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Override the Implied Warranties That Accompany Your Products

Override the Implied Warranties That Accompany Your Products
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In this segment, we’re going to be looking at the two implied warranties, merchant ability and fitness for a particular purpose.
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These warranties, like the express warranty, are embedded in United States law, but they are also included in international sales of goods. There is a convention, a treaty on the international sale of good that has been adopted by many countries around the world. And so, when you’re involved in international sales and where this convention applies, you’re going to face similar warranty liability. So let’s start with the implied warranty of merchant ability. And this warranty basically says that sellers who are merchants warrant if their goods are merchantable. And so that raises the question, what do these two words mean? Well, a merchant is basically someone in the business of selling goods.
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A person who deals in goods of the kind sold, or holds himself out as having special knowledge, is a merchant, a business person. What does merchantable mean? It means that the goods are of fair, average quality fit for ordinary purposes.
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The second implied warranty is the implied warranty of fitness for a particular purpose. And unlike the implied warranty of merchant ability, this one applies to any seller. You don’t have to be a merchant, it applies to you and me when we sell something if we have reason to know two things. First of all, the particular purpose for the which the goods are required. And second, the buyer is relying on the seller’s skill or judgement in supplying suitable goods. Let’s try a hypothetical. Let’s assume that you have recently moved to the United States from let’s say India.
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And you have been ask to participate on a baseball team. You don’t know anything about baseball. You play a sport in India call cricket, which is very popular. But you know very little about baseball. And the person who has asked you to play baseball tells you you’re going to be the catcher on the team, and the pitcher on the team throws a special pitch called a knuckle ball. A knuckle ball is a pitch that floats and is very difficult to hit, but it’s also very difficult for the catcher to catch. So, you need a special catcher’s mitt to catch knuckle balls. I am having a garage sale.
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Now, if you’re from outside the United States, you might not be familiar with the term garage sale. But in America, we often, when we want to sell our junk, we put it into a garage and offer it for sale to our neighbors. So let’s say that you come to my garage sale and you walk into the garage and you say to me, George I don’t know anything about baseball. But I’m going to be a catcher and there’s a knuckle ball pitcher, and I need a special met to catch the knuckle ball. I say to you well, I don’t know about catching knuckle balls either.
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I don’t know much about baseball, but I do have this catcher’s mitt that I would be willing to sell to you. So, let’s say you buy the mitt, and it turns out it’s not large enough to catch knuckle balls and so you want to sue me for damages for breach of an implied warranty fitness for a particular purpose. Will you win? Well, let’s look at the two elements, did you tell me the particular purpose for which the goods are required? Yes, you told me that you needed a catcher’s mitt that would catch knuckle balls. Second, did you rely on my skill or judgement in supplying suitable goods?
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No, because I made it very clear that I have no skill or judgement in collecting knuckle balls. So you would lose that case. Now, if you went to a garage sale held by a professional baseball catcher, that was a legendary catcher, by the name of Yogi Berra who died recently. If you went to Yogi’s garage sale, then you would win on the basis of the implied warranty of fitness for a particular purpose. So let’s test your understanding of the implied warranties with this example. We have a situation where a bank repossessed a boat from one of it’s borrowers and they sell the boat to Donald.
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During the negotiations with Donald, Donald tells the bank he wants to use the boat for charter service in Florida. The bank officers handling the sale made no representations concerning the boat during negotiations. Donald later discovers that the boat is defective and sues the bank for breach of warranty. Is the bank liable, and why? Now this is a very tough question. It’s going to require your very best analysis. If you can analyze this correctly, I’m very impressed. You’ve got great legal aptitude. So, please hit pause and answer that question. Is the bank liable?
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The answer to the question is no. And to figure out why, let’s go through our three types of warranties. First of all, did the bank make an express warranty? Well, clearly no. The facts state the bank officers handling the sale made no representations concerning the boat. They made no statements of fact. Second, would the bank be liable under the basis of the implied warranty of merchantability?
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The problem here is that even though the boat is not merchantable, it’s not a fair, average, ordinary quality. We’re missing the second element of the test. The bank is not a merchant. The bank is not in the business of selling boats, and therefore, there would be no implied warranty of merchant ability. Now, there might be a sophisticated argument that would say, well, if the bank repossesses a lot of boats, maybe they are the equivalent to a boat merchant. But that argument probably would not prevail on the facts that we have here.
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And then finally, is there an implied warranty of fitness for a particular purpose on the basis of Donald’s statement to the bank that he wants to use the boat for charter service in Florida? Well, the bank knew the particular purpose. The problem is that Donald has no reason to rely on the bank for it’s special skills or expertise relating to boats. The banker would be like me selling a baseball mit to catch knuckle balls. They have no special skill or expertise. And therefore, no implied warranty of fitness for a particular purpose. So, Donald would strike out on all three counts, express warranty, implied warranty of merchantability, and implied warranty of fitness for a particular purpose.
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One last question relating to implied warranties is, can you disclaim them? And the answer is yes. And specifically to disclaim the warranty of merchantability, you as a seller must mention the word merchantability, and if your disclaimer is in writing it must be conspicuous. Several years ago, I purchased some picture hangers that you glue to your wall and then hang your pictures on the hangers. So I put several of these hangers in my office, and I hung on the hangers some large pictures and some diplomas. I was working in the office late one evening on a hot, humid summer night.
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And all of a sudden, the pictures fell off the wall, crashed to the floor, damaged the frames, the glass was broken. In other words, the picture hangers were not adhering to the wall. They were not of fair, average, ordinary quality. So just out of curiosity I still had the package in which the hangers came, so I looked at the package and it said very clearly, there are no warranties, express or implied. And specifically there is no warranty of merchandability. Now, they misspelled the word merchantability, but still, I think it would count as a disclaimer. The disclaimer was conspicuous, and it mentioned the word merchandability. How do you disclaim an implied warranty fitness for particular purpose?
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The disclaimer must be in writing and it must be conspicuous. And then you can disclaim both implied warranties by using language such as, as is, or with all faults, or by requesting the buyer to examine the goods for defects. So, in closing this segment, let’s take a look at Amazon’s conditions of use. And I intentionally used a small font for conditions of use because the Amazon website, the font is pretty small when you want to find and click conditions of use. But if you find conditions of use and you click, this is what you find.
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Amazon services and all information, content, materials, products, and other services included on or otherwise made available to you through the Amazon services are provided by Amazon on an as is basis. So they’ve used the magic words, as is. And then it goes on to say, Amazon disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability and fitness for a particular purpose. So they’ve used the right magic words. I think the only question that might arise [COUGH] if somebody challenged these disclaimers is whether the disclaimers were conspicuous since the words, conditions of use, are so small on the Amazon website.
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So that concludes our look at implied warranties, and in our next segment we will be exploring strict liability.
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