warranty and express warranty and basis of the bargain

Article 2 builds upon and refines both the CL history of warranty and Section 12 of the Uniform Sales Act. It continues the collapsed distinction between an "affirmation of fact" and a "promise" that was present in the USA but it discards the "reliance" test of the USA in favor of a "basis of the bargain" test. In addition, it will add a new distinction, which the CL didn't know, between an "affirmation of fact" and a "commendation." Thus, we have a tall order sort out some of these basic principles for this most important doctrine.

One other introductory point should be mentioned. Though there are three warranties listed in the code (2-313 through 2-315), there is only one concept of warranty. By focusing in on the definition of warranty, you can see how it applies to each of the three instances where it is extended. Recall that I defined a warranty in class as "an assurance by the seller that the goods are what they purport to be. If they are not, the seller is open to an action for breach of warranty."

2-313, The Express Warranty

There are three subtypes of express warranties, according to the Code. Note, first of all, that an express warranty need not be a written warranty. It can be a statement made by a sales person, either as an inducement to purchase or just in a description of the product. The word "express" is meant to be contrasted with "implied" in 2-314 and 2-315.

According to the Code, an express warranty is:

"(1)(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain..." OR (b) "Any description of the goods which is made part of the basis of the bargain..." OR (c) Any sample or model which is made part of the basis of the bargain."

Thus, when you speak of an express warranty, you must specify which type of express warranty it is. It is "express warranty by description," for example.

Several of the comments are crucial for understanding these basic statements of law. Cmt 3 is a good starting point. It provides that "no specific intention to make a warranty is necessary if any of these factors [the three listed above] is made the basis of the bargain." Then there is a statement which tries to distinguish the Code from the USA: "In actual practice affirmations of fact made by the seller about the goods during a bargain are regarded as part of the desciption of those goods; hence no particular reliance on such statements need be shown..." The burden of proof, actually, is upon the seller to show that any affirmation, once made, is taken out of the agreement.

Cmt 5 is important because it discusses the concept of "description." A description need not be by words, but may include "technical specifications, blueprints and the like." The example I gave in class of the car's odometer is a good one. No words, but it is an express warranty--a warranty by description.

Cmt 6 elucidates the notion of sample or model. The most common examples of express warranty by sample are in the purchase of bulk goods. The seller gives you a handful of the goods and even if the seller says nothing, "good faith requires that the sample be fairly drawn" and the sample becomes an express warranty of the general uniformity of the entire batch. A warranty by model would be if you were to purchase a car "exactly the same" as the showroom model--your car would have to conform to it in precise detail.

The two "pressure points" of the statute, so to speak are to determine what the basis of the bargain is under the law and to distinguish an express warranty from a "mere" commendation. The remainder of this essay will address the former, while the next essay, the latter.

The Basis of the Bargain

This is new langauge for the Code. It is meant to get beyond the reliance concept. Therefore, if any statement goes to "the basis of the bargain," it will be an express warranty. The comments are not particularly helpful in delineating precisely what this means, but a few sentences lend some light. Cmt 6 provides: "In general, the presumption is that any sample or model just as any affirmation of fact is intended to become a bsis of the bargain." Cmt 8 tells us, "As indicated above, all of the statements of the seller do so (i.e., become express warranties) unless good reason is shown to the contrary." This suggests to me that the burden of proof is on the seller to show that a statement/model, etc. was not part of the basis of the bargain.

It might be helpful to think of the "basis of the bargain" requirement in terms of a continuum of possible activities or representations that a seller might make with respect to a product. (1) Of course, the most obvious example is if a buyer relied on an express statement or representation in a buyer's manual regarding a product. That is definitely an express warrranty. (2) Less obvious would be the instance where something is advertised publicly but the purchaser has not seen the ad. Does it become the "basis of the bargain" for the purchaser? Probably so. The dealer/seller has made it so for them; it should not matter if the purchaser is fully aware of the advertised language. Not everyone will agree with me on this, but I think this is probably the case.

(3) Less obvious still is when there has been no representation and no buyer's manual making an affirmation, but that the card promoting the piece (say a watch) in a jewelry store says something about the watch, such as it "keeps ticking under water." If the purchaser did not see it and it was not pointed out, could the buyer claim that it was the basis of the bargain for express warranty purchases if s/he plunged the new watch beneath the waves and it stopped ticking? Probably so, but maybe not. (4) Less obvious still is a representation made by the seller to the buyer directly after the purchase--to the effect of, "did you know that your watch is waterproof?" Since the buyer had already purchased the watch, it is hard to see how it could become the basis of the bargain. But, read Cmt. 7, which may give contrary authority. (5) Finally, if the salesperson sees the purchaser about a month after purchase and says, "well, have you discovered the waterproof feature of the watch?" and then the buyer decides to try out the waterproof feature, only to discover that it, indeed, is not waterproof, the purchaser probably will NOT have a successful claim for express warranty.

Now, on to 2-313(2) regarding commendation.