It’s possible that when you were in school, history was not necessarily your favorite subject. But to understand express versus implied warranties, a brief history lesson is in order.
Before delving in, however, you’ll be happy to know that Hammerle Finley has practiced business law since 1984. We have an extensive online library for your reference purposes, as well as a staff of highly qualified and experienced business law attorneys.
The Uniform Law Commission and the Uniform Commercial Code
In 1892, as the American economy grew at a rapid pace and commerce increasingly crossed state boundaries, the Uniform Law Commission (ULC) was created to provide the states with non-partisan, well-drafted commercial laws. Today, the ULC is comprised of lawyers representing all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands, and they work together writing and promoting the enactment of uniform state laws in areas where uniformity is desirable and practical.
One of the organization’s most important actions came in 1942 when the ULC worked in partnership with another nongovernmental agency, the American Law Institute (ALI), to create the Uniform Commercial Code (UCC) that was offered to the states for their consideration in 1951. Pennsylvania was the first to adopt the UCC, and other states followed over the next 20 years.
In reality, the UCC is only a model or recommendation of what a state’s commercial code might include, and by itself, it has no legal force. In practice, however, every state has adopted some version of the UCC, and these state versions have the effect of law because they are, in fact, laws. The Texas version is known as the Business and Commerce Code, but for purposes of clarity, we will simply refer to it as the UCC.
Organizational Makeup of the UCC
Eleven articles make up the UCC, and these, in turn, are divided into Parts and Sections, with specific UCC rules found in the Sections. For example, Article 2 of the UCC deals with Sales, the topic of express warranties is covered in Article 2, Section 313 (UCC 2 313), and Article 2, Section 315 (UCC 2 315) addresses implied warranties.
In business and legal transactions, a warranty is an assurance by one party to another party that certain facts or conditions are true or will happen. The party purchasing the product is permitted to rely on the warranty and seek legal remedy if the warranty is breached.
Furthermore, a warranty is express or implied or both. In some cases, the seller of a commodity or property expressly guarantees the quality of the product purchased. On the other hand, in certain situations, the law implies a warranty where there is no express warranty. Both express and implied warranties provide legal relief for the purchaser.
UCC 2 313 – Express Warranties
An express warranty is created by the seller’s words and actions, and under UCC 2 313 a seller can create one of these warranties with:
- An affirmation of fact or promise.
- A description of the goods.
- A sample or model.
Essentially, express warranties are affirmative promises about the qualities and features of the goods being sold. If a manufacturer says that a vehicle will get 35 MPG on the highway or another says that a watch is waterproof to 300 feet, those are both examples of express warranties.
Under the UCC, however, express warranties also include descriptions of the goods being sold, or samples shown the buyer. For example, if a buyer is shown a particular laptop computer, and they then purchase the same model, the sample computer is now an express warranty that assures the customer that the laptop they have purchased is the same type and quality as the display model. As you can see, it is not necessary to use formal words like “guarantee” or “warrant” to create an express warranty.
UCC 2 314 and 315 – Implied Warranties
In addition to express warranties, UCC 2 314 and 315 create a second type, called an implied warranty. As the name suggests, an implied warranty is made even if not specifically mentioned. This type of warranty ended the old rule of caveat emptor (let the buyer beware), and these warranties allow buyers to be confident the commodities purchased meet certain minimum standards.
In addition, the UCC creates two types of implied warranties, both of which apply in Texas: the warranty of “merchantability” and the warranty that the goods are “fit for a particular purpose.”
Under the UCC definition of merchantability, goods must be of at least average quality, properly packaged and labeled and fit for the ordinary purposes they were designed to serve. However, an implied warranty of merchantability is limited to the kinds of goods normally sold by a merchant. If, for example, the owner of a clothing store sells an unneeded display case to some other merchant, there would be no implied warranty of merchantability on this transaction because the seller normally sells clothing, not display cases.
The implied warranty of fitness for a particular purpose applies if the seller knows or has reason to know that the buyer will be using the item purchased for a particular purpose. If the seller knows the purpose for which the item is to be used, the seller impliedly warrants that the item is indeed suitable for that particular purpose.
For example, a contractor might need a truck with enough horsepower to pull a loaded heavy equipment trailer and the salesman knows of this particular purpose. When the salesman sells the contractor a particular truck, he has made an implied warranty of fitness for a particular purpose, namely that the truck he has sold is indeed suitable for moving heavy equipment.
The rationale behind this type warranty is that buyers typically depend on the seller’s skill and expertise to help them find the specific goods that meet their needs.
Because warranties typically become an issue when there is a problem, a prudent seller may try to limit the scope of his warranty before a problem arises. Within certain limits, the UCC allows sellers to disclaim both express and implied warranties. Generally, a seller who wants to disclaim a UCC warranty must do so specifically.
Just how specific depends on the kind of warranty being disclaimed. An express warranty must be expressly disclaimed. As to implied warranties, a seller can disclaim all implied warranties by stating that the item is being sold “as is,” or “with all faults” or some other phrase making it clear to the buyer that there are no implied warranties. The UCC also requires that all disclaimers of implied warranties must be in writing and be conspicuous, and not hidden in the fine print of a lengthy sales document.
Get Assistance from Business Law Attorneys in Lewisville, Texas
With this summary, we have really only touched on the highlights of issues related to express versus implied warranties and disclaimers to both. It is extremely important that sellers clearly understand what express and implied warranties are, as well as how to disclaim warranties with a properly written disclaimer prepared by a highly experienced business law attorney.
Conversely, we also understand the many frustrations a consumer can face trying to have defective merchandise either repaired or replaced. Our attorneys understand that when you buy a consumer product, you expect it to meet certain standards of quality and performance and that when it comes to matters of breach of warranty, we have every confidence that we can be of assistance to you.
If you’re dealing with warranty issues as a merchant or buyer, we urge you to contact us for an initial consultation. Give us the opportunity to examine your situation and provide you with the very best warranty-related legal assistance.
Virginia Hammerle is a Texas attorney whose practice includes estate planning, guardianship and probate. Sign up for her newsletter at email@example.com. Contact Hammerle Finley Law Firm to schedule a consultation at hammerle.com.
This column does not constitute legal advice.