Question 1

What does Latin phrase "caveat emptor" mean?

Accepted Answer

"Caveat emptor" is a Latin phrase that means "let the buyer beware." It is a principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.

Question 2

Which of the following is NOT a type of warranty recognized by Article 2 of the UCC?

Accepted Answer

Article 2 of the UCC recognizes warranties of title, express warranties, and implied warranties of fitness for a particular purpose, but it does not recognize "warranties of information content" as a type of warranty.

Question 3

Eileen is driving down the road during the first nice spring day in Michigan. The car's top is down and Eileen is daydreaming of the idyllic warm summer days soon to arrive. All of a sudden, another car pulls out in front of Eileen. Eileen didn't see the car right away because she had her mind on other things. A thunderous collision ensues. Eileen sues the other driver and the jury finds that Eileen was 25% responsible for the accident. The jury awards damages of $100,000. Explain the doctrines of contributory and comparative negligence, and Eileen's recovery under each.

Accepted Answer

Contributory negligence was once the majority rule, but today applies only in a minority of states. This doctrine provides that if both the plaintiff and the defendant were negligent and the plaintiff's negligence is a though not necessarily the sole) proximate cause of his or her injuries, the plaintiff receives no recovery.
Comparative negligence also known as comparative fault) applies in the majority of states. This doctrine provides that if the plaintiff and the defendant were both negligent, plaintiff's recovery will be reduced by his or her relative degree of fault. Thus, if the plaintiff was 30% at fault and the defendant 70% at fault, the plaintiff will recover 70% of his or her damages, but will not recover for the 30% of his or her damages attributable to his or her own lack of due care. In a pure comparative fault system, the plaintiff will always recover for the portion of the injury attributable to the defendant.
Thus, under a contributory negligence doctrine Eileen would have no recovery, and under a comparative negligence doctrine she would recover $75,000 $100,000 x 75%).

Question 4

Explain the concept of privity of contract as it relates to products liability theory and how the concept has evolved since MacPherson v. Buick Motor Co.

Accepted Answer

The answer of Explain the concept of privity of contract...

Question 5

Jim goes to Carol's Computer Center CCC) to buy a new laptop. While he is there, the saleswoman gives him a sheet of paper listing the warranties for all the laptops. Jim is a tram driver for Walt Disney World in the Goofy parking lot. He asks the saleswoman if the laptop he is thinking about buying will stand the heat of an Orlando summer in the Goofy lot. After she thinks for a minute about how hot it likely gets on a Walt Disney World tram during the summer in Orlando, she tells him that the laptop should be fine for Jim's intended purpose. Jim buys the laptop and uses it to help people keep track of where they parked. One day, while cruising around Goofy 8, Jim's laptop overheats and catches on fire. He is outraged, and he takes the laptop to CCC. CCC refuses to take the laptop back, because it wasn't approved for use in sweltering heat. Does Jim have any recourse?

Accepted Answer

The saleswoman, acting as a representative of CCC, provided an express warranty that the laptop would be suitable for use in the conditions described by Jim. This creates a basis for Jim to seek recourse from CCC for the laptop's failure under the conditions for which he was assured it would be suitable.

Question 6

You work for an accounting firm and you are doing an audit of a publicly traded company. Explain how the Article 2 UCC warranties cover the claims and representations your firm makes in the course of its audit.

Accepted Answer

The answer of You work for an accounting firm and...

Question 7

Any merchant seller of goods impliedly warrants the merchantability of goods, even if the seller did not manufacture the goods. Which of the following is NOT one of the requirements for a good to be "merchantable?"

Accepted Answer

All the options listed (A, B, C) are indeed requirements for goods to be considered "merchantable" under the Uniform Commercial Code (UCC), which governs the sale of goods in the United States. This means that for goods to be merchantable, they must conform to the standards mentioned in all the options.

Question 8

To recover under a negligence theory in tort, a plaintiff must show all of the following EXCEPT:

Accepted Answer

Privity is not a requirement for a negligence claim. Negligence focuses on the breach of a duty of care that causes harm, not on the existence of a direct contractual relationship between the plaintiff and defendant.

Question 9

The Restatement Third) of Torts imposes a post-sale duty to warn on sellers if a reasonable person in the seller's position would provide such a warning. Which of the following is NOT a factor the Restatement uses to evaluate the reasonable person standard?

Accepted Answer

The Restatement Third of Torts focuses on the risk of harm and the feasibility of providing a warning, not on a cost-benefit analysis comparing the cost of the warning to the seller with the potential harm cost to the buyer.

Question 10

Which of the following is NOT a way in which a merchant can limit an implied warranty?

Accepted Answer

Refusing to talk to the buyer about warranties does not legally limit an implied warranty. Implied warranties can be limited by specific actions such as selling goods "as is," through standard trade usage, or by course of performance, but simply refusing to discuss warranties does not constitute a legal method for limiting them.

Question 11

Diane owns and operates a wedding dress emporium. Laura, a bride-to-be, goes to the store to purchase a dress for the big day. Laura picks out a designer dress and heads off happy, knowing that she now has the perfect dress. During the wedding, however, the dress becomes increasingly frayed and torn. The seams are coming undone and the sequins are falling off in droves. During Laura's dance with her father, a sleeve comes off and a strap tears. Laura is devastated and the wedding is a fiasco. There was no express warranty because Diane did not make any express claims about the dress. Was there an implied warranty?

Accepted Answer

The answer of Diane owns and operates a wedding dress...

Question 12

Rikki's Pizza Parlor wished to purchase a used commercial pizza oven. Bubba's Pizza Shop had one for sale. Rikki visited Bubba's restaurant and examined the oven. Rikki explained to Bubba that she had only been in the restaurant business for 6 months, that her restaurant was doing much better than she had expected, that her current pizza oven had insufficient capacity to meet her demand, and that she needed a commercial pizza oven capable of baking up to 30 pizzas an hour. Bubba replied, "Well, you are in luck. This has been a great pizza oven for me, and I'm only getting rid of it because I want an even bigger one myself. I've been in the pizza business for 20 years, and I've really gotten to know ovens."

Accepted Answer

The answer of Rikki's Pizza Parlor wished to purchase a...

Question 13

The Magnuson-Moss Federal Warranty Act applies to written warranties on consumer products. The Act does not address oral warranties, nor does it apply to products sold for resale or for commercial purposes. Which of the following was NOT one of Congress' goals in passing the Act?

Accepted Answer

The Magnuson-Moss Federal Warranty Act was designed to provide consumers with comprehensive information about warranties and to promote competition based on warranty coverage. However, it does not require companies to provide warranties; it only governs the content and disclosure of warranties when companies choose to offer them.

Question 14

You stop by Krazy Jim's House of Pancakes and Computers for some breakfast and to peruse the latest in computer technology. After politely reminding Jim that the maple syrup should already be on the table, you proceed to talk to him about the latest computer model in the store window. Jim describes the computer as "an excellent computer" and proceeds to tout its virtues. After a short stack and some coffee, you take Jim at his word and go home full and carrying a new computer. In retrospect, buying a computer at a pancake restaurant never really did make sense, and of course, the computer is hardly "excellent."
e.g., "this computer is well-designed." In such instances, the courts will often consider the relative knowledge of the parties involved. If the buyer is not knowledgeable about the seller's goods, the courts are more likely to treat the statement as one of fact that creates an express warranty. If the buyer knows as much or almost as much about the goods as the seller, the courts are more likely to treat the statement as one of opinion that does not create an express warranty.
Here, the court might say that Jim was an expert and you relied on his opinion, but his statement does not really seem definite enough to give rise to an express warranty.Fed up with your substandard computer, and craving Jim's famous nana-germ pancakes you head back to the store. You proceed to try to get Jim to take back the computer but to no avail. He won't even serve you pancakes now! Did Jim create an express warranty on the computer?

Accepted Answer

The answer of You stop by Krazy Jim's House of...

Question 15

What is the difference, if any, between implied and express warranties?

Accepted Answer

Implied warranties arise automatically by law when a sale is made, while express warranties require specific statements or actions by the seller to be created.

Question 16

Which of the following is NOT one of the factors used to determine if a seller has created an express warranty?

Accepted Answer

An express warranty is created based on the seller's actions and statements about the goods, such as affirmations of fact, promises, descriptions, and samples or models provided. The buyer's reliance on these statements is not a factor in determining whether an express warranty has been created; rather, it's the seller's statements and actions that are crucial.

Question 17

Clyde Clydeford is an expert in Stradivarius violins. In fact, Clyde has an excellent collection and is considered the best violist in the world at playing "The Devil Went Down To Georgia" by Charlie Daniels. Drawn by Clyde's reputation, Nick Stradivarius, a distant relative of the great violin designer, seeks out Clyde to buy one of his prized violins. Nick tells Clyde that he would like a violin that will allow him to perfect his "fiddlin'" with his traveling country music band. Clyde is reluctant to sell a Stradivarius to such an obvious rube, but the money is right so he decides to go through with the sale. Nick, relying on Clyde's expertise, asks him which violin he should purchase. Clyde talks to Nick about several of the violins and finally recommends a specific one. Nick purchases the violin and leaves happy, knowing that he now owns a piece of his family's distant history and a fine instrument that will help him perform better on stage. When Nick actually uses the violin in a performance he is shocked to hear the horrible sound emanating from his bow. It turns out that Clyde sold him a violin that is fit for a small practice room, so the sound doesn't resonate properly on a large stage. Nick is furious. Is there any implied warranty of fitness for a particular purpose Nick can rely on?

Accepted Answer

Clyde's expertise in Stradivarius violins and the fact that Nick relied on this expertise to choose a violin suitable for his needs establishes an implied warranty of fitness for a particular purpose.

Question 18

All of the following are defenses to a products liability action EXCEPT:

Accepted Answer

Disclaimer of warranty is not a defense to a products liability action because products liability can be based on negligence, strict liability, or breach of warranty, and disclaiming a warranty does not negate a manufacturer's or seller's liability under negligence or strict liability theories.

Question 19

Tony owns and operates a company that sells giant novelty "we are number 1" foam hands. Tony is updating his store to sell giant novelty "we are number two" foam hands and has decided to sell his old display equipment. Tony, being an astute businessman, comes to you for your legal advice. He is worried that an implied warranty of merchantability will attach to his sale. He is concerned because he did not manufacture the display equipment and he does not to give any warranties. Does Tony have to worry about the implied warranty of merchantability?

Accepted Answer

The implied warranty of merchantability applies to merchants who deal in goods of the kind sold. Since Tony is not a merchant of display equipment but rather sells novelty foam hands, the warranty of merchantability does not automatically apply to the sale of his used display equipment.

Question 20

Larry Larcenous sells used autos at Larry Larcenous' Auto Land. On April 1, Larry sells a used Lexus SC 430 hardtop convertible, with a 4.3-liter, 300-horsepower V8 with all-aluminum construction to Gerald Gullible. The sales price was only $45,000, a steal for such a fine automobile! Like all deals too good to be true, it turns out that this deal was also. The police stop Gary less than a week later because the car's original owner reported it stolen. The title Larry received when he originally bought the car is a fake. Obviously, Gary is upset and wants to get his money back. Larry counters that Gary cannot have his money back because Larry didn't know about that the car was stolen and he exercised due care in buying the car. Who wins?

Accepted Answer

Larry violated UCC § 2-312, which provides a warranty of title in sales transactions. This means that when Larry sold the car to Gary, he implicitly warranted that the title to the car was good and that the transfer was rightful, regardless of whether Larry knew the car was stolen.

Quiz 10: Warranties and Products Liability