Dynamic business law 4e kubasek 4e CH25

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Dynamic business law 4e kubasek 4e CH25

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Chapter 25 Warranties Copyright © 2017 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Overview • LO25-1: What are express warranties? • LO25-2: What is the implied warranty of title? • LO25-3: What is the implied warranty of merchantability? • LO25-4: What is the implied warranty of fitness for a particular purpose? • LO25-5: Do warranties apply to third parties? • LO25-6: Can warranties be disclaimed? 25-2 Chapter 25 Hypothetical Case • Last week, Richard Stamos purchased a used 2007 Honda Civic from his neighbor, Adam Lourdes Yesterday, Stamos experienced mechanical difficulties with his new purchase, and his mechanic diagnosed an automatic transmission problem with a repair estimate of $2,150 Lourdes has refused to rescind the contract and has said he will not pay for the transmission repair • Does the Uniform Commercial Code (UCC) or the common law provide any remedies, warranty or otherwise, for Richard Stamos in a lawsuit against Adam Lourdes for the failed transmission? 25-3 Chapter 25 Hypothetical Case • Recall from the Chapter 16 Hypothetical Case that Imogen Ledbetter was seriously injured in an automobile accident when the steering wheel of a new car she had just purchased detached from the steering column (the steering wheel literally came off in her hands), causing Ledbetter to crash into a culvert • In terms of drafting the personal injury complaint against Fjord Motors, Inc (the manufacturer of the sedan) and Bjorn Fjord Motors, Inc (the dealership), what theories of warranty liability should Ledbetter's attorney include? Are there any non-warranty (i.e., non-Uniform Commercial Code) theories of liability that might be applicable in this case? 25-4 What Is a Warranty? • Definition: Assurance by one party that the other party can rely on its representations of fact 25-5 Express Warranty Versus Implied Warranty • Express warranty: Explicitly stated in contract • Implied warranty: Automatically (by operation of law) applied to contract 25-6 Express Warranties • Any description of the good's physical nature or its use, either in general or specific, that becomes part of the contract • • • • May be found in advertisements or brochures May be material term of contract Salesperson's oral promise concerning good can give rise to express warranty Buyer's reliance on seller's representations generally means those representations become express warranties, and part of contract 25-7 Sales Puffing • Definition: Salesperson's mere statement of opinion, rather than • representation of facts Puffing generally does not create express warranty liability 25-8 Implied Warranty of Title • Implied warranty of title assumes: • Seller has good and valid title to goods • Seller has right to transfer title free and clear of liens, judgments, or infringements of intellectual property rights of which buyer has no knowledge 25-9 Implied Warranty of Merchantability • • Implied warranty of merchantability: Warranty based on reasonable expectation of product performance Good purchased must: • • • • • • Pass without objection in trade/market for similar goods Be of fair quality (within the product's description) Be fit for ordinary use Have even kind, quality, and quantity Be adequately packaged and labeled Conform to promises made on package/product label 25-10 Implied Warranty of Fitness for Particular Purpose • Implied warranty of fitness for particular purpose: Warranty that arises when seller knows purpose for which buyer purchasing goods, and buyer relies on seller's judgment to recommend/select certain product • Seller does not have to be merchant to make this warranty 25-11 Implied Warranty of Trade Usage • Implied warranty of trade usage • Definition: An assurance created through well-accepted course of dealing or trade usage 25-12 Third Party Beneficiaries of Warranties • Seller's warranties may extend to: • Buyer's household members and guests • Any reasonable and foreseeable user • Anyone injured by good 25-13 Warranty Disclaimers and Waivers • Methods of disclaiming/waiving warranties: • Seller does not make express warranties • Seller disclaims implied warranties in clear, unambiguous, conspicuous language • Buyer fails/refuses to examine goods • Buyer fails to file suit within applicable statute of limitations period 25-14 Magnuson-Moss Warranty Act • Provides that if seller decides to issue written warranty for consumer good, seller must specify whether warranty is "full" or "limited" 25-15 Chapter 25 Hypothetical Case • Aristotle Mythos is having a mid-life crisis at 50 In an attempt to conquer his depression and prove that he is equivalent to a 20-year-old (at least in spirit), Mythos plans to climb Mount Zeus, the highest peak in his ancestral homeland of Greconia In preparation for his climb, Mythos patronizes a local outdoors shop, Athena's Garden, and asks to speak with a trained sales associate Mythos specifies that he will be climbing Mount Zeus, and that he will need a tent and sleeping bag that can survive the wind and elements for two nights during his ascent and descent The associate selects a tent and sleeping bag from a wide variety of possibilities, and Mythos leaves the store a happy camper Mythos begins his climb the following day and successfully reaches his checkpoint, halfway to Zeus's peak, before nightfall He prepares his campsite and looks forward to some much-needed rest Unfortunately, he has a fitful night, shivering in his sleeping bag in a partially collapsed tent, with the wind and the cold getting the best of Mythos and his camping gear 25-16 Chapter 25 Hypothetical Case (cont'd) • The following morning, Mythos awakens to see that the toes on both of his feet have turned a sickening shade of blue, and he realizes with great disappointment that he will not be able to fulfill his dream of climbing Mount Zeus Upon closer examination of his tent and sleeping bag, he sees that both are labeled "The Young Mythologist"—gear clearly intended for children's backyard camping As a result of his misfortune, Mythos must have four toes (two toes on each foot) amputated, and he incurs medical expenses of $58,000 for treatment and rehabilitation Mythos's doctor has rated him with a 20% permanent partial disability as a result of his toe amputations • Is Athena's Garden legally responsible for Mythos's medical expenses and partial disability? If so, on what theory? 25-17 Chapter 25 Hypothetical Case • Sanford Ngobo decided to purchase a new car from Fortuna Motors Ngobo enjoys closed-track racing on the weekends, so he was seeking a car that was better and faster than all the rest Before making his purchase, Ngobo browsed the cars for quite some time—but what really interested him were the recommendations of the sales clerk he worked with, Sophia Farrell Farrell told Ngobo that the Satyr 1000, a new model the dealership had just gotten in, would guarantee Ngobo 's dominance in all the races in which he competed, as it had an extraordinarily powerful engine Despite the fact that the Satyr was at least 30 percent more expensive than the other cars he'd considered, he decided that it was what he was looking for A month later (and after putting 2,000 miles on his new car), Ngobo took his new Satyr to the track—and came in dead last Furious, he went back to Fortuna, and Farrell, and demanded his money back • Should Fortuna take the Satyr back because it didn't live up to Farrell's promises? Is she guilty of puffing? 25-18 ... repair • Does the Uniform Commercial Code (UCC) or the common law provide any remedies, warranty or otherwise, for Richard Stamos in a lawsuit against Adam Lourdes for the failed transmission? 25-3... Express warranty: Explicitly stated in contract • Implied warranty: Automatically (by operation of law) applied to contract 25-6 Express Warranties • Any description of the good's physical nature

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Mục lục

  • Slide 1

  • Overview

  • Chapter 25 Hypothetical Case 1

  • Chapter 25 Hypothetical Case 2

  • What Is a Warranty?

  • Express Warranty Versus Implied Warranty

  • Express Warranties

  • Sales Puffing

  • Implied Warranty of Title

  • Implied Warranty of Merchantability

  • Implied Warranty of Fitness for Particular Purpose

  • Implied Warranty of Trade Usage

  • Third Party Beneficiaries of Warranties

  • Warranty Disclaimers and Waivers

  • Magnuson-Moss Warranty Act

  • Chapter 25 Hypothetical Case 3

  • Chapter 25 Hypothetical Case 3 (cont'd)

  • Chapter 25 Hypothetical Case 4

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