantability and the implied warranty of fitness for a particular purpose.