Warranty, Product Liability and Transaction Structure: The Problem of Amazon

Amazon, and other internet sales platforms, have revolutionized the manner in which goods are purchased and sold. The obligations undertaken by Amazon in those sales are unclear, both as a matter of transparency, and as a matter of legal doctrine. Is Amazon a store? Is it a shipper? Is it a telephone? In various transactions Amazon can play some or all of these roles. Choosing the right metaphor has consequences. Amazon knows this and has done everything it can to deploy the metaphors selectively to its best legal and practical advantage, even when the chosen characterizations are inapt or even mutually inconsistent. In an earlier article, we explored whether Amazon should be considered a “seller” for the purposes of product liability when a customer purchases goods from a third-party seller using the Amazon platform. We concluded that the answer was an emphatic “Yes.” We examined the relationship between Amazon and the third-party seller, and considered the extent to which Amazon controlled all aspects of the sale. We also noted, to a lesser extent, the way in which the consumer experienced the sale process. The purpose of this article is, to extend that analysis to include the law of contracts—principally the law of warranty. We ask the next question: Should Amazon be considered a “warrantor” for the purposes of making the implied warranty of merchantability when it serves as an intermediary between a third-party seller and a consumer buyer? Again, we conclude that it does. This article will proceed in four steps. First, it will explore the formal legal problems that transaction structure creates when sales are intermediated by an internet platform like Amazon. The problem created by Amazon’s manipulation of transaction structure is the same for contract and for tort, but as we shall see, the doctrinal response is not symmetric. Second, it will explore whether that transaction structure should affect substantial rights. To address that question we will look at what a customer actually sees when they purchase something from Amazon. We will show that what the consumer experiences is at odds with the formal transaction structure claimed by Amazon. We will examine the text of the Uniform Commercial Code (UCC), and show that the statute does not preclude Amazon from being considered a warrantor. Further, Amazon could, and probably should be considered a warrantor-by-estoppel, or as an agent. Third, we will consider whether Amazon should be viewed as successfully disclaiming warranty. Here we conclude that the answer is tied inextricably to ongoing debates about the enforceability of boilerplate in consumer contracts. Those debates are reflected in the current battle royal of the Restatement of Consumer Contracts, but more importantly, in uncertainty in the courts. For that reason, warranty will offer an imperfect solution at best. So, finally, fourth, we return to tort, and argue that the section 20 of Third Restatement of Torts – Product Liability offers a somewhat more direct solution, including within the definition of "seller," somebody who "sells or otherwise distributes."