A warranty is a seller’s promise that a product sold to a buyer has a certain quality. If the product proves to be deficient in this quality as promised, the seller is legally liable for breach of warranty.
A number of common warranties made in commercial transactions are as follows:
- Express warranties: If a seller explicitly communicates promises about a product to a buyer, an express warranty is created. Express warranties are often in written form. They may be consumer warranties, part of product descriptions, or product samples. They are often included in written contracts;
- Implied warranty of merchantability: When a seller specializes in dealing in a certain type of product, a warranty is implied in their transactions. It is a promise that the quality of the products will be equal to what is generally acceptable in the market. Also it is implied that a product is generally fit for the ordinary purposes for which it is used. The warranty of merchantability if implied by law;
- Implied warranty of fitness for a particular purpose: An implied warranty of fitness for a particular purpose applies when a seller knows the particular purpose for which a customer is purchasing a product. It also applies when the seller knows that the customer is relying on the seller’s skill or judgment in providing the right product for the seller’s purpose. Again, this warranty is implied by law in the appropriate situation.
Sellers of products can also disclaim warranties. This means that the seller expressly provides in some document that is part of the transaction that the implied warranties do not apply. This could defeat any claim for breach of warranty if a product is delivered that does not conform to the implied warranties.
What Happens If a Warranty Is Breached?
If express or implied warranties prove to be false and products do not measure up in quality or fitness for purpose, the buyer of the product is liable for breach of warranty. The consequence of this might differ depending on the type of transaction. If it is an ordinary consumer transaction, the buyer might first approach the seller and request a remedy, e.g. a new product.
In a commercial transaction the remedy might be more difficult to achieve. The transaction might involve a large quantity of the product and the remedy sought might depend on the nature of the defect. The defect in the product might be something that can be repaired; sometimes, it might not.
A person who has been sold a defective product that is not what is promised in a warranty can file a lawsuit for breach of warranty. This is true in the case of both express and implied warranties.
A person who sues the seller of a product for breach of warranty must prove the following:
- The buyer purchased a product from the seller;
- The seller made an express warranty in the form of a description of the product, a promise, or a model or sample;
- The product failed to match the standards set by the seller’s promised description;
- The buyer suffered quantifiable damages as a result of the breach of warranty.
In a commercial transaction, the damages that the buyer can recover will depend on the circumstances of the transaction. A buyer might be a manufacturer of a product that was supposed to be a component part in a product the buyer manufactures. So, the buyer might fail to produce products which the buyer has a contract to sell to its own customers. If the buyer is unable to perform its contract, it might be liable for breach of contract. So the buyer will look to the seller to compensate the buyer for its losses.
If the buyer is an ordinary consumer who receives a defective product in a retail transaction, the consumer may proceed differently. Rather than filing a civil lawsuit for damages, the person might first try to return the product to the seller or manufacturer for replacement or repair. Some sellers of consumer goods offer repair services.
If a consumer has a warranty for a product they purchase, the seller or manufacturer is required to deliver to the consumer a product in full working condition that conforms to the warranty. Alternatively, the buyer could offer an option to refund the money the buyer paid for it. Of, the buyer can request repair or exchange of the defective product for a new one.
Today, many retailers commonly sell product warranties as part of retail transactions. Basically a warranty is a written contract that defines the legal obligations of the parties, seller and buyer. A buyer who has purchased a warranty should read it and understand that the warranty probably defines the remedies for breach.
If the seller or manufacturer will not fix or replace a defective product, one of the following options may be available:
- If the person is making installment payments on the product, the person may be able to stop making the payments until the seller or manufacturer agrees to honor their warranty. This may not be the best approach, because the seller could then sue the buyer for non-payment of a legitimate debt;
- If a person cannot resolve the issue amicably with the seller, they might turn to their local Better Business Bureau. Or, the city, county or state in which the person lives might have a consumer complaint agency, perhaps as part of the state attorney general’s office, that offers services for these situations to citizens. These agencies might mediate the dispute and motivate the seller to offer a remedy;
- If a person cannot reach an agreement with the seller on how to solve their dispute, and the warranty is still being breached, a person may sue the seller for breach of warranty. Depending on the value of the item and the amount of money a buyer seeks in damages, the buyer may be limited to suing in small claims court,.
Are There Limitations on Warranty Liability?
Courts have ruled in the past that breaches can be material or immaterial. An immaterial breach is one in which the defect or damage does not have a significant effect on the functionality of the product. For example, a person might buy a new refrigerator that is delivered with a mark on the back or sides. This does not affect the operation of the refrigerator, so a court might consider it to be an immaterial breach.
On the other hand, a refrigerator that does not refrigerate food would constitute a material breach and a buyer could seek a remedy for being given a non-operating refrigerator. The implied warranty of fitness for a particular purpose means that delivery to a buyer of a refrigerator that does not refrigerate food is a breach of the warranty. The seller is liable to replace or repair the refrigerator, so it functions as warranted.
Or, a merchant may have communicated an express warranty by making a certain guarantee regarding the quality of their goods and services. So, for example, an appliance manufacturer might guarantee that a refrigerator model is free from defects for one year from the date of purchase. If a refrigerator stops working during a one-year period because of a manufacturing or design defect, the manufacturer must provide any remedy stated in the warranty.
What Other Types of Recovery Might Be Available?
If a defective product that does not conform to warranties made as to its quality causes actual physical injury to a user of the product, the injured person can pursue a breach of warranty lawsuit. The seller would be liable for the costs of treatment of those injuries, as well as lost wages, pain and suffering and other quantifiable damages in a breach of warranty case.
Do I Need a Lawyer for a Warranty Lawsuit?
Breach of warranty lawyers are experienced in dealing with sellers and manufacturers in cases in which a defective product has been delivered to a buyer. It is a technical area of the law that can become complicated. A person needs to consult an experienced business lawyer for help in analyzing warranties, determining the nature of a product defect, and planning a strategy for winning a remedy for a breach of warranty claim.