Reading Between the Lines: Of Unspoken and Unwritten Warranties
By Charles A. “Chip” Gentry
Last week, I received a call from “Warren T. Lacking,” the owner and sole proprietor of Lacking Warren T. Windows LLC. After a short introduction, Warren explained that he had just been served with papers claiming that the windows his company manufactured violated the Warranty of Merchantability.
“The terms of the contract don’t even mention a warranty of merchantability,” Warren explained.
“Unfortunately, the warranty of merchantability is implied in every contract for the sale of goods, provided that the seller is a merchant with respect to goods of that kind,” I reluctantly informed him.
Warren, puzzled and confused, then asked, “What do you mean the warranty is implied?”
Whether you know it or not, there is likely a warranty contained in each and every contract of the sale of fenestration products your company sells. That warranty is the Implied Warranty of Merchantability and, by law it is contained within every contract for the sale of goods by a merchant who deals in those goods, whether or not such warranty is expressly contained in the terms of the contract. As a dealer, manufacturer or supplier of glass or other fenestration products, it’s important to know the ins-and-outs of the warranties contained automatically within your company’s contracts under the Uniform Commercial Code.
WHAT YOU NEED TO KNOW
The Implied Warranty of Merchantability has six essential elements. In order to be merchantable, the goods sold must:
- Pass without objection under the contract description;
- Be of fair and average quality;
- Be fit for the ordinary purposes for which the goods are to be used;
- Be of even kind, quality and quantity;
- Be adequately contained, packaged or labeled; and
- Conform to any promises or affirmations of fact made on the label.
Most of these elements are fairly self-explanatory. If the contract states your company is to ship ten windows then, in accordance with the quantity section of prong four, a shipment of nine doors violates the Warranty of Merchantability. By far, the most common Implied Warranty of Merchantability violation stems from element three: the goods must be fit for the ordinary purpose for which they are to be used.
PROTECTING YOUR BUSINESS
Where the warranty of merchantability can get tricky is when the buyer’s description of the requested product is “incomplete.” In Warren’s case, a company had ordered a shipment of “hurricane-wind-resistant windows” for a new high-rise apartment complex on the coast of the Atlantic Ocean. Warren, knowing that the windows would also need a sand- and salt-resistant coating, arguably has a duty to manufacture windows with said coating, because such coating is required for the windows to be fit for the ordinary purpose for which they are to be used.
As I explained to a frustrated Warren on the phone that afternoon, the Implied Warranty of Merchantability aims to protect the less experienced and educated party to the transaction in an effort to ensure the utmost utility from the products being ordered and supplied. My advice to him was: either disclaim the Implied Warranty of Merchantability directly in your contract terms, and/or make sure to always have a detailed discussion with the purchaser before beginning manufacturing. Understanding the intended purpose of the product is vital to protecting you and your business. A quick review of your company’s standard contract by an experienced fenestration industry attorney could save you ample time and, more importantly, thousands of dollars in litigation costs.
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