Warranties and Limits on Sales Contracts - Module 3 of 5


Question 1

Assume that Rosa enters into an agreement to purchase bedroom and living room furniture on credit from the Thompson Furniture Company. Rosa only speaks Spanish and has a 6th grade education. She relies on the Gene, the salesperson, to explain the purchase agreement to her. Gene does not explain to her a cross-collateralization clause that entitles the furniture company to repossess all of the furniture if Rosa misses even a single payment. Under the credit agreement Rosa signs, all of Rosa’s monthly payments are divided up and applied pro rata to all of the furniture so it is very difficult for Rosa to pay off even one piece of the furniture collection. When Rosa defaults on one payment, Thompson seeks to repossess all of the furniture. Gene’s efforts to take unfair and one-sided advantage of Rosa’s limited education and language skills other than English arguably constitute

Question 2

Assume the same facts as in question #1. The credit agreement’s cross-collateralization clause arguably denotes

Question 3

An agreement that requires a person to click “I Accept” in order activate a program downloaded over the Internet is called a

Question 4

The agreement that is the most challenging in its enforceability is the

Question 5

Assume Francine visits Pine Ridge Used Cars and buys a Chevrolet truck. Francine asks Kevin, the salesperson, if the truck leaks oil, to which Kevin replies, “nope, clean as a whistle, dry as a desert.” She buys the truck and three days later notices a large puddle of oil under the truck. Francine’s mechanic tells her that the truck is in dire need of an oil pan gasket and it is leaking badly. The job will cost Francine over $900 and the truck is no longer drivable. Francine could arguably bring a claim against Pine Ridge for breach of

Question 6

Assume the same facts as in question 5 but Francine does not inquire about any oil leakage and Kevin makes no mention of it. Nevertheless, Francine could arguably bring a claim against Pine Ridge for breach of

Question 7

Assume Shane intends to hike to the summit of Mount Washington in New Hampshire. He visits Granite State Footwear Retail Outlets and consults with Laurie, the salesperson, to purchase hiking boots. She tells Shane that she recommends Lumberland Boots, which she claims are specially-manufactured for hiking purposes. Shane purchases the boots and begins his hike. The boots separate and fall apart. Shane gets frostbite on his feet and has to be rescued by local authorities. He brings a claim against the Granite State and Lumberland Boots in tort for selling him a defective product and breach of

Question 8

Assume Lance owns a farm with much of his farm equipment subject to a collateral claim by First Bank for a loan that Lance did not repay. Lance sells the equipment to Randall, his neighbor, before Lance leaves town and his farm goes into foreclosure. Lance did not tell Randall about First Bank’s claim. Lance’s sale to Randall has violated the

Question 9

Assume Maryanne wants to sell a car but does not want to give the buyer a warranty. Maryanne has disclaimed the warranty of merchantability if

Question 10

Assume Phil buys a nail gun from his local hardware store. He is using the nail gun in his garage when his friend, Fred stops by. Phil’s wife, Amanda, is painting furniture in one corner of the garage. The nail gun malfunctions foreseeably injuring Phil, Amada, and Fred. Phil lives in a state that follows the Uniform Commercial Code’s Alternative B to third party liability. Who in this situation may bring a claim under a theory of warranty?