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What is the Implied Warranty of Merchantability?

— March 2, 2015

When you buy any product, you expect that it will do what it is supposed to do. While this seems like common sense it is also part of the law under the concept of an implied warranty in U.C.C §2-314. The law says that any goods delivered under an agreement made by a seller come with an inherent guarantee of quality or an implied warranty of merchantability. Be sure to check any packaging or sales documentation carefully; a seller can waive the implied warranty of merchantability if the seller explicitly states that the product is not guaranteed by using phrases such as “as is” or “defective” if it raises that language as an affirmative defense. Shows v. Man Engines & Components, Inc., 364 S.W.3d 348 (Tex. App. Houston 14th Dist. 2012)

Not fit to be Sold- Breaching an Implied Warranty

What does it mean that a product is fit to be sold? Imagine you buy an oven and the seller promises that the oven is in proper condition for sale because it will do what ovens are supposed to do. But, if the oven doesn’t heat, or if it heats without proper temperature control, then the oven isn’t fit for sale as an oven, and the seller has breached the implied warranty of merchantability. In such a case, the law requires the seller to provide a remedy so that the buyer gets the value of the product as well as any damage the product caused.

The damage caused by a defective product in a home can cause a lot of indirect damage, but those related damages can also be recovered. In Melody Home Mfg. Co. v. Barnes, a family ordered a modular home. They soon found that a sink was not connected to the drain in one of the walls and had caused damage to the sheetrock, insulation, and flooring. When the sellers attempted to repair the damages, the workmen caused much more damage. The court held that the family could recover the damage to the wall and the damage caused by the workmen. Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349 (Tex. 1987)

Used Products–Do I still have a claim?

Keep in mind that the implied warranty of merchantability, passes to subsequent purchasers (second hand products). The court held in MAN Engines & Components, Inc v. Shows, that the resale of a used good does not automatically end any implied warranty obligations. This case involved a buyer’s purchase of a used 50-foot yacht from a broker. Several years following that purchase, the in-board engine failed because of an allegedly bad valve, and the buyer of the yacht sued the engine manufacturer for negligence, fraud, negligent misrepresentation, breaches of express and implied warranties, and deceptive trade practices. The jury found the engine manufacturer liable only for breach of the implied warranty of merchantability and awarded the buyer $89,967 in damages.

When dealing with second hand products, be careful to file the law suit as soon as possible. Generally there is a four year statute of limitations for a breach of warranty. Hixon v. Tyco Int’l, (Tex. App. Houston 1st Dist. Apr. 21, 2011) But, the Texas Supreme Court has held that implied warranties brought under the DTPA, are subject to the DTPA’s two-year statute of limitations under Tex. Bus. & Com. Code Ann. § 17.565. Gonzales v. Southwest Olshan Found. Repair Co., LLC, 400 S.W.3d 52 (Tex. 2013).

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