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Are you a merchant or a manufacturer? Do you know what you are warranting as to the goods you sell? If you are a consumer, do you read the Limited Warranties that often come with the goods you purchase? Are you aware that they may lessen, rather than increase, your rights against the manufacturer of the goods?

Under New York’s Uniform Commercial Code (or “UCC”), goods that are sold by someone who regularly trades in goods of that kind carry with them an implied warranty of merchantability, i.e. a warranty that they are fit for the purposes for which such goods are ordinarily used. Further, if the seller knows of the particular purpose for which the goods were intended, and knows that the buyer is relying on the seller to provide goods suitable for that purpose, a warranty that the goods are fit for that particular use applies. Thus, if you go to the paint store and ask for swimming pool paint, but the merchant sells you interior latex paint that is unsuitable for pool use, the merchant may have breached the implied warranty of fitness for a particular use.

Consumer goods are frequently sold with a written Limited Warranty which is used to limit the seller’s implied warranties to the purchaser. To effectively revoke the UCC’s implied warranty of merchantability, that Limited Warranty must use the word “merchantability” when it says that its warranties are limited. To overcome the implied warranty of fitness for a particular use, the Limited Warranty must disclaim the implied warranty conspicuously, i.e. in a different typeface or large type, or in type of a different color than the rest of the document. Anything less, and the UCC’s implied warranties will be in addition to the written warranties provided.

Linda Calder and Steven Taitz of RTT recently obtained a ruling from the New York State Supreme Court, Appellate Division1 pertaining to the implied warranties applicable to goods sold by manufacturers to merchants. RTT’s client was a merchant who purchased goods from a manufacturer for resale to the general public. The manufacturer provided the merchant with a written Limited Warranty that was to be provided to each consumer who ultimately purchased the goods. The Limited Warranty provided by the manufacturer stated in capital letters that it was “in lieu of any and all other remedies and warranties express or implied, including the warranties of merchantability and fitness for a particular purpose.” The manufacturer’s agreement with the merchant contained limiting language, but did not use the word “merchantability” and was not conspicuous. The manufacturer argued that the disclaimer it issued to consumers also applied to the merchant. The Appellate Division disregarded the latter argument and ruled that the defective goods sold to the merchant were covered by the UCC’s implied warranties because the limiting language in the agreement with the merchant did not include the word “merchantability” and was not conspicuous. Thus the manufacturer was liable to the merchant for the defective product it sold him.

Please contact Linda Calder or Steve Taitz for additional information.

1 The Appellate Division is the intermediate level appeals court in New York, to which appeals from the Supreme Court of New York are taken. (The State’s highest court is the Court of Appeals).

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