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§7.18 UCC—Implied Warranties

Lesson 7:
& Warranties

When the seller is a merchant of goods of the kind sold, whether new or used, there is an implied warranty of merchantability, unless otherwise excluded or modified. [Com C §2314(1).] To be merchantable, a product must be fit for the ordinary purpose for which it is used. [Com C §2314(2)(c).] For example, a passenger automobile must be fit to transport the driver and passengers reasonably safely, efficiently, and comfortably. This warranty arises only in sales by merchants of goods, not in private sales. [See Com C §2314(1).]

Merchantable goods must also [Com C §2314(2)]:

  • Pass without objection in the trade under the contract description;
  • In the case of fungible goods, be of fair average quality within the description;
  • Run, within the variations permitted by the agreement, of even kind, quality, and quantity within each unit and among all units involved;
  • Be adequately contained, packaged, and labeled as the agreement may require; and
  • Conform to the promises or affirmations of fact made on the container or label if any.

When the seller has reason, at the time of the contract, to know the buyer’s particular purpose and that the buyer is relying on the seller’s skill or judgment, an implied warranty of fitness is created. [Com C §2315.]

The sale of used products may be covered by the warranty of merchantability. The content of the warranty, however, will depend on the contract description of the product—that is, what the product appeared to be, and how it was characterized by the seller and understood by the buyer. If, through the seller’s description, the buyer was made to understand that the used product was in excellent condition, such “contract description” should be given legal effect. The circumstances surrounding the sale of a used product are therefore relevant in determining whether there was an implied warranty and its content. [See Official Comments 3 & 4 to Com C §2314.]

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