Whether You Know it or Not You Gave a Warranty
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Whether You Know it or Not You Gave a Warranty
Copyright(C)2003 Stephen Bucaro
You may not know it, but when you sell a product you
automatically provide the buyer with a very extensive warranty.
Article Two of the Uniform Commercial Code provides buyers with
implied warranties of merchantability, fitness, and
noninfringement. Few sellers are even aware of the existence of
these warranties, yet they expose the seller to liability far in
excess of the products price.
* Implied Warranty of Merchantability
The Implied Warranty of Merchantability means your product must
be "fit for the ordinary purposes for which such goods are
used". Because the standard for"merchantability" has never been
defined, this warranty is very ambiguous. Over the years,
merchantability has been defined on a case-by-case basis.
When you sell a product, a warranty that the product is
"merchantable" is implied, unless you specifically exclude that
warranty. The Warranty of Merchantability can be excluded only
with "conspicuous" text. The exclusion text must use a different
size or color of text than the rest of the contract. The
exclusion language must explicitly mention "merchantability".
* Implied Warranty of Fitness
The Implied Warranty of Fitness means your product must be "fit
for a particular purpose". Will The court interpret the Warranty
to mean fit only for the purpose for which the product was
designed? Do you know every purpose and situation for which your
product may be used?
When you sell a product, the ambiguous "warranty of fitness for
a particular purpose" is implied. Specifically exclude the
implied warranty of fitness for a particular purpose, or clearly
document that the product is sold "as-is".
* Implied Warranty of Noninfringement
The Implied Warranty of Noninfringement means that your product
does not infringe on a third parties intellectual property
rights. Can you guarantee that every aspect of your product does
not infringe on some patent, trademark, or copyright?
If your product does infringe on a third parties property
rights, you will be liable to reimburse the buyer for
"consequential" damages, (costs of the lawsuit resulting from
the infringement), and "incidental" damages (costs to replace
the product).
when you sell a product, a Warranty of Noninfringement is
implied. Specifically exclude the implied warranty of
noninfringement. Clearly document that "In no event shall you be
liable for incidental, or consequential damages arising out of
the use of the product.
=> Offer a Limited Warranty
When you sell a product, you should exclude all of the Uniform
Commercial Code's implied warranties. Instead, provide your own
limited warranty. Warrent only that the product will, for a
limited period of time, be free from defects in materials and
craftsmanship when used for the purpose for which it was
designed. The warranty should limit the buyer's remedy to repair
of the defect in the product, replacement of the product, or
refund of the purchase price.
Any statement that you publish in your advertising and marketing
creates an "express" warranty. Be careful about what your
advertising and marketing says. Avoid making express warranties
that you don't mean to make. If your products are being sold
through distributors, make sure that your distributors are aware
of the limited warranty and that they avoid making statements
that create express warranties.
If you sell products online, make sure that customers are
required to review the warranty before completing the
transaction. They should have to read the limited warranty and
then click on an [I Accept] button prior to completing the
transaction. Make sure they have the ability to print the
limited warranty.
Disclaimer: This information is provided with the understanding
that the author is not a lawyer. If legal advice is required,
the services of a competent professional should be sought. By
using this material, the user assumes complete responsibility
for any and all damages resulting from that use.
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