Source: https://techbizweb.com/commercial-and-consumer-warranties-a-primer/
Timestamp: 2019-04-23 21:51:51+00:00

Document:
As Tommy Callahan asks his customers in the high-brow ‘90s movie, Tommy Boy, “why would somebody put a guarantee on a box?” What does it mean and why it is useful? This post provides a high-level primer on commercial and consumer warranties on products.
There are two types of warranties: express warranties and implied warranties.
Sections 2-314 and 2-315 of the U.C.C. impose on sellers broad implied warranties of merchantability and fitness for particular purpose, and provide for the possibility of other, implied warranties arising from course of dealing or usage of trade (in addition to the warranties of title and freedom from infringement found in U.C.C. § 2-312).
Conform to the promise or affirmations of fact made on the container or label, if any. C.C. § 2-314(2).
Implied Warranty of Fitness for a Particular Purpose. Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is also, unless it is excluded or modified under U.C.C. § 2-316, an implied warranty that the goods will be fit for such purpose. U.C.C. § 2-315.
Course of Dealing or Usage of Trade. Other implied warranties may arise from course of dealing or usage of trade (unless excluded or modified). U.C.C. § 2-314(3).
Disclaimer of Implied Warranties. As adopted in most states, the U.C.C. permits implied warranties to be disclaimed. The primary requirements for an effective disclaimer are: (1) notice of the disclaimer before purchase, and (2) use of CONSPICUOUS type. For the disclaimer of the warranty of merchantability, the disclaimer must also mention merchantability to be sufficient. A phrase that the goods are being sold “AS IS” is also sufficient to disclaim implied warranties. U.C.C. § 2-316.
Express warranties are created by (a) any statement of fact or promise made by the seller to the buyer which relates to the goods, (b) any description of the goods, and (c) any sample or model, in each case which is made part of the basis of the agreement to sell. It is not necessary that the seller use formal words such as “warrant” or “guarantee” or that the seller have a specific intention to make a warranty. U.C.C. § 2-313.
A. U.C.C. Remedies. The “warrantor” (the person giving the warranty) is responsible to the buyer for all losses that can be shown to have resulted from the breach (see U.C.C. §§ 2-714 and 2-715).
The disclaimer must be CONSPICUOUS and carefully drafted.
C. Sole and Exclusive Remedies. Warranty remedies in supply agreements are typically limited to repair or replacement of the non-conforming products or reimbursement of the purchase price paid by the buyer for the non-conforming products. From the Seller’s perspective, the foregoing remedies should expressly state that they are the sole and exclusive remedies available to the buyer for a breach of the warranties. U.C.C. § 2-719(1)(b).
A. Federal Law Regulating Written Consumer Warranties (15 U.S.C. § 2301 (2018) et seq., the “Magnuson-Moss Warranty Act”).
The statute applies only to written warranties and only when the products warranted are purchased for personal, family or household use. Sellers are not required to furnish written warranties.
Provisions affecting warranties on all products: If the warrantor designates a warranty as “full”, the warranty includes certain minimum protections. Implied warranties may not be entirely disclaimed; at most, they may be limited to the duration of the written, express warranty.
Additional provision affecting warranties on products costing more than $5 at retail: the warrantor may not require the consumer, in order to get the warranty, or enforce it, to pay for anything identified by a brand name.
The statute may be enforced by the Federal Trade Commission (or the U.S. Department of Justice), state attorneys general and consumers (including class actions), and permits a court to award attorneys’ fees to a successful plaintiff. Remedies are damages and injunctions.
B. FTC Rules Regulating Written Consumer Warranties (16 C.F.R. Parts 701, 702 and 703). These rules apply only to warranties on products costing more than $15 at retail. Disclosures required include: specific wording, and additional specific wording if implied warranties are disclaimed or damages are limited; both warrantors and retail sellers must make the full warranty text available pre-sale, through the use of one or more specified means. Those rules have the force of law; and violations may lead to FTC fines, mandated consumer protection and/or injunctions. Consumers may not enforce them.
There is a haphazard body of state legislation/regulations of consumer warranties on specific products (see, e.g., Wis. Stat. § 100.205, as to motor vehicle rustproofing warranties). Further, California has adopted a generally applicable statute (called the “Song-Beverly Consumer Warranty Act”, Cal. Civ. Code § 1790 et seq.), notably adding that “warranty registration” cards, and even the use of that phrase, are prohibited. Most state “little FTC” laws permit consumers to make claims under the principles embodied in the FTC Magnuson-Moss rules.
D. General Federal Anti-Deception Law.
The Federal Trade Commission Act (15 U.S.C. §§ 41-58) prohibits “unfair or deceptive acts or practices” generally; many states have similar laws.
if the word “lifetime” or “life” is used, an indication of what life is referred to should be included.
If you are interested in obtaining a complimentary copy of the Supply Chain Desk Reference, which contains this article and others, please send your name, organization, and mailing address to kwegrzyn@foley.com (subject to availability).
This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney.
This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary.
The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites.
In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

References: § 2
 § 2
 § 2
 § 2
 § 2
 § 2
 § 2
 § 2
 § 2301
 § 100
 § 1790