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Breach: 09. Breach of Implied Warranty

1 Elements and Case Citations

Goods to be merchantable must be at least such as

(a) Pass without objection in the trade under the contract description; and
(b) In the case of fungible goods, are of fair average quality within the description; and
(c) Are 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) Are 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.

See Cal. Com. Code § 2314.

For sale and leases of “Consumer Goods:”

  1. Plaintiff bought a consumer good manufactured by defendant;
  2. At the time of purchase, defendant was in the business of selling consumer goods to retail buyers;
  3. The product was not of the same quality as those generally acceptable in the trade, or was not fit for the ordinary purposes for which the product is used, or did not conform to the quality established by the parties' prior dealings or by usage of trade; and
  4. The failure of the product to have the expected quality was a substantial factor in causing Plaintiff's harm.

See Cal. Civ. Code §§ 1790, et seq., California’s Song-Beverly Consumer Warranty Act; see American Suzuki Motor Corp. v. Superior Court, 37 Cal. App. 4th 1291, 1295 (1995) (“The Song-Beverly Act incorporates the provisions of [Commercial Code] sections 2314 and 2315.  It ‘supplements, rather than supersedes, the provisions of the California Uniform Commercial Code’ by broadening a consumer’s remedies to include costs, attorney’s fees, and civil penalties.”).

CALIFORNIA STATE COURTS

California Supreme Court:  Mexicali Rose v. Superior Court, 1 Cal. 4th 617, 622 n.3 (1992); Hauter v. Zogarts, 14 Cal. 3d 104, 117 (1975).

California 1st Dist.:  Pisano v. Am. Leasing, 146 Cal. App. 3d 194, 198 (1983).

California 2d Dist.: Isip v. Mercedes-Benz USA, LLC, 155 Cal. App. 4th 19, 26 (2007).

California 3d Dist.:  Brittalia Ventures v. Stuke Nursery Co., Inc., 153 Cal. App. 4th 17, 27 & n.2 (2007).

California 4th Dist.: Mexia v. Rinker Boat Co., Inc., 174 Cal. App. 4th 1297, 1303 (2009).

California 5th Dist.:  Pierce v. Western Surety Co., 207 Cal. App. 4th 83, 90-91 (2012); Mills v. Forestex Co., 108 Cal. App. 4th 625, 636 (2003).

California 6th  Dist.: Atkinson v. Elk Corp. of Texas., 142 Cal. App. 4th 212, 215 (2006).

CALIFORNIA FEDERAL COURT

Ninth Circuit Court of Appeal:  Troup v. Toyota Motor Corp., No. 11-56637, 2013 U.S. App. LEXIS 23338, at *3-4 (9th Cir. Nov. 20, 2013).

Central District: Guido v. L'Oreal, USA, Inc., No. CV-11-1067 CAS (JCx), 2013 U.S. Dist. LEXIS 94031, at *33-34 (C.D. Cal. July 1, 2013).

Eastern District:  Daniel v. Ford Motor Co., No. CIV. 2:11-02890 WBS EFB, 2013 U.S. Dist. LEXIS 80638, at *20 (E.D. Cal. June 7, 2013).

Northern District:  Elias v. Hewlett-Packard Co., No. 12-CV-00421-LHK, 2013 U.S. Dist. LEXIS 87748, at *15-16 (N.D. Cal. June 21, 2013).

Southern District:  Clark v. LG Elecs. U.S.A., Inc., No. 3:13-CV-485-JM (JMA), 2013 U.S. Dist. LEXIS 155179, at *27-28 (S.D. Cal. Oct. 29, 2013).

2 Defenses to Claim for Implied Warranty of Merchantability

(1)   Cal. Code Civ. Proc. § 431.30(b)(2) (pleading affirmative defenses), and other standard defenses.  See Chapter __ for all defenses.

(2)   Statute of Limitations: Cal. Com. Code § 2725(2) (four years).

(3)   The Song-Beverly Act provides with regard to consumer goods:

The duration of the implied warranty of merchantability and where present the implied warranty of fitness shall be coextensive in duration with an express warranty which accompanies the consumer goods, provided the duration of the express warranty is reasonable; but in no event shall such implied warranty have a duration of less than 60 days nor more than one year following the sale of new consumer goods to a retail buyer. Where no duration for an express warranty is stated with respect to consumer goods, or parts thereof, the duration of the implied warranty shall be the maximum period prescribed above.

Cal. Civ. Code § 1791.1.

(4)   Lack of Notice:  The purchaser failed to notify the seller of the breach after he or she should have discovered the breach.  See Cal. Com. Code § 2607(3)(a).

(5)   Lack of Reliance:  “The reliance elements are important to the consideration of whether an implied warranty of fitness for a particular purpose exists. . . . The major question in determining the existence of an implied warranty of fitness for a particular purpose is the reliance by the buyer upon the skill and judgment of the seller to select an article suitable for his needs.”  Keith v. Buchanan, 173 Cal.App.3d 13, 25 (1985).

(6)   Primary Purpose is Service, Not Goods:  “[W]here the primary objective of a transaction is to obtain services, the doctrines of implied warranty and strict liability do not apply.”  Allied Properties v. John A. Blume & Associates, 25 Cal. App. 3d 848, 855 (1972).

(7)   Vertical Privity Required:  “Vertical privity is a prerequisite in California for recovery on a theory of breach of the implied warranties of fitness and merchantability.”  U.S. Roofing, Inc. v. Credit Alliance Corp., 228 Cal. App. 3d 1431, 1441 (1991).  However, “there are exceptions to this rule, such as one for members of the purchaser's family” (Hauter v. Zogarts, 14 Cal.3d 104, 115, fn. 8 (1975)), or for employees.  Peterson v. Lamb Rubber Co., 54 Cal.2d 339 (1960).

(8)   Knowledge of Non-Conformity:  “Acceptance of goods by the buyer precludes rejection of the goods accepted and, if made with knowledge of a nonconformity, cannot be revoked because of it unless the acceptance was on the reasonable assumption that the nonconformity would be seasonably cured.”  Cal. Com. Code § 2607(2).

(9)   “No implied warranty of merchantability and, where applicable, no implied warranty of fitness shall be waived, except in the case of a sale of consumer goods on an ‘as is’ or ‘with all faults’ basis where the provisions of this chapter affecting ‘as is or ‘with all faults’ sales are strictly complied with..”  Cal. Civ. Code § 1792.3; see Cal. Civ. Code § 1792.4 (“Disclaimer of Implied Warranty”), § 1792.5 (“‘As Is’ Sales”), and Cal. Com. Code § 2316(3)(a) (“all implied warranties are excluded by expressions like "as is," "with all faults" or other language which in common understanding calls the buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty”).

(10)  The warranty was expressly excluded by the seller.  See Cal. Civ. Code § 2316(2) (exclusions must be in writing and “conspicuous”).

(11)  When the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him.  See Cal. Com. Code § 2316(3)(b).

(12)  An implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.  See Cal. Com. Code § 2316(3)(c).

(13)   The sale of a product does not breach the implied warranty of merchantability when it “is in safe condition and substantially free of defects.” Mexia v. Rinker Boat Co., Inc., 174 Cal. App. 4th 1297, 1303 (2009).

An implied warranty of merchantability does not impose a general requirement that goods precisely fulfill the expectation of the buyer. Instead, it provides for a minimum level of quality. See Am. Suzuki Motor Corp. v. Superior Court, 37 Cal. App. 4th 1291, 1296 (1995).