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Business Law Ch19

Law for Business Chapter 19 Definitions

Warranty Assurance article that conforms to a standard
Express warranty Statement of guarantee by seller
Implied warranty Warranty imposed by law
Full warranty Warranty with unlimited duration of implied warranties
Limited warranty Written warranty, not a full warranty
Constructive notice Information or knowledge imputed by law
Sample Portion of whole mass of transaction
Model Replica of an article
Merchant Person who deals in goods of the kind or by occupation is considered to have particular skill regarding goods involved
Caveat emptor Let the buyer beware
Privity of contract Relationship between contracting parties
Unit Pricing Price stated per unit of measurement
Balloon payment Payment more than twice the normal one
Finance charge Total amount paid for credit
Annual percentage rate (APR) Amount charged for loan as percentage of loan
Injunctive powers Power to issue cease-and-desist orders
Seller's agreement made by a warranty The seller agrees to make good any loss or damages that the purchaser may suffer if the goods are not as represented
Warranty made at the time of the sale It is considered part of the agreement and is therefore binding
Warranty made after the sale It is binding and considered a modification of the sales contract
What constitutes an express warranty The words "warranty" and "guarantee" need not be used. A seller is bound by the ordinary meaning of the words used.
Defective goods If a defect is known to the buyer, an express warranty may not cover them. This would not be true if the seller concealed them.
Implied warranties When construed as inconsistent with an express warranty, an express warranty prevails over an implied warranty
Full or limited warranties A written warranty may be either of these.
Warranties of All Sellers Warranty of Title, Warranty Against Encumbrances, Warranty of Conformity to Description, Sample, or Model, Warranty of Fitness for a Particular Purpose
Additional Warranties of Merchant Warranty Against Infringement, Warranty of Merchantability or Fitness for Normal Use
Warranty of Title The seller confirms ownership of the goods, unless they are making the sale in a representative capacity
Warranty Against Encumbrances The seller ensures that the buyer is free from security interest or any other lien or encumbrance that the seller did not previously know about.
Warranty of Conformity to Description, Sample, or Model Any description of the goods, sample, or model made part of the basis of the sales contract creates an express warranty that the goods shall conform in kind to the description, sample, or model.
Warranty of Fitness for a Particular Purpose An implied contract when the buyer relies on the seller's skill or judgment to select or furnish suitable goods when the seller has reason to know of the buyer's reliance.
Warranty against Infringement Unless otherwise agreed, a merchant warrants that goods shall be delivered free of the rightful claim of any third person by way of patent or trademark infringement.
When the Warranty Against Infringement is not true When a buyer supplies the seller with exact specifications for the preparation or manufacture of goods. The seller makes no implied warranty against infringement.
Warranty of Merchantability or Fitness for Normal Use An implied warranty that the seller makes that implies that the goods are fit for the ordinary purpose for which they are sold.
Warranties in Particular Sales Sale of food or drink, Sale of article with patent or trade name, sale of secondhand or used goods, leased good
Sale of food or drink Carries the implied warranty that the food is fit for its ordinary purpose of human consumption.
Sale of article with patent or trade name The sale of a patented or trademarked article does not bar the existence of a warranty of fitness for a particular purpose, or of merchantability, when the circumstances giving rise to such a warranty otherwise exist.
Sale of secondhand or used goods No warranty arises as to fitness of used property for ordinary use from a sale made by a casual seller.
Leased goods Most states have adopted Article 2A of the UCC, which applies to person property leasing, and it includes express and implied warranty sales.
Exclusion and surrender of warranties Particular provisions, examination by the buyer, dealings and customs, caveat empor
Particular provisions Implied warranties ,including the warranty of merchantability, are excluded by the statements "as is" or "with all faults".
Examination by the buyer No implied warranty exists if the buyer refuses to examine the goods, model, or sample as fully desired.
Dealings and customs An implied warranty can be excluded or modified by the course of dealings, the course of performance, or the usage or trade. The words "no adjustment" would exclude implied warranties.
Caveat empor "Let the buyer beware". The buyer has full opportunity to examine the goods, and the seller has not committed fraud.
Product liability Privity of contract in breach of warranty, warranty protection, effect of reprocessing by distributor
Privity of contract in breach of warranty The UCC abolished the requirement of privity of contract (relationship between the contracting parties) for a person to sue for breach of warranty.
Warranty protection The Magnuson-Moss Warranty and Federal Trade Commission Improvement Act requires that written warranties for consumer goods meet certain requirements. No written warranty may waive the implied warranties of merchantability and fitness for a part. purpose.
Effect of reprocessing by distributor A manufacturer is not liable if a retailer does not complete additional processing when advised by the manufacturer.
Identity of parties Third persons, manufacturer of component part
Third persons The UCC permits recovery for breach of warranty by guests of the buyer, but not for employees or strangers.
Manufacturer of component part Component part manufacturers are protected against suits which involve a part that they manufactured as a component to something else.
Nature and cause of harm The plaintiff need only prove that a sale and warranty existed, the goods did not conform to the warranty, and the injury resulted from the goods for a suit.
Consumer protection Product safety, truth in advertising, product uniformity, usury laws, truth in lending, statutes prohibiting unconscionable contracts, fair credit reporting, state consumer protection agencies
Product safety The Consumer Product Safety Act established the Consumer Product Safety Commission, which may ban products if they do not meet correct standards.
Truth in advertising The Federal Trade Commission is charged with preventing "deceptive acts or practices in or affecting commerce". They may seek voluntary agreement from businesses to stop deceptive advertising.
Product uniformity Products must be packaged so they can be priced per unit of measurement and compared to other products
Usury laws Laws that fix the maximum rate of interest that can be charged
Truth in lending TILA requires lenders to make certain written disclosures, including: 1. The finance charge 2. The APR 3. The number, amount, and due dates of all payments including balloon payments.
Statutes prohibiting unconscionable contracts The UCC provides courts with the authority to refuse to enforce a contract or a part of it because it is unconscionable.
Fair credit reporting The Fair Credit Reporting Act requires creditors to notify a potential recipient of credit whenever any adverse action or denial of credit was based on a credit report.
State consumer protection agencies Agencies in different states can have power to compel fairness in advertising, sales presentations, and other consumer transactions. They sometimes have injunctive powers and can order cease-and-desist orders.
Created by: JuliRae



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