Contract Terms to Know: Implied Warranty

Last week we talked about express warranties that are directly written into a contract. This week we discuss implied warranties that the Uniform Commercial Code (UCC) imposes in contracts with merchants to protect people from unscrupulous merchants.

One of those is the implied warranty of merchantability. This means, that if you buy goods from a merchant for use as they are ordinarily used, the goods will be fit for this ordinary purpose. If they are not in good working order, they can be returned, even without a written contract. You should look at the written warranty in any contract you are asked to sign. The written warranties may cover merchantability or your use of the goods. If you need more than what is there, negotiate this term.

What if you are not using something in an ordinary manner?

What if you have a special need and you talk to the Seller about this?

If you tell the seller of your particular purpose, and the seller recommends a specific product, the contract carries an implied warranty of “fitness for a particular purpose.” In this case, you are relying on the Seller’s expertise and judgment, and you need the contract to reflect this. Even if you don't have a written contract with this merchant, the UCC (which has been adopted by NC) fills in this gap in your agreement with the merchant.

For example, you have a pathway outside your restaurant that leads to a gazebo that has poor drainage. There is standing water and mosquitoes. No one wants to sit in the gazebo and you could be making more money.You have a landscaping company come out, and you want them to address the water problem in the pathway.They listen to you explain the problem and take a look. Knowing that you are relying on their expertise,the landscaping company recommends a certain kind of gravel,steppingstones and plants that will allow customers to safely and comfortably take the path without getting wet feet or slipping in the mud. And without the standing water, your mosquito problem disappears!

If, however, the steppingstones that the landscaping company specifically recommended crumble from normal use, or the plants don’t grow in that shady spot near the gazebo, the Seller landscaping company may have violated its warranty of fitness for a particular purpose.

On the other hand, if the restaurant owner looked online for garden path designs and provided the specifications to the landscaping company to build the project the restaurant owner found, the restaurant did not rely on the Seller’s expertise and this implied warranty of fitness for a particular purpose would not apply.

Things that are sold “as is”are not covered by any type of warranties