BB30 Business Law 6.01Summer 2013 ES 6 UNDERSTAND SALES, CONSUMER, PROPERTY, AND CYBER LAWS.

BB30 Business Law 6.01Summer 2013

ES 6 UNDERSTAND SALES, CONSUMER, PROPERTY, AND CYBER LAWS


WARRANTIES• Express• Implied•Warranty of Title• Exclusions


Express WarrantyExpress warranty is also called a guarantee • The promise or assurance of the quality or life of a product• “Guaranteed satisfaction or your money back”• “Lifetime guarantee”


Express Warranty• Can be oral or written•Written form recommended• Parol evidence rule applies: evidence of oral statements made before signing a written contract cannot be presented in court to change or add to the terms of that written agreement• Magnuson-Moss Act – requires that written warranties be labeled as full or limited


Express Warranty• Puffery by salesman is not a warranty, but an opinion of the salesperson.

• Express warranties are created by:• Statement of fact or promise by seller• Description of goods• Use of same item or model


Implied WarrantyA guarantee of quality imposed by law but not in writing • Implied warranty deals with sale of goods• Regulated by UCC• Given by all sellers


Implied Warranties•Warranty of fitness for a particular purpose

• Seller knows the purpose for which goods are needed• Seller advises buyer in making purchase• Buyer relies on seller’s advice to make decision• Seller infers that the goods are fit for a particular purpose• A warranty exists


Implied Warranties•Warranty of Merchantability• Given by a merchant only• Merchant infers that goods pass in the trade without objection• Goods are fit for the ordinary purpose such goods are used for• Conform to any promises or statements made on the container

or label


Implied WarrantiesUsage of Trade

An implied warranty that is a well established custom or practice among people in specific trades or businesses

•Example: When a person sells a thoroughbred horse there is an implied warranty that papers are provided to prove the animal’s pedigree as a thoroughbred. It is expected in the horse trading business


Warranty of TitleSeller warrants that the title is good and transfer is rightful

Seller warrants that goods will be delivered free of any financial obligations about which the buyer had no knowledge


Warranty of Title• Sale of Stolen Goods• If stolen goods are sold to an innocent purchaser, the true

owner is entitled to return of the goods

• The buyer can pursue remedy against the seller for breach of warranty of title


Full WarrantyA full warranty requires that the defective product be repaired or replaced for free within a reasonable length of time after complaint is made. • If the product cannot be fixed, the consumer has the option to get their money refunded.•Have you ever tried to return merchandise that you thought was under warranty but was not?


Limited WarrantyA limited warranty provides a restricted guarantee. • Must state “Limited” Warranty• Be sure to read and understand the limits of the warranty before purchasing…caveat emptor!


Limited WarrantyCaveat Emptor - Latin for “Buyer Beware”• It is the duty of the consumer to make informed decisions. • Be sure to read labels and research products before buying.

Comparison shop.• It is the duty of the seller to provide appropriate information

for the consumer.


Limited WarrantyCaveat Venditor - Latin for “Seller Beware”• It is the duty of the seller to make informed decisions. • Example: Banks, credit card companies and businesses who

extend credit to customers check credit histories and applications before extending credit.

BB30 Business Law 6.01Summer 2013 ES 6 UNDERSTAND SALES, CONSUMER, PROPERTY, AND CYBER LAWS.

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