Product Liability for Breach of Warranty - Part 1

This is part 1. Part 2 is here.

Product Liability for Breach of Warranty – Part 1

Product liability is one of the fastest growing areas of law. As our economy continues to become more complex and technologically advanced, understanding product liability becomes an increasingly important area of tort law. Product liability concerns the liability of sellers for the products they sell. The law assigns legal responsibility to sellers to ensure that the merchandise they offer for sale will not harm purchasers.

Under the common law tradition, the principle of caveat emptor, or ‘let the buyer beware’ meant that the seller had very little responsibility for products once they were sold. If a buyer wanted a guarantee regarding the quality and safety of the product, such protections had to be stipulated in a contract between the buyer and seller.

            However, modern law recognizes that buyers are at a disadvantage when it comes to inspecting and evaluating the quality and reliability of goods offered for sale. By contrast, sellers are normally in a better position to inspect and understand the quality of merchandise.  Therefore, courts extended the tort concepts of negligence and strict liability to hold sellers liable for defective goods even when no contract existed.

Here, we will discuss a third theory of products liability, which is liability based on the breach of a warranty for the sale of a product. As with negligence and strict liability, the law has greatly expanded the scope of warranty protections for consumers. This is true both of liability for express promises made by the sellers regarding the quality of products, and the protections the law presumes when sellers offer goods for sale. In this presentation, will focus on defining product warranties in determining when they exist. In part two, we will look at features of claims for breach of warranties.

What is a Warranty?

A warranty is a guarantee made by the seller that the products he or she is selling are not defective or that they conform to some other standard of safety, reliability or performance.  When a seller makes a representation at the time of sale regarding the quality of the product, that product is said to be under warranty. Should it turn out that the product is defective or not as advertised and this deficiency causes damage, the buyer can bring a tort action for breach of warranty.

The seller can be liable for harm or loss resulting from the defect whether or not he knew of the defect, or even if the defect was due to someone else’s negligence,

Consider a simple example. A hiker goes to a sporting goods store and tells the manager he is looking for durable hiking boots fit for any weather. The manager shows him an expensive pair and tells him the boots are completely waterproof, and assures him they are “100 percent” fit for any weather. A few weeks later, the hiker wears the boots on a rainy day, and his feet get soaked, leading to a bad fungal infection. Since the boots were not as promised, the seller will be liable for the value of the boots, plus any loss associated with the resulting physical harm.

            In the United States, all jurisdictions have adopted the Uniform Commercial Code in part or whole as a statutory basis for products liability. The U.C.C. deals with all aspects of breach of warranty, including when a warranty exists, who is considered a seller for warranty purposes, and which users of products may bring suits for breach of warranty.[1]

Express Warranties

As in the sporting goods store example, a merchant may inform a potential buyer of the qualities of a product which make it an attractive purchase. If the seller makes such representations to the buyer, and these promises or facts form part of the basis of the bargain to purchase the product, an express warranty is created.[2]  In the case of the defective boots, the statement by the manager creates a warranty because the durability of the boots was part of the reason the hiker bought them. If, however, the manager had told him that he had just sold the same pair of boots to a celebrity, and it turned out not to be true, this would probably not be considered part of the basis of the bargain. This may be a promise that was part of the transaction, but it was not a warranty as to the effectiveness of the product sold.

An express warranty is also created if the seller describes the product or shows a sample or model of the product.[3] If the product is not as advertised, and the purchaser is injured or suffers economic loss as a result, the express warranty has been breached.

Note that the seller does not have to use the words “warranty” or “guarantee” for a warrantee to exist. As long as his words attest to the quality of the goods, a warrantee is created.[4]

Implied Warranties

Legally enforceable warranties may exist even when the seller has not made any specific claims about the qualities of the products in question. Under certain conditions, simply offering goods for sale can imply the promise of warranty protections.

One such category of implied warranties is the implied warranty of merchantability. Under the U.C.C., if a seller offering goods for sale is considered a merchant “with respect to goods of that kind,” the law will automatically imply the existence of a warranty of merchantability for those goods.[5]

This warranty applies under two conditions. First, that the seller is a merchant, meaning that he is in the business of selling products. It would not apply, for example, to someone holding a yard sale or selling a used car.  Second, the seller must regularly trade in the specific merchandise in question.[6] If a car dealership sells cups of coffee to people in its waiting room, it may not be considered a merchant with respect to the coffee.

The implied warranty of merchantability is a legally enforceable guarantee that the goods are fit for the purposes for which they are ordinarily used.[7]

            Let’s revisit the example of the hiker but change the facts. In this scenario, the hiker did not speak to the manager, but simply bought the boots off the shelf at the sporting goods store. As a sporting goods store, the seller would certainly be considered a regular merchant with respect to hiking boots. The scope of the warranty would depend on what is considered the ordinary purpose for using hiking boots. We can imagine that in a case for breach of the warranty of merchantability, courts would treat wearing the boots for outdoor nature treks differently from wearing them on a factory floor. There can be little question, though, that hiking boots are made for hiking. If, while hiking, the boots proved defective and the hiker gets injured, he can maintain a lawsuit against the store for breach of warranty.

            The other important category of implied warranties is the implied warranty of fitness for a particular purpose.  This warranty is created if a seller knows that the buyer is looking to use the goods for a particular purpose, even if that is not the conventional purpose normally associated with those goods. If the buyer relies on the seller’s implied judgment regarding the suitability of the product for the purpose he has in mind and expressed to the seller, then the seller impliedly guarantees that the goods are fit for that purpose.[8]

            Let’s go back to our sporting goods store to demonstrate.  A woman tells the manager that she has recently begun cycling, and asks the manager to recommend a bicycle for purchase. She specifically tells him that she is planning a long-distance bicycle trip, with a significant off-road component.  Armed with that knowledge, the manager suggests a particular model.  This creates an implied warranty that the bicycle is fit for off-roading. If the bicycle’s failure in that circumstance causes injury, the seller is liable for breach of warranty.  

In part two of this presentation, we will look at the parties involved in a breach of warranty claim, including which users can bring such claims and the defenses that sellers may have against breach of warranty claims.