The UCC and Sales Contract Warranties

The buying and selling of goods generally involves a variety of warranties. Warranties are, in essence, promises by the people who make or sell the goods that they will stand behind those goods. As described in Article 2 of the UCC, there are both express warranties and implied warranties. It is worth looking at each of these types of warranty.

Express Warranties

Express warranties are affirmative statements (in the words of the UCC, an “affirmation of fact or promise”) by a seller to the buyer regarding the goods being sold. Among the various situations where these types of statements might arise are when a manufacturer sells to a retailer or when a retailer sells to a consumer. For example, an electronics retailer may tell customers that it will repair or replace any DVD player it sells if the player fails to work within three years of the sale, no questions asked. Or, an industrial machine manufacturer may tell an auto parts maker that the machines the manufacturer is selling will always be within certain tolerances. As long as the buyers involved are relying on these types of statements—as long as the statements are part of the “basis of the bargain”—the statements constitute express warranties, and create legal obligations for the seller.

The UCC also makes it clear that specific words such as “warrant” or “guarantee” are not required to create express warranties, and that express warranties can be created even when the seller did not have the specific intention to create a warranty. In fact, one way in which an express warranty may be created is through the seller’s description of the goods (as may be contained, for example, in a sales contract). As long as the buyer is depending on that description as part of the basis of the bargain, an express warranty is created that the goods will meet the description. Similarly, if a seller provides a buyer with a sample of the goods to be sold, that sample is an express warranty that all the goods to be sold will conform to that sample.

Express warranties often taken the form of advertisements or certificates. However, keep in mind that express warranties may be oral as well as written.

Finally, while not part of the UCC, and not covered in this article, there are other laws that relate to express warranties. Perhaps the most important among these is the Magnuson-Moss Warranty Act, which is a federal law governing express warranties related to consumer products.

Implied Warranties

Apart from express warranties, the UCC has various rules regarding implied warranties. Basically, these are warranties that automatically exist when goods are being sold, without the need for any specific “affirmation.” Two particularly important implied warranties under the UCC are the warranty of merchantability and the warranty of fitness for a particular purpose.

Implied warranty of merchantability. There are an array of general standards under Article 2 for when goods are merchantable. Probably the most important of these is that the goods “are fit for the ordinary purposes" for which those types of goods are used. Here are just a few possible examples of how various goods could meet this standard:

• Kitchen ovens will bake food at controlled temperatures as set by the user.
• Cups of yogurt will not contain pieces of shredded plastic.
• Step ladders will be able to support persons weighing at least 250 pounds.
• Lawn mowers will be able to cut three-inch-high grass.
• Cordless home phones will carry a signal more than three feet from a base unit.

Among the other potential UCC requirements for merchantability are that the goods involved would “pass without objection” under the standards of the relevant trade (for example, machine screws will meet or exceed the industry standard for such screws) and that the goods are sufficiently contained, packaged, and labeled as required by the sales contract.

Implied warranty of fitness for a particular purpose. This type of warranty is created if the seller has reason to know that: (1) the buyer intends to use the goods being sold for a particular purpose; and (2) the buyer is relying on the seller’s skill or judgment in selecting which goods to buy for that purpose. When these two conditions are met, the seller will be bound by this warranty. A few examples will help make it clearer how this warranty works:

• John asks an appliance dealer for a clothes dryer that can dry twenty pounds of wet clothes. The dealer recommends a specific model of dryer and on the basis of that recommendation, John buys that model. If the dryer subsequently is unable to dry twenty pounds of wet clothes, then, even if it can handle smaller loads, John has the basis for a warranty claim against the dealer.
• Susan asks an outdoors outfitter for a parka that can keep her warm in weather below zero Fahrenheit. The outfitter assures Susan that a particular parka will keep her very warm well below zero Fahrenheit, and Susan buys that parka on the strength of the outfitter’s advice. If it turns out that the parka cannot keep a person warm when the temperature is below freezing, much less below zero Fahrenheit, Susan has the basis for a warranty claim against the outfitter.
• Charlotte asks a paint store manager for the best wood stain to use on the new tables and chairs she has made for herself, and the manager recommends a particular product. If the product is actually dark paint and not stain, and ruins Charlotte’s furniture, the warranty created by the manager has been breached.

Having looked at examples where implied warranties may be breached, it is important to understand that implied warranties do not cover every possible failure of goods or products. For example, implied warranties generally do not cover such things as abuse, misuse, ordinary wear and tear, improper maintenance, or failure to follow instructions. Also, there generally is no specific duration for implied warranties. However, states commonly have a four year statute of limitations on implied warranties, which effectively means buyers have four years to discover relevant defects in goods sold.

Disclaiming Implied Warranties

Under the UCC, it is possible for sellers to exclude or modify implied warranties. However, in order to do so, the seller generally must provide the exclusion or modification in a record—which generally mean in a printed document, such as the sales contract—and in a manner that makes the exclusion or modification conspicuous. The UCC provides specific language that may be used for such disclaimers:

• For the warranty of merchantability: “The seller undertakes no responsibility for the quality of the goods except as otherwise provided in this contract.”
• For the warranty of fitness for a particular purpose involving a sale to a consumer: “The seller assumes no responsibility that the goods will be fit for any particular purpose for which you may be buying these goods, except as otherwise provided in the contract.”

Other options for disclaiming implied warranties include using phrases such as “with all faults” or “as is.” However, be aware that a dozen states do not allow consumer goods to be sold “as is.” Also, warranty disclaimers will not provide protection if a buyer is injured by a product.

Note: This article is based on the current version of the model Uniform Commercial Code (UCC). However, not all states have adopted all sections of the current model UCC. Moreover, the model UCC specifically leaves it to individual states to determine the precise wording of certain sections. Therefore, you should always check your own state’s commercial code for the most accurate information regarding your state's laws.

For more information on UCC rules, see the Nolo website section on the UCC.

April 2013