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Express and Implied Warranties Campbell University School of Law Scholarly Repository @ Campbell University School of Law Scholarly Works Faculty Scholarship 1980 Some Thoughts About Warranty Law: Express and Implied Warranties Richard A. Lord Campbell University School of Law, [email protected] Follow this and additional works at: https://scholarship.law.campbell.edu/fac_sw Recommended Citation Richard A. Lord, Some Thoughts About Warranty Law: Express and Implied Warranties, 56 Notre Dame L. Rev. 4 (1980). Available at: https://scholarship.law.campbell.edu/fac_sw/25 This Article is brought to you for free and open access by the Faculty Scholarship at Scholarly Repository @ Campbell University School of Law. It has been accepted for inclusion in Scholarly Works by an authorized administrator of Scholarly Repository @ Campbell University School of Law. SOME THOUGHTS ABOUT WARRANTY LAW: EXPRESS AND IMPLIED WARRANTIES* RICHARD A. LORD** I. INTRODUCTION ............................ 511 II. EXPRESS WARRANTIES ...................... 512 A. CREATION OF THE EXPRESS WARRANTY ............. 513 1. Creation by Affirmation of Fact or Promise .......... 513 2. Creation by Description....................... 516 3. Creation by Sample or Model ................... 518 4. Basis of the Bargain.:Effect of Affirmation, Promise, Description, or Sample on the Transaction........... 525 a. Basis of the Bargain: The Pre-Sale Contributionand Expectation Test ......................... 528 b. Basis of the Bargain: Contribution, Expectation, and the Transactionas a Whole - Recovery in a Post-Transaction Setting................ 529 5. Puffing: Statements of Value, Opinion, or Commendation............................ 537 B. DISCLAIMER OF THE EXPRESS WARRANTY ............ 538 C. UNCONSCIONABILITY AND DISCLAIMERS ............. 543 1. UnconscionableDisclaimers: The Courts' Options ..... 545 2. Limitation of Remedies ....................... 546 D. EXPRESS WARRANTY DISCLAIMERS AND THE PAROL EVIDENCE RULE . ............................ 552 *The original title of this article was to be Some Thoughts About Warranty Law in North Dakota, Part Two: Express and Implied Warranties. Due to the time between the publishing of Part One and this article, and the modified scope of this article, the title has been changed to reflect a treatment of warranty law not limited specifically to North Dakota law. **Associate Professor of Law, University of North Dakota; J.D., Memphis State University, 1975; LL.M., Yale University, 1976. The author gratefully acknowledges the research assistance of Jan Fetsch, Class of 1981, and Lorna Brown, Class of 1982. HeinOnline -- 56 N.D. L. Rev. 509 1979-1980 510 NORTH DAKOTA LAW REVIEW 1. Exceptions to the ParolEvidence Rule .............. 553 2. The ParolEvidence Rule and the Code .............. 554 E . D AMAGES .................................. 562 1. Damages Under the Code...................... 562 2. Direct and ConsequentialDamages Distinguished...... 563 3. Measures of Damages: Special Circumstances......... 564 4. The PrimaryDamage Rule and Cost of Repair........ 569 III. IMPLIED WARRANTIES ....................... 571 A. Warranties Arising from Course of Dealing or Usage of T rade ................................... 572 1. Creation of Implied Warrantiesby Course of Dealing or Usage of Trade ........................... 572 2. Exclusion or Modification by Usage, Dealing, and Performance ............................ 582 3. Limitation of Remedies by Usage, Dealing, or Performance.............................. 590 4. Other Cases Successfully Invoking Usage, Dealing, and Performance ............................ 593 B. THE IMPLIED WARRANTY OF FITNESS FOR PARTICULAR PURPOSE ................................... 597 1. Creation of the Warranty ...................... 598 2. Disclaimers ............................... 601 3. ParolEvidence Considerations .................. 602 4. Conspicuousness ............................ 605 5. The Buyer's ParticularPurpose .................. 608 6. The Buyer's Reliance ........................ 615 7. Used Goods and Fitnessfor ParticularPurpose ........ 619 8. Express Warranty of Fitnessfor ParticularPurpose ..... 619 9. Fitnessfor ParticularPurpose: North Dakota Cases ..... 620 C. THE IMPLIED WARRANTY OF MERCHANTABILITY ...... 626 1. Merchants and Merchantability................. 627 2. Goods and M erchantability .................... 644 a. Foodand Drink .................... .... 645 HeinOnline -- 56 N.D. L. Rev. 510 1979-1980 WARRANTY LAW 511 b. A nimals ............................. 646 c. H uman Products........................ 647 d. Unusual Goods in North Dakota ............. 648 3. Criteriafor M erchantability .................... 650 a. Passing Without Objection ................. 650 b. Fungible Goods.: FairAverage Quality .......... 653 c. Even Kind, Quality, and Quantity ............ 654 d. Adequacy of Containers, Packages, and Labels..... 655 e. Conformity with Af.i-r:-nations on the Label or Container........................... 663 f Fitnessfor Ordinary Purpose ................ 664 i. Ordinary versus Extraordinary Use ....... 665 ii. Abnormal Use .................... 668 iii. Misuse........................... 670 iv. Used Goods and Second Quality Goods .... 674 4. Disclaimerof the Warranty ofMerchantability ........ 679 a. "As Is "Clauses and Language Equivalents ...... 680 b. Disclaimerby Examination................. 684 c. Disclaimerby Usage, Dealing, and Performance . 689 d. Disclaimers: FarmMachinery in North Dakota .... 690 IV. CONCLUSION ............................... 700 I. INTRODUCTION This article will conclude the author's consideration of warranty law in North Dakota, which began with an explanation of some of the more interesting aspects of the warranty of title.' It is the goal of this article to explore some of the problems that occur with respect to express and implied warranties which arise in connection with the sale of goods. To that end, the article will first 1. Lord, Some Thoughts about Warranty Law in North Dakota, Part One., The Warranty of Title, 53 N.D.L. REV. 537 (1977). HeinOnline -- 56 N.D. L. Rev. 511 1979-1980 NORTH DAKOTA LAW REVIEW discuss the way in which these warranties arise, including their history and status, some of the more recent developments in this state, and finally probable future prospects. The practitioner should be aware of relatively recent federal legislation, the Magnuson-Moss Federal Trade Commission Improvement Act, 2 which will greatly expand the applicability of implied warranties. A full discussion of this federal law is beyond the scope of this article.' In addition, the recent developments in the law of strict liability and products liability which complement and overlap warranty law are beyond the scope of this article.4 II. EXPRESS WARRANTIES Express warranties have existed longer than any other but the warranty of title.5 Because express warranties are usually intentionally created by the parties and are not some accident of fate6 or implication of positive law,7 their boundaries have remained relatively stable over the years, and the rules of law governing them have changed very little. Nevertheless, the codification of these boundaries and rules, first in the Uniform Sales Act and more -r cently in the Uniform Commercial Code, has provided sorme expansion of the use of such warranties as well as some clarification of their hazier applications. 2. Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, Pub. L. No. 95- 558, 92 Stat. 2130 (1978); Pub. L. No. 94-299, S 2, 90 Stat. 588 (1976); Pub. L. No. 93-637, 88 Stat. 2183 (1975) (codified in scattered sections of 15 U.S.C.) [hereinafter cited as the "Act"]. 3. The Act gives the Federal Trade Commission the power to require that, when a consumer product is sold with a written warranty, the warranty must be readily understandable as to its terms and conditions, even to the extent of making the warranty available prior to purchase. The Act further requires that all written warranties on consumer products be designated as either "full" or "limited," depending upon whether the warranty meets the federal minimum standards. Whether the warranty is full or limited, no disclaimer or modification of implied warranties is permissible if a written warranty is given. Implied warranties can be limited in duration to the duration of a written limited warranty, if reasonable. The effect is to make the Uniform Commercial Code implied warranties significantly more important, since in many instances they will no longer be disclaimable. The Act encourages informal dispute settlement and requires resort thereto if an informal dispute settlement procedure approved by the Fedt.-ai -rade Commision is set up prior to the commencement of any civil action. Beyond that, the Act confers a cause of action on any consumer for failure to comply with any obligation of the Act, and gives state and federal courts concurrent .Jurisdiction, subject to stiff jurisdictional limits for federal courts. The Act also allows for a grant of attorney's fees. The Act, supra note 2. For additional aspects of the Act and the regulations enacted pursuant thereto, see 16 C.F.R. 55 700.1-703.8 (1980). 4. See, e.g., Note, Economic Losses and Strict Products Liability: A Record of Judicial Confusion Between Contractand Tort, 54 NOTRE DAME LAW. 118 (1978). 5. This is true in North Dakota as it is generally. While warranty of title actions existed as early as 1876, see Cheatham v. Wilber, 1 Dak. 335, 46 N.W. 580 (1876), the first non-title case was decided
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