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Implied Warranty of Merchantability & Implied Warranty of Fitness for Particular Purpose

— July 21, 2015

Implied Warranty of Merchantability

In order to protect consumers, Hawaiian law applies two inherent promises into commercial transactions:  that the goods sold will do what they are supposed to do and that there is nothing significantly wrong with them. If a product meets these two promises then they are “fit to be sold”. Hawaii Revised Statutes § 490:2-314 defines an implied warranty as a guarantee through implication that the product must be of quality comparable to that generally acceptable in that line of trade and is suitable for sale. There is an exception to this rule if the seller of the product explicitly states otherwise by using phrases such as “as is” or “defective”.   The law will also protect buyers of second hand merchandise even if a seller is not a “merchant” as to the goods in question, if the seller states generally that the goods are “guaranteed” that would be understood as creating a warranty.

In order to prevail in a breach of the implied warranty of merchantability claim, a plaintiff must prove:

1)    The seller is a merchant of such good; and,

2)    The product was defective or unfit for the ordinary purpose for which it is used.

If you buy an oven at a typical store, the seller is impliedly promising you that the oven is in proper condition for sale and it will do what ovens are supposed to do – bake food at a certain temperature over time. If the oven doesn’t heat, or if it heats without proper temperature control and burns down the kitchen, 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 what they bargained for, such as a working oven. Further, if a plaintiff is injured while reasonably using a defective product, a defendant is not relieved of liability for those damages. Indeed, a defective product is one that causes injury when it is used in a reasonable manner and the tort and implied warranty doctrines of products liability were designed to compensate plaintiffs for these very injuries as well as any damages caused by the loss of the oven.

For pleading purposes, it is sufficient for a consumer to plead a cognizable loss under a benefit of the bargain theory—i.e., that the consumer contracted for a safe product but received a defective product— even if the product has not yet caused any external damage. Larsen v. Pacesetter Sys., Inc., 74 Haw. 1 (Haw. 1992) In Larsen, the Court held that the risk of harm in a defective product created an unmerchantable condition sufficient to support an action for the breach of the implied warranty of merchantability. The Plaintiff in Larsen used a pacemaker that had not malfunctioned or caused any injury. The product was still held to be in a defective condition sufficient to support an action for breach of the implied warranty of merchantability. Larsen v. Pacesetter Sys., Inc., 74 Haw. 1 (Haw. 1992)

Implied warranty of Fitness for Particular Purpose

Generally, HRS § 490:2-315 creates an implied warranty of fitness for particular purpose when: the seller at the time of contracting has reason to know any particular purpose for which the goods are required; and, the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods shall be fit for such purpose.

To prevail in a breach of the implied warranty of fitness for a particular purpose claim, a plaintiff must prove:

1)    plaintiff desired a product for a particular purpose;

2)    defendant had reason to know about this purpose;

3)    The product sold to plaintiff failed to meet that purpose;

4)    defendant made an affirmation of facts or promise regarding the product;

5)    That statement became part of the basis of the bargain; and,

6)    The product failed to perform according to the statement.

Keep in mind, reliance is not an essential element of a breach of express warranty claim, implied warranty claims based on strict liability can be maintained against the merchant seller even though the defect was not detectable by the seller.

In Brown, the Hawaii Court of Appeals ruled that when a buyer expressly or by implication, makes known to the seller the particular purpose for which the goods are required, and if it appears that the buyer relies on the seller’s skill or judgment, there is an implied warranty that the goods shall be reasonably fit for such purpose.Brown v. Chapman, 304 F.2d 149 (9th Cir. Haw. 1962) Plaintiffs in Brown purchased a grass skirt which caught fire at a party. The Defendants in Brown argued that since Plaintiffs had used a grass hula skirt not as clothing, but as a decoration on a wall, the skirt ‘was fit for and fulfilled the purpose for which it was purchased.’

The court rejected this narrow interpretation of implied warranty of fitness , focusing on what a consumer would understand a grass skirt to be used for; “The evidence, including the jury’s observation of Carol and Mrs. Leppard in court, would support a finding by the jury: (1) that it was or must have been known to defendants at the time of sale (a) that this hula skirt was intended to be sued as an article of clothing, (b) that Mrs. Leppard would probably lend it to others, and (c) that it would probably be used as an article of clothing at dances, costume parties or other social gatherings, large or small, where people drank or smoked, which is a very common modern condition; and (2) considering the relative size, height, etc. of Carol and Mrs. Leppard and the length of the skirt and how it was pinned on Carol, that the wearing of the skirt by plaintiff would not constitute a different use or purpose from that contemplated at the time of sale.”

Statute of Limitation

There is a four year statute of limitations under Hawaii’s Uniform Commercial Code which applies to plaintiffs in an implied warranty of merchantability and implied warranty of fitness for particular purpose claim for personal injury

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