Warranty

Every contract for the sale or lease of goods contains a warranty that the seller or lessor actually owns the property. Courts hold that this warranty is implied if it is not included in the contract, and a seller or lessor cannot disclaim it.

The two basic types of sales warranties are express warranties and implied warranties. Express warranties are specific promises made by the seller and include oral representations, written representations, descriptions of the goods or services, representations in samples and models, and proof of prior quality of the goods or services. Puffing, or the seller's exaggerated opinion of quality, does not constitute a warranty. For example, if a car salesperson says, "This car will last you a lifetime," a court would likely consider such a statement puffing and not an express warranty.

Implied warranties are warranties that courts assume are implied in sales made by merchants. A merchant is a person who is in the business of selling the good or service being sold in the contract. All sales contracts made by merchants contain an implied warranty of merchantability. This is a promise that the goods, as they are described in the contract, pass without objection in the merchant's trade, are fit for the ordinary purpose for which they are normally used, are adequately contained, packaged, and labeled, and conform to any promises or affirmations of fact made on the container or label. If the goods are fungible, or easily replaced or substituted, such as grain or oil, the replacement goods must be of fair and average quality, fit for their ordinary purposes, and similar to previous goods delivered in the same contract or previous similar contracts.

In some situations a sales contract may include an implied warranty of fitness for a particular purpose. This kind of warranty is a promise that the goods are useful for a special function. Courts infer this warranty is implied when the seller has reason to know of a particular purpose for which the goods are required and also knows that the buyer is relying on the seller's skill and knowledge in choosing the goods. The buyer does not need to specifically inform the seller that the goods are for a particular purpose; it is enough that a reasonable seller would be aware of the purpose.

For example, assume that a farmer, intending to plant no-till soybeans, approaches a seller to buy herbicide. Assume further that the buyer requests a particular herbicide mix but the seller suggests a less expensive mix. If the chemicals fail to kill crabgrass and the farmer has a low yield of soybeans, the farmer could sue the seller for breach of the warranty of fitness for a particular purpose because the seller knew what the farmer required.

In some cases an implied warranty may be lost or waived. If a seller issues a disclaimer—for example, states that the goods are as is—and the buyer examines or refuses to examine the goods, the buyer may lose any implied warranties. One important caveat is that courts will not find that an implied warranty has been waived if, under the circumstances of the sale, it is unreasonable to expect that the buyer would have understood that there were no warranties under the circumstances of the transaction.

A seller may disclaim the warranty of merchantability either orally or in writing, but a seller cannot orally disclaim a warranty of fitness for a particular purpose. A disclaimer of the warranty of fitness for a particular purpose must be in writing, and the disclaimer must be conspicuous to the buyer. Express warranties made by a seller may not be disclaimed. However, if a disclaimer and an express warranty can be construed as consistent, a court may uphold the disclaimer.