Product Liability Laws: Implied and Express Warranties

How are manufacturers held accountable for the performance of their products?

A warranty is a seller or manufacturer’s promise to stand behind its product. It is a seller or manufacture’s statement about the integrity of their product and about their commitment to correct problems if it fails. There are two kinds of warranties: implied warranties and express warranties.

State laws create implied warranties that go from the seller or merchant to the consumers. A consumer transaction creates two types of implied warranties. These are the implied warranty of merchantability and the implied warranty of fitness for a particular purpose.

In the implied warranty of merchantability, a merchant promises that the goods sold will perform properly and be in correct condition. This means that the goods are fit to be sold. Under the law, merchants make this promise automatically every time they sell a product they are in the business to sell. For example, if an automobile dealer sells a car it is promising that the car is in proper condition and that it will do what cars do and will transport the buyer. If the car does not run or if it only runs sometimes, then the car is not fit to be sold as a car. Thus, the dealer’s implied warranty of merchantability would be breached. If that is the case, the law requires that the manufacturer provide the buyer with a running car.

If you as a buyer rely on the advice of the seller that a product can be used for a specific purpose, the law creates an implied warranty of fitness for a particular purpose. For example, suppose a customer asks a John Deere dealer for a tractor that can dig ditches. If the dealer recommends a particular model and the customer buys that model on the strength of that recommendation, the law says that the dealer has made a warranty of fitness for a particular purpose. If the tractor can only mow ditches, the warranty of fitness for a particular purpose is breached.

Implied warranties are promises about the condition of products at the time they are sold, but they do not assure that a product will last for any specific length of time. The normal durability of a product is, of course, one aspect of a product's merchantability or its fitness for a particular purpose. The law does not provide that everything that can possibly go wrong with a product falls within the scope of implied warranties. For example, implied warranties do not cover problems such as those caused by abuse, misuse, ordinary wear, failure to follow directions, or improper maintenance.

An implied warranty of merchantability on a used product is a promise that it can be used as expected, given its type, age and price range. As with new merchandise, implied warranties on used merchandise apply only when the seller is a merchant who deals such goods, not when a sale is made by a private individual.

To disclaim an implied warranty, the seller must inform consumers in a conspicuous manner, and generally in writing, that it will not be responsible if the product malfunctions or is defective. The law requires that the consumer understand that the risk of the product failing falls on them. The seller must specifically indicate that it does not warrant "merchantability," or use a phrase such as "with all faults," or "as is."

Federal law, the Magnuson-Moss Act, prohibits a seller from disclaiming implied warranties on any consumer product if it offers a written warranty for that product.

Even if a seller sells a product "as is" and it proves to be defective or dangerous and causes personal injury to someone, the seller may still be liable under the principles of product liability. Selling the product "as is" does not eliminate this liability.

Express warranties explicitly offer warranties to the consumer in the course of a sales transaction. They are promises and statements that the seller voluntarily makes about its product or about its commitment to remedy the defects and malfunctions that may occur. Express warranties range from advertising claims to formal certificates. An express warranty can be made either orally or in writing. However, only written warranties on consumer products are covered by the Magnuson-Moss Warranty Act.

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