Written Assignment Law

Module 5 Written Assignment

March 18, 2011

Please prepare an essay on the following case study. The submitted essay will be judged on your capacity to present strong, logical discussions that support your conclusions.

Case study

A dealer sold a new car to Raymond Smith. The sales contract contained language expressly disclaiming liability for personal injuries caused as a result of defects in the car and limiting the remedy for breach of warranty to repair or replacement of the defective part. One month after purchasing the auto, Smith was seriously injured when the car veered off the road and into a ditch as a result of a defect in the steering mechanism of the car.

If Smith sues the dealer for breach of warranty and the dealer defends by relying on the contract disclaimer, what would be the result and why?

In your essay, be sure to cite information on warranty and UCC Article 2.

Response

In this case, we are assuming the contract entered into between Raymond Smith, the buyer, and the auto dealer, the seller, is a legal contract. We will assume UCC Article 2 will apply since there was a payment from the buyer to the seller resulting in a sale of a good and under section 2-201(1) of the UCC code, the all contracts must be $500 or more and in writing.

Warranty disclaimers can only be disclaimed, or limited, only if the warranty disclaimer and the warranty can be reasonably construed with each other. The rules for disclaiming implied warranties are:

“As-Is” Disclaimer - The contract language must state “as-is, with all faults” or other language that make it clear to the buyer there are no implied warranties.

“Disclaimer of the Implied Warranty of Merchantability” – The contract must specifically mention the term merchantability to be disclaimed. The disclaimer may be oral or written.

“Disclaimer of the Implied Warranty of Fitness for a Particular Purpose” – If the “as-is” disclaimer is not used, the implied warranty of fitness for...