Risk of Loss
Warranties I: A Brief History
This and the next several pages will summarize warranties under the UCC. This page will review relevant historical background to the UCC warranty provisions.
Freedom of Contract and Warranty at Common Law
The basic principle of business dealing in Anglo-American law is freedom of contract. The parties are generally left free to contract for goods in the manner they see fit. The sting of the doctrine, however, was that at common law this was implemented in the doctrine of caveat emptor--let the buyer beware. If you, as a buyer, agree to a purchase, you have few rights if the product does not fit your expectations. Even at common law, however, there were limitations on what a seller could do to close a sale. Common law doctrines such as misrepresentation, fraud and duress could be used to nullify a supposed sale. Thus, if the seller had "sold" a good to a buyer with a gun to buyer's head, the sale could be rescinded under the common law.
The law of warranty grew up in the caveat emptor context. Warranty became another protection for a buyer. That is, if a good was warranted by the seller and did not live up to its warranty, the buyer had a cause of action for the breach of warranty. At common law and until about 1900 no distinction was made between express and implied warranties. The assumption was that any warranty made would be express. The central question in early (1620-1850) warranty cases was: What constituted a warranty? For example, in the Chandelor case (1625) seller told buyer that the stone he was buying was a bezoar stone. Was the affirmation made by the seller that the stone sold to buyer a "bezoar" stone a warranty? [By the way, a bezoar stone may be defined as "a concretion in the alimentary canal of a ruminant used primarily for medicinal or magical purposes." Maybe you are sorry you asked...] And, specifically, what would it warrant? Would it warrant in fact that it was taken from a goat's internal organs? That the stone would "work" and heal buyer's [unstated] problem? Both?
The court did not sort out these questions but held that the statement made by seller to buyer was not a warranty but was more like an affirmation of fact. This conclusion sounds very strange (and it IS strange) from the perspective of 21st century warranty law, but it is perfectly consistent with a strict doctrine of caveat emptor--you take your chances as a buyer.
Thus, the law of warranty in this period was built on the distinction between affirmations and promises. If the seller just made statements about the goods, they were not warranties. If these were promises, then you have a warranty. How could you tell the difference? Well, another good question. Usually the court would require a showing that the buyer extracted words of promise from the seller or written words such as "I promise" or "I warrant." Otherwise, recovery for disappointed buyers under a warranty theory was not possible.
American law adopted this English precedent in the Seixas case in the early 19th century from NY. Things began to change, however, in the 1870s, in the Pemberton case (also New York), where the court used an analysis of mutual mistake to rescind a sale of a mislabeled chemical which was of poorer quality than the chemical actually contracted for. Thus, rather than allowing damages for disappointed expectations, a court would say that no contract actually was concluded. One might look at this as a softening of the harsher aspects of common law warranty doctrine without, however, giving huge remedies to the disappointed buyer. By appealing to mutual mistake, the court indicated a shift away from the classic caveat emptor doctrine.
The Uniform Sales Act (1906)("USA") recognized express warranties, but further relaxed the common law approach by providing in Section 12 that a warranty was "any affirmation of fact or any promise by the seller relating to the goods....if the natural tendency of such affirmation or promise is to induce the buyer to purchase the goods, and if the buyer purchases the goods relying thereon." Now we have the express melding of fact and promise (which common law divided), and we have the addition of a reliance requirement. The effect of this section of the USA was to broaden warranty protection for buyers.
Another protection for buyers in the warranty area was the development of the doctrine of implied warranty. Such a doctrine, in which the buyer was protected even if no express warranty was made, was a common law development that began around 1900. Various jurisdictions accepted it as the twentieth century developed, but it did not enter into the USA. The precise contours of implied warranty doctrine had to await the drafting and acceptance of Article 2 of the UCC in the 1950s-1970s.