Warranty that is not written but exists under the law; contrast with expressed warranty.
Implied warranty
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One that is not written but exists under the law. Contrasted with "expressed."
Example: Under the law in several states there is an implied warranty of habitability for apartments leased to tenants. This means that the tenant has the right to a dwelling that is fit for living, i.e., there are no Building Code violations.
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This entry contains information applicable to United States law only.
A promise, arising by operation of law, that something that is sold will be merchantable and fit for the purpose for which it is sold.
Every time goods are bought and sold, a sales contract is created: the buyer agrees to pay, and the seller agrees to accept, a certain price in exchange for a certain item or number of items. Sales contracts are frequently oral, unwritten agreements. The purchase of items like a candy bar hardly seems worth the trouble of drafting an agreement spelling out the buyer's expectation that the candy bar will be fresh and edible. Implied warranties protect the buyer whether or not a written sales contract exists.
Implied Warranty of Merchantability
Implied warranties come in two general types: merchantability and fitness. An implied warranty of merchantability is an unwritten and unspoken guarantee to the buyer that goods purchased conform to ordinary standards of care and that they are of the same average grade, quality, and value as similar goods sold under similar circumstances. In other words, merchantable goods are goods fit for the ordinary purposes for which they are to be used. The Uniform Commercial Code (UCC), adopted by most states, provides that courts may imply a warranty of merchantability when (1) the seller is the merchant of such goods, and (2) the buyer uses the goods for the ordinary purposes for which such goods are sold (§ 2-314). Thus, a buyer can sue a seller for breaching the implied warranty by selling goods unfit for their ordinary purpose.
There is rarely any question as to whether the seller is the merchant of the goods sold. Nevertheless, in Huprich v. Bitto, 667 So.2d 685 (Ala. 1995), a farmer who sold defective horse feed was found not to be a merchant of horse feed. The court stated that the farmer did not hold himself out as having knowledge or skill peculiar to the sale of corn as horse feed, and therefore was not a merchant of horse feed for purposes of determining a breach of implied warranty of merchantability.
The question of whether goods are fit for their ordinary purpose is much more frequently litigated. Thomas Coffer sued the manufacturer of a jar of mixed nuts after he bit down on an unshelled filbert, believing it to have been shelled, and damaged a tooth. Coffer argued in part that the presence of the unshelled nut among shelled nuts was a breach of the implied warranty of merchantability. Unquestionably, Coffer was using the nuts for their ordinary purpose when he ate them, and unquestionably, he suffered a dental injury when he bit the filbert's hard shell. But the North Carolina appellate court held that the jar of mixed nuts was nonetheless fit for the ordinary purpose for which jars of mixed nuts are used (Coffer v. Standard Brands, 30 N.C. App. 134, 226 S.E.2d 534 [1976]). The court consulted the state agriculture board's regulations and noted that the peanut industry allows a small amount of unshelled nuts to be included with shelled nuts without rendering the shelled nuts inedible or adulterated. The court also noted that shells are a natural incident to nuts.
The policy behind the implied warranty of merchantability is basic: sellers are generally better suited than buyers to determine whether a product will perform properly. Holding the seller liable for a product that is not fit for its ordinary purpose shifts the costs of nonperformance from the buyer to the seller. This motivates the seller to ensure the product's proper performance before placing it on the market. The seller is better able to absorb the costs of a product's nonperformance, usually by spreading the risk to consumers in the form of increased prices.
The policy behind limiting the implied warranty of merchantability to the goods' ordinary use is also straightforward: a seller may not have sufficient expertise or control over a product to ensure that it will perform properly when used for nonstandard purposes.
Implied Warranty of Fitness
When a buyer wishes to use goods for a particular, nonordinary purpose, the UCC provides a distinct implied warranty of fitness (§ 2-315). Unlike the implied warranty of merchantability, the implied warranty of fitness does not contain a requirement that the seller be a merchant with respect to the goods sold. It merely requires that the seller possess knowledge and expertise on which the buyer may rely.
For example, one court found that horse buyers who indicated to the sellers their intention to use the horse for breeding were using the horse for a particular, nonordinary purpose (Whitehouse v. Lange, 128 Idaho 129, 910 P.2d 801 [1996]). The buyers soon discovered that the horse they purchased was incapable of reproducing. Because the court found this use of the horse to be nonordinary, the buyers were entitled to an implied warranty of fitness.
Before a court will imply a warranty of fitness, three requirements must be met: (1) the seller must have reason to know of the buyer's particular purpose for the goods; (2) the seller must have reason to know of the buyer's reliance on the seller's skill and knowledge in furnishing the appropriate goods; and (3) the buyer must, in fact, rely on the seller's skill and knowledge. Even when these requirements are met, courts will not imply a warranty of fitness under certain circumstances. A buyer who specifies a particular brand of goods is not entitled to an implied warranty of fitness. Also, a buyer who has greater expertise than the seller regarding the goods generally is precluded from asserting an implied warranty of fitness, as is a buyer who provides the seller with specifications, such as a blueprint or design plan, detailing the types of material to be used in the goods.
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In common law jurisdictions, an implied warranty is a contract law term for certain assurances that are presumed to be made in the sale of products or real property, due to the circumstances of the sale. These assurances are characterized as warranties irrespective of whether the seller has expressly promised them orally or in writing. They include an implied warranty of fitness for a particular purpose, an implied warranty of merchantability for products, implied warranty of workmanlike quality for services, and an implied warranty of habitability for a home.
An implied warranty is one that arises from the nature of the transaction, and the inherent understanding by the buyer, rather than from the express representations of the seller.
The warranty of merchantability is implied, unless expressly disclaimed by name, or the sale is identified with the phrase "as is" or "with all faults." To be "merchantable", the goods must reasonably conform to an ordinary buyer's expectations, i.e., they are what they say they are. For example, a fruit that looks and smells good but has hidden defects would violate the implied warranty of merchantability if its quality does not meet the standards for such fruit "as passes ordinarily in the trade". In Massachusetts consumer protection law, it is illegal to disclaim this warranty on household goods sold to consumers etc.
The warranty of fitness for a particular purpose is implied when a buyer relies upon the seller to select the goods to fit a specific request. For example, this warranty is violated when a buyer asks a mechanic to provide snow tires and receives tires that are unsafe to use in snow. This implied warranty can also be expressly disclaimed by name, thereby shifting the risk of unfitness back to the buyer.
Another implied warranty is the warranty of title, which implies that the seller of goods has the right to sell them (e.g., they are not stolen, or patent infringements, or already sold to someone else). This theoretically saves a buyer from having to "pay twice" for a product, if it is confiscated by the rightful owner, but only if the seller can be found and makes restitution.
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Fitness for a particular purpose
An implied warranty of fitness for a particular purpose is a warranty implied by law that if a seller knows or has reason to know of a particular purpose for which some item is being purchased by the buyer, the seller is guaranteeing that the item is fit for that particular purpose.
International sales law
In international sales law, the obligation is found in Article 35(2)(b) of the United Nations Convention on Contracts for the International Sale of Goods.
Australia
In Australia, the is obligation is in section 71(2) of the Trade Practices Act 1974.
United States
In the United States, the obligation is in Article 2, Section 315 of the Uniform Commercial Code. The warranty of fitness differs from a warranty of merchantability in that it applies to all sellers, not only professional merchants. In the United States, this warranty is sometimes referred to simply as a warranty of fitness.
Merchantability
An implied warranty of merchantability is a warranty implied by law that goods are reasonably fit for the general purpose for which they are sold.
International sales law
In international sales law, merchantability forms part of the ordinary purpose of the goods. According to Article 35(2)(a) of the United Nations Convention on Contracts for the International Sale of Goods, a seller must provide goods fit for their ordinary purpose.
Australia
In Australia, the obligation is in section [66(2) of the Trade Practices Act 1974.]
United States
In the United States, the obligation is in Article 2 of the Uniform Commercial Code (UCC). This warranty will apply to a merchant (that is, a person who makes an occupation of selling things) who regularly deals in the type of merchandise sold.
Under US law, goods are 'merchantable' if they meet the following conditions:
- The goods must conform to the standards of the trade as applicable to the contract for sale.
- They must fit for the purposes such goods are ordinarily used, even if the buyer ordered them for use otherwise.
- They must be uniform as to quality and quantity, within tolerances of the contract for sale.
- They must be packed and labeled per the contract for sale.
- They must meet the specifications on the package labels, even if not so specified by the contract for sale.
If the merchandise is sold with an express "guarantee", the terms of the implied warranty of merchantability will fill the gaps left by that guarantee. If the terms of the express guarantee are not specified, they will be considered to be the terms of the implied warranty of merchantability. The UCC allows sellers to disclaim the implied warranty of merchantability, provided the disclaimer is made conspicuously and the disclaimer explicitly uses the term "merchantability" in the disclaimer.[1] Some states, however, have implemented the UCC such that this can not be disclaimed.
Habitability
An implied warranty of habitability is a warranty implied by law that by leasing a residential property, the lessor is promising that it is suitable to be lived in, and will remain so for the duration of the lease.
Disclaimer of an implied warranty
In some jurisdictions, an implied warranty in a sales contract can be expressly disclaimed by the use of specific language, such as the words, "as is" or "with all faults".
United States
In the United States, a disclaimer must be conspicuous in the contract, e.g., in a different kind of print or font that makes it stand out. On the other hand, express warranty, that is, any affirmation of fact or promise to the buyer, or description of the good, oral or written, can be negated or limited only if such disclaimers are not unreasonable. (Uniform Commercial Code, Section 2-316 (1)).
Some jurisdictions, however, limit the ability of sellers or manufacturers to disclaim the implied warranty of merchantability or fitness, such as Massachusetts. (Massachusetts General Laws, Chapter 106: Section 2-316A).
Contractual language can also limit the remedies available for breach of an implied warranty - for example, capping recoverable damages or limiting the remedy to a replacement of a defective item. However, such a term can be found to be unconscionable. For example, if a defective product causes a personal injury, a contractual provision limiting recovery in such a case will be deemed prima facie unconscionable. (Uniform Commercial Code, §2-719(3).)
References
- ^ U.C.C. § 2-316(2)
This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)
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Mentioned in
- Sample (insurance term)
- Express (legal term)
- Warranty of Habitability
- Use (legal term)
- Caveat Emptor (legal term)
- Merchant
- Warranty
- Livery Stable Keepers (legal term)
- Warranties
- Encumbrance
- Consumer Protection (legal term)
- Product Liability (legal term)
- Landlord and Tenant (legal term)
- Lease (legal term)
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