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Warranty Theories Pt. 2

 

Also See: Warranty Theories Part 1.

This is the second in a multi-part series on the basics of products liability practice. This month’s installment will discuss products liability causes of action based on express and implied warranties. Causes of action for breach of warranty are contract, rather than tort, causes of action. These actions, which arose out of the common law of contracts, are now governed by the Florida Uniform Commercial Code contained in Chapters 670 through 680, Florida Statutes. Click here for a sample complaint alleging breach of express and implied warranties.

The Most Important Distinction between Strict Liability and Breach of Warranty:
Privity of Contract Requirement

The most important distinction between product liability actions based in warranty versus actions based in negligence or strict liability is that warranty causes of action, both express and implied, require privity of contract between the seller and the injured party. If a plaintiff cannot establish privity of contract, he is limited to negligence and strict liability theories.1

In the years leading up to the Florida Supreme Court’s adoption of the doctrine of strict liability in West v. Caterpillar, 531 So.2d 531 (Fla. 1976), Florida case law had created many exceptions to the privity requirement, making it easier for injured parties to recover. However, these exceptions were eliminated after West v. Caterpillar. See, Kramer v. Piper Aircraft Corporation, 520 So.2d 37 (Fla. 1988) in which the Florida Supreme Court stated: “ . . . the doctrine of strict liability in tort supplants all no-privity, breach of implied warranty cases, because it was, in effect, created out of these cases. This groundbreaking holding [in West v. Caterpillar] did not result in the demise of the contract action of breach of implied warranty, as that action remains, said the West court, where privity of contract is shown.” Id. at 39.

The requirement that the seller and injured party be in privity of contract eliminates breach of warranty as a cause of action in “bystander cases” in which the injured party has no relationship to the product. However, in F.S. § 672.318, entitled “Third-party beneficiaries of warranties express or implied,” the Florida legislature extended the reach of the privity relationship. That section provides that “[a] seller’s warranty whether express or implied extends to any natural person who is in the family or household of his or her buyer, who is a guest in his or her home or who is an employee, servant, or agent of his or her buyer if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty.” F.S. § 672.318.

EXPRESS WARRANTY

Florida Statutes § 672.313 states that an express warranty is created by an affirmation of fact or promise made by the seller to the buyer that relates to the goods, by any description of the goods that is made part of the basis of the bargain, or by any sample or model that is made part of the basis of the bargain. The warranty created by any of the above is that the product will conform to the promise, description, sample, or model. According to Florida Statutes, Section 762.313, it is not necessary that the seller use formal words such as “warranty” or “guarantee” or that the seller have a specific intention to make a warranty, in order for an express warranty to be created. However, a statement that is merely about the value of the goods or is merely the seller’s opinion or commendation of the goods does not create a warranty.

Elements of an Action for Breach of Express Warranty

The essential elements of a cause of action for breach of express warranty are:

1. A sale of goods

2. Privity between Plaintiff and Defendant

3. A warranty as described in F.S. § 672.313

4. Breach of the warranty

5. Legal causation

6. Notice to the Defendant of the breach

7. Damages2

The “Notice” element (Number 6 above) is a statutory requirement contained in F.S. § 672.607(3)(a). That statute requires that a buyer must “within a reasonable time after he or she discovers or should have discovered any breach notify the seller of the breach or be barred from any remedy. . . .” The notice required by F.S. § 672.607(3)(a) is a condition precedent to maintaining a cause of action for breach of warranty and the burden is on the plaintiff to show that the condition was met. General Matters, Inc. v. Paramount Canning Company, 382 So.2d 1262 (Fla. 2nd DCA 1980). See also, Dunham-Bush, Inc. v. Thermo-Air Service, Inc., 351 So.2d 351 (Fla. 4th DCA 1977) and F.S. §672.607(3)(a).

Defenses to an Action for Breach of Express Warranty

The most common defenses to an action for breach of express warranty go to element Number 3 above, whether or not a warranty as described in Florida Statutes § 672.313 was created. This element, a warranty as described in F.S. § 672.313, encompasses the notion that the warranty must have been part of the “basis of the bargain.” 3   A common defense to a cause of action for breach of express warranty is that, although a warranty may have been made, the buyer did not rely on the statement made by the defendant as part of the “basis of the bargain”. Another common defense to an action for express warranty is disclaimer. Since most sales contracts have “boilerplate” disclaimer clauses, disclaimers can also be a major hurdle in products liability cases. A third common defense is that no warranty was created by a seller’s statements because the seller was merely “puffing”, which is referred to in the final sentence of F.S. § 762.313 as “a statement purporting to be merely the seller’s opinion.”

IMPLIED WARRANTY

There are two types of implied warranties: the implied warranty of merchantability and the implied warranty of fitness for a particular purpose. These two types of implied warranties are described in F.S. § 672.314 and 672.315, respectively.

The Implied Warranty of Merchantability

Florida Statutes § 672.314 says that when a seller sells a product that is of the kind of product he regularly sells, there is an implied warranty in the sales contract that the goods will be “merchantable”. To be merchantable, goods must meet the following criteria:

(a) Pass without objection in the trade under the contract description; and

(b) In the case of fungible goods, be of fair average quality within the description; and

(c) Be fit for the ordinary purposes for which such goods are used; and

(d) Run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and

(e) Be adequately contained, packaged, and labeled as the agreement may require; and

(f) Conform to the promises or affirmations of fact made on the container or label, if any.

Elements of a Cause of Action for Breach of an Implied Warranty of Merchantability

To state a cause of action for breach either the implied warranty of merchantability, the plaintiff must allege the following elements:

1. A sale of goods

2. Privity between Plaintiff and Defendant

3. Goods were defective (i.e. not reasonably fit for the purposes intended or reasonably foreseeable) when they left the defendant

4. Plaintiff must have been a foreseeable user of the goods

5. Legal causation4

6. Notice to the Defendant of the breach5

7. Damages

The Implied Warranty of Fitness for a Particular Purpose

Florida Statutes § 672.315 deals with implied warranties of fitness for a particular purpose. An implied warranty of fitness for a particular purpose arises where, at the time of contracting, the seller had reason to know of a particular purpose for which the goods are required, and the buyer relied on the seller’s skill or judgment to select or furnish suitable goods for that purpose. This type of implied warranty arises in the situation where the seller has certain expertise that the buyer does not and recommends a particular product to meet a need of the buyer. The buyer must rely on the seller’s expertise, skill, or judgment to select the proper product for the buyer’s purpose.

Elements of a Cause of Action for Breach of an Implied Warranty of Fitness for a Particular Purpose

The elements of a cause of action for breach of the implied warranty of fitness for a particular purpose are very similar to the elements for breach of an implied warranty of merchantability. They are:

1. A sale of goods

2. Privity between Plaintiff and Defendant

3. Defendant knowingly sold the product for a particular purpose

4. Plaintiff bought the product for a particular purpose in reliance in the Defendant’s judgment

5. Goods were defective (i.e. not fit for the particular purpose for which Defendant knowingly sold the goods) when they left the defendant

6. Legal causation6

7. Notice to the defendant of the breach7

8. Damages

A “Defect” is an Element of Both Strict Liability and Breach of Warranty Cases

The concept of “defect” in strict liability actions is applicable to breach of express and implied warranty actions with slight variations on what it means to be defective under these different theories. While the Uniform Commercial Code introduced the terms “not merchantable” and “not fit for its ordinary purpose,” Florida’s standard jury instructions suggest that those terms are essentially interchangeable with the term “defect” in the products liability context. Florida Standard Jury Instruction PL1, PL2 and PL3 provide as follows:

The issues for your determination on the claim of (claimant) against (defendant) are whether the (describe product)[sold][supplied] by (defendant) was defective when it left the possession of (defendant) and, if so, whether such defect was a legal cause of [loss][injury] [or][damage] sustained by (claimant or person for whose injury claim is made). A product is defective.

PL 1 express warranty

if it does not conform to representations of fact made by (defendant), orally or in writing, in connection with the [sale][transaction], on which (name) relied in the [purchase and]use of the product. [Such a representation must be one of fact, rather than opinion].

PL 2 implied warranty of merchantability

if it is not reasonably fit for the uses intended or reasonably foreseeable by (defendant).

PL 3 implied warranty of fitness for particular purpose

if it is not reasonably fit for the specific purpose for which (defendant) knowingly sold the product and for which the purchaser bought the product in reliance on the judgment of (defendant).

Damages Recoverable in a Breach of Warranty Case

Florida Statutes §672.714 provides that if a buyer has accepted goods and given notice that he goods are nonconforming under F.S. § 672.607(3)(a), he or she may recover the loss resulting in the ordinary course of events from the seller’s breach, as determined in any manner which is reasonable. Subsection (2) of that Section states that the measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount. Subsection (3) goes on to say that “[i]n a proper case any incidental and consequential damages . . . may also be recovered.”

The following Section, F.S. §672.715, states that consequential damages include “[i]njury to person or property proximately resulting from any breach of warranty.” F.S. §672.715 (2)(b). Therefore, in a breach of warranty case involving personal injuries, the buyer of a product is entitled to recover the same damages for the personal injuries as he would be entitled to recover in a strict liability action.

 

[1] Kramer v. Piper Aircraft Corporation, 520 So.2d 37 (Fla. 1988).

[2] As to all elements, see Dunham-Bush, Inc. v. Thermo-Air Service, Inc., 351 So.2d 351 (Fla. 4th DCA 1977).

[3] Thursby v. Reynolds Metals Company, 466 So.2d 245 (Fla. 1st DCA 1984)

[4] Elements 1 through 4 are named in Amoroso v. Samuel Friedland Family Enterprises, 604 So.2d 827 (Fla. 4th DCA 1992), aff’d, 630 So.2d 1067 (Fla. 1994).

[5] The statutory notice requirement is stated in Dunham-Bush, Inc. v. Thermo-Air Service, Inc., 351 So.2d 351 (Fla. 4th DCA 1977) and F.S. §672.607(3)(a).

[6] Elements 1 through 4 are named in Amoroso v. Samuel Friedland Family Enterprises, 604 So.2d 827 (Fla. 4th DCA 1992), aff’d, 630 So.2d 1067 (Fla. 1994).

[7] The statutory notice requirement is stated in Dunham-Bush, Inc. v. Thermo-Air Service, Inc., 351 So.2d 351 (Fla. 4th DCA 1977) and F.S. §672.607(3)(a).

 

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