Business Law

TITLE WARRANTIES

( Good Title: Except where disclaimed, a seller warrants that it has good and valid title to the goods being sold and that it may rightfully transfer title to the goods.

( Quiet Possession: A lessor transfers the rights to possess and use the goods during the lease term, not title to the goods; therefore, lessors warrant only that no one (other than the lessor) has a superior right to that of the lessee to possess or use the goods during the lease term.

( No Liens: Except where disclaimed, a seller warrants that the goods are free of any liens – that is, any encumbrance on the goods to satisfy a debt or protect a claim for payment of a debt (e.g., a security interest or a tax lien).

( No Infringements: Except where disclaimed, a merchant seller/lessor warrants that the goods delivered are free from any infringement claims by a third party.

( Disclaimer: A seller can disclaim any of the foregoing warranties by specific language in the sales contract.

( Only specific, written, and conspicuous language can disclaim the no-infringement warranty in a lease contract.

EXPRESS WARRANTIES

( Express Warranty: A seller’s or lessor’s statement of fact or promise, ancillary to an underlying sales or lease agreement, about the quality, description, or performance of the goods.

( UCC express warranties arise when a seller/lessor indicates to a buyer/lessee that the goods conform to

(1) any factual affirmation or promise about the goods the seller/lessor made to the buyer/lessee,

(2) any factual description of the goods the seller/lessor made, e.g., on a label, packaging, or in a brochure, and

(3) any sample or model of the goods the seller/lessor showed the buyer/lessee prior to the sale/lease.

( The affirmation, promise, description, sample, or model must become part of the basis of the bargain – something a reasonable buyer/lessee would consider important when deciding to buy/lease the...