Warranties in the Sale of Goods

A warranty is a legally enforceable promise that certain facts and representations about a product are true. Article 2 of the New Mexico UCC controls express and implied warranties in the sale of goods. §§55-2-101 et seq. In addition, the federal Magnuson-Moss Warranty Act sets minimum standards for the contents of a written warranty for goods. 15 U.S.C. §2301 et seq. See also FTC Interpretations of the Magnuson-Moss Warranty Act, 16 C.F.R. §700 (2004).

A.  How to Determine Whether a Warranty Exists

Before the question of breach of contract can be evaluated, the judge must determine whether a warranty exists and, if so, the scope of the warranty.  There are two basic types of warranties:

1.  Express Warranty (§55-2-313): The seller expressly makes an affirmation of fact or promise or a description of the goods that becomes part of the basis of the bargain.  For example, if the seller describes a truck as a “96 Ford,” then the truck is expressly warranted to be a “96 Ford.”  An express warranty can also be created by the seller’s reference to any sample or model that becomes the basis of the bargain.  It is important to note that use of the words “warranty” or “guarantee” are not necessary to create an express warranty.  Additionally, the seller does not need to intend to create an express warranty for one to be inferred from the seller’s descriptions and representations.  An express warranty need not be written, but frequently are in writing.

2.  Implied Warranty: The law may imply the existence of a warranty, even if no express warranty is given.  The most common implied warranties are:

• Implied Warranty of Merchantability (§55-2-314): If the seller is a merchant in the goods sold, then a warranty is implied that the goods are fit for the ordinary purposes for which those goods are used;
• Implied Warranty of Fitness for a Particular Purpose (§55-2-315): This warranty arises if:
  (i)   At the time of contracting, the seller has reason to know the buyer has a particular purpose for which he or she wants to use the goods; and
  (ii)  The buyer has relied upon the seller’s skill or judgment to select or furnish suitable goods.

B.  Buyer’s Claims Concerning Warranties and Seller’s Defenses

When goods do not conform to their warranties, a buyer may sue the seller for breach of warranty, or in some cases, for seller’s noncompliance with the Magnuson-Moss Warranty Act.

1. Breach of Warranty

When a buyer claims the seller breached a warranty, the buyer must prove the existence of the warranty, the scope of the warranty, and the specific manner in which the seller breached the warranty.  When facing a claim of breach of warranty claim, the seller may attempt to disclaim the warranties entirely or claim the buyer waived any warranties on the goods purchased.

A Seller’s Disclaimers of Warranties

• Disclaimers of Express Warranties:  A seller may not exclude or modify any express warranties that were made part of the basis of the contract.
• Disclaimers of Implied Warranties:  A seller may disclaim implied warranties as follows:

  (i) by stating that the item is being sold “as is” or “with all faults;”
  (ii) if in writing, the disclaimer of an implied warranty must be easily noticed in the contract;
  (iii) to disclaim an implied warranty of fitness for a particular purpose, the disclaimer must be in writing and be conspicuous;
  (iv) to disclaim any implied warranty of merchantability, the disclaiming language must specifically mention “merchantability.”  If the disclaimer of the implied warranty of merchantability is in writing, it must be conspicuous.  §55-2-316 (Exclusion or modification of warranties).

Note, however, that a seller who supplies a written warranty may not disclaim any implied warranties while the written warranty is in effect. Under the Magnuson-Moss Warranty Act, implied warranties may be limited to the duration of a written warranty of reasonable duration, if such limitation is conscionable, is set forth in clear and unmistakable language, and is prominently displayed on the face of the warranty.

A Buyer’s Waiver of Implied Warranties
A buyer waives the implied warranties with regard to obvious defects when the buyer has examined the goods (or the sample or model) as fully as he desired before entering into the contract or when the buyer has refused to examine the goods before entering the contract.  §55-2-316(3)(b).

C. Damages in an Action for Breach of Warranty

If the seller breaches a warranty, the consumer may recover in damages the difference between the actual value of the nonconforming goods and the value of the goods as they should have been according to the warranty (without defects).  §55-2-714(2).