Slide 1IntroductionWarrantiesWarrantiesWarrantiesWarrantiesWarrantiesWarrantiesWarrantiesWarrantiesWarrantiesWarrantiesWarrantiesWarranty DisclaimersWarranty DisclaimersWarranty DisclaimersWarranty DisclaimersLemon LawsLemon LawsProduct LiabilityProduct LiabilityProduct LiabilityProduct LiabilityStrict Product LiabilityStrict Product LiabilityStrict Product LiabilityStrict Product LiabilityStrict Product LiabilityStrict Product LiabilityProduct Defects—Restatement (3rd) of TortsProduct Defects—Restatement (3rd) of TortsProduct Defects—Restatement (3rd) of TortsProduct Defects—Restatement (3rd) of TortsProduct Defects—Restatement (3rd) of TortsMarket Share LiabilityOther Applications of Strict LiabilityDefenses to Product LiabilityDefenses to Product Liability© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Business Law Today 10th Ed.Text and Summarized CasesDiverse, Ethical, Online and Global EnvironmentRoger LeRoy MillerGaylord JentzChapter 17: Warranties and Product LiabilityLisa/Shutterstock.com© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.INTRODUCTION•A warranty is an assurance or guarantee by the seller or lessor of certain facts concerning the goods being sold or leased. •If seller breaches a warranty, buyer can recover damages, or rescind the contract.2© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.WARRANTIES•Warranties automatically arise in most commercial sales transactions.•Normally warranties can be disclaimed or modified with specific language in the contract. 3© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.WARRANTIES•Express Warranties.–Representations concerning quality, condition, description, or performance potential of goods.–Can be created by:•Any Affirmation or Promise.•Any Description.•Any Sample or Model.4© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.WARRANTIES•Express Warranties.–Basis of the Bargain. •Seller does not have to use the words “guarantee” or “warranty.”•Buyer must rely on warranty when he enters into contract. 5© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.WARRANTIES•Express Warranties.–Statements of Opinion and Value. Only statements of fact create express warranties.•Exception for Statements of Opinion by Experts. •Puffery versus Express Warranties.6© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.WARRANTIES•Implied Warranties.–Inferred at law based on the circumstances or nature of the transaction. 7© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.WARRANTIES•Implied Warranty of Merchantability.–Merchantable Goods:•Are average, fair, or medium-grade.•Are adequately packaged and labeled.•Conform to promises on label.•Have a consistent quality and quantity among the commercial units. 8© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.WARRANTIES•Implied Warranty of Merchantability.–Merchantable Food: based on consumer expectations.• Webster v. Blue Ship Tea Room, Inc. (1964). Was the soup fit to eat on the basis of consumer expectations?9© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.WARRANTIES•Implied Warranty of Fitness for a Particular Purpose.–Arises by any Seller who: •Knows the particular purpose for which the goods are being bought; and•Knows the buyer is relying on seller’s skill and judgment to select suitable goods.10© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.WARRANTIES•Implied Warranty of Fitness for a Particular Purpose.–Particular vs. Ordinary Purpose: Differs from ordinary purpose of merchantability. Goods can be merchantable but unfit for a particular purpose. 11© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.WARRANTIES•Implied Warranty of Fitness