San Diego Business Law: What is a Breach of Warranty?
All San Diego and California businesses want to “do good” by their customers, want to provide products and services that meet their customers’ needs and keep them happy. This is the basic method of running a successful business and this creates and perpetuates customer loyalty. This is the basic idea behind “warranties.” As a business, by law — and sometimes by contract — you are promising that the products and services provided “meet the needs” of your customers. Here is more detailed information.
San Diego Business Law: Implied and Express Warranties
In general, “meeting the needs” of your customers is legally called satisfying the implied warranty of “merchantability.” This means that the goods and services your San Diego business is providing must be sufficient for the intended use. If you sell apples as food, then the apples must be fit to be eaten. Thus, if you are under contract to deliver 10,000 pounds of apples (which you know are meant for a farmers’ market), you must deliver 10,000 pounds of edible apples; spoiled or nonsaleable apples will not satisfy your obligations. You will have breached your implied warranty. Sometimes, merchantability can be tricky. You contract to deliver cellphones, but nothing is mentioned about batteries. So, you deliver 10,000 cellphones without batteries. Is that sufficient to meet your obligations under the contract? Or is it understood in the industry that a “cellphone” must have a battery?
This implied warranty is created by operation of law. For example, Uniform Commercial Code § 2-314 says that goods are warranted to be “… fit for the ordinary purpose for which such goods are used.” There is a similar provision in the Convention for the International Sale of Goods (“CISG”). Article 35(2) of the CISG provides that “goods do not conform with the contract unless they … [a]re fit for the purposes for which goods of the same description would ordinarily be used.”
San Diego Business Law: Express Warranties
As suggested by the name, an express warranty is one provided expressly via written contract. If there is no written warranty, then a customer only has the implied warranties that are created by California statute and case law. If your customers and clients want/need contractual warranties, then you should consult a good business and corporate attorney like those at San Diego Corporate Law.
If your product or service fails to perform according to written warranty/guarantee, then the other party to the contract will be able to sue for breach of warranty. Thus, warranties should be drafted carefully so that your San Diego business is only warranting what you want and can warrant. A well-drafted written guarantee will state the guarantee, but also define limitations.
San Diego Business Law: For “Ordinary Use”
Note in the UCC and CISG provisions quoted above, both mention “ordinary use.” This is an important limitation that should be included in any written warranty. Continuing with our apple example, the “ordinary use” would be as food. Apples would not be fit for use as “baseballs.” As such, the buyer would not be able to claim breach of warranty if the apples were used in that manner.
A more realistic example might be a chair. The warranty would guarantee the chair as a chair, but exclude use that is NOT ordinary — such as, use as a step ladder.
Contact San Diego Corporate Law
Every business needs experienced business attorneys to provide legal advice concerning business contracts. If you have contracts that need to be drafted or reviewed or if you need help understanding your options and what might be best for your unique circumstances, contact attorney Michael Leonard of San Diego Corporate Law. Mr. Leonard provides a full panoply of legal services for San Diego and California businesses. Mr. Leonard has been named a “Rising Star” four years running (2015-2018) by SuperLawyers.com and “Best of the Bar” by the San Diego Business Journal. Mr. Leonard can be reached at (858) 483-9200 or via email.