January 26, 2007
Within the United States, the purchase/sale of products is typically governed by each state government’s version of the Uniform Commercial Code (UCC). Under the UCC, a seller’s sale of a product inherently is made with two “implied” warranties:
1. The Warranty of Merchantibility
2. The Warranty of Fitness for a Particular Purpose
Whether or not offered by the seller, these two warranties are provided under the UCC’s Article 2….unless specifically disclaimed in obvious writing (for example, ALL CAPITALS). If these implied warranties are not disclaimed in the seller’s contract or sales proposal in obvious writing, then they are automatically part of the deal…to the benefit of the buyer.
Let’s discuss each of these types of implied warranties…
Warranty of Merchantibility – This implied warranty says that the product will conform to other like products of similar intent or description, and will perform at the average level of other similar products. An example would be a company which generally advertises its product as a “forklift”. If a buyer purchases this product, and finds it cannot lift pallets of a comparable weight to other similar forklifts available in the marketplace, they may have a valid claim in a civil lawsuit against the supplier. The purpose of this warranty is to protect buyers against damage resulting from products which don’t meet the marketplace standard.
Warranty of Fitness for a Particular Purpose – This implied warranty protects buyers when the seller determines what the buyer has asked for in good faith. An example might be a fleet buyer who contacts an automotive dealer and says “Our firm needs a truck capable of towing a 10,000 lb trailer….you tell me which truck will work best for us”. If the salesperson sells this fleet buyer a compact truck with a four-cylinder engine, which can’t tow the trailer, it is the automotive dealer’s fault. This warranty would protect the buyer, who should have been sold a ¾ or 1 Ton truck.
To receive the protection these two implied warranties provide, it is imperative that the buyer carefully review the seller’s contract for disclaimer language. As noted above, the UCC requires any such disclaimers to be in noticeable form. ALL CAPITALS is the most common method.
If these implied warranties are disclaimed, it is important to carefully review the seller’s express warranty language to determine whether it is fair and reasonable.
Note: More detail about the Uniform Commercial Code, Common Law (which covers Real Estate and Service Transactions), and the Convention on the International Sale of Goods (CISG) is available in Strategic Procurement Solutions’ two day onsite Strategic Contracting™ workshop. Readers should consult with their own legal counsel with regards to the proper application of UCC principles.
For information about detailed contracts training, visit www.StrategicProcurementSolutions.com