Prof. Bill Long 3/8/05
Disclaiming Warranties under 2-316
This and the following page will address the significant issues of: (1) disclaiming warranties or, as the title to 2-316 calls it, "Exclusion or Modification of Warrantiess" and (2) limitations of remedies under 2-718 and 2-719. I will first go through the language of the section and a few comments on 2-316, with a few words about the Gindy case. Then, I will turn to the limitations of remedies sections. In order for this material to be of most use to you, you need to have the handouts from class on 3/3 and 3/8 and be familiar with our in-class discussions.
Sometimes law giveth and also taketh away. We have seen how warranties "giveth." They afford protection to consumers and to commercial buyers. Warranties assure either that a product is what it purports to be or that the buyer has a remedy for breach of warranty. Yet, sellers can also "take away" the seeming affirmations of a warranty under certain circumstances. 2-316 addresses those circumstances. It might be best to divide 2-316 into two large sections: (1) and (2-3). Subsection (4) is only a "pointer" to the remedies provision of the Code--2-718 and 2-719. Section (1) describes the way to disclaim an express warranty, while sections 2-3 speak of implied warranties.
Cmt 1 is helpful for us to "get our bearings" on the section. "This section is designed principally to deal with those frequent clauses in sales contracts which seek to exclude 'all warranties, express or implied.' Such statements are often "unexpected," as the Cmt says. The purpose of the section, then, is to tell us what kind of language will be effective to disclaim a warranty, and when disclaimer is not possible. But the general perspective seems to be to protect unwary consumers from suprising attempts to disclaim warranty.
Express Warranties. As we discovered in class, the language of 2-316(1) is not crystal clear, but its sense should be obvious enough. The "bottom line" of the section is that it does not allow the exclusion of express warranties but they may be supplemented. Here is the langauge:
"Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this Article on parol or extrinsic evidence (Section 2-202) negation or limitation is inoperative to the extent that such construction is unreasonable."
This language says to things to me: (1) that efforts fully to "negate or limit" an express warranty are not possible--because this effort would have to be construed "as consistent" with the warranty and a negation or full limitation cannot do that; but (2) some negation or limitation is possible--unless it leads to an unreasonable construction. The standard to determine what is acceptable "negation or limitation" is set out in 2-202. Thus, if the words added "explain or supplement" the express warranty, they are permissible, though they may not "contradict" it. I think that the section could have been expressed much more simply, but this is the essence of it. If you understand the two examples I gave in class on 3/3 regarding express warranties--one that said that something was "washable" but then attempted to disclaims this "washability" (not permissible) and one that said a garment was "washable" but the disclaimer said that the warranty doesn't apply to washes abouve 70 degrees Fahrenheit (permissible), you understand this section.
Implied Warranties. As the Gindy court informs us (p.317), sections 2-3 were originally one section of the proposed Code, but this section was redrafted to include the two sections we have today. It provides that disclaimer of 2-314 warranties "must mention merchantability and in case of a writing must be conspicuous." I suppose that means it envisions a situation where there can be an oral disclaimer of an implied warranty, but I don't know why they even opened that can of worms. What I mean is that Cmt.2 talks about protecting the "seller" against false allegations of oral warranties by provisions on parol and extrinsic evidence, but doesn't the language of this section expose the buyer to potential false allegations of the seller-- 'Oh, yeah, I orally disclaimed the implied warranty of merchantability.' But that is what the Code says. I will only require you to know the "merchantability" and "conspicuous" rules.
Conspicuousness is defined in 1-201(10), and it is a rather more extensive definition that you might expect. Read it, please. The gist of the definition is that the disclaimer must call the attention of a reasonable person to itself, though the intricacies of the rule sometimes define what that actually means. The two tests that you should usually apply are the "different sized text" and the "different color" tests. Courts will also look to the "prominence of the disclaimer" (first page or "buried" in the contract) in determining whether a disclaimer is conspicuous.
In order to have a legitimate 2-315 disclaimer, one only need put it in writing and make it conspicuous. It suffices to disclaim a fitness for particular purpose warranty if the disclaimer says: "There are no warranties which extend beyond the description on the face hereof."
Let's continue with the discussion of Section 3 in the next essay.
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