I need an explanation for this Business question to help me study.
- Read the attached story of Little Red Ride-in-the-Hood. View the video if you do not know who Peter Dinklage is:The Daily Show – Peter Dinklage (Links to an external site.)
- Liarliar Pantsonfire is concerned about implied warranties under the Uniform Commercial Code. The owner has come to you for advice how to protect the store from implied warranty liability under the UCC.
- Review the Implied Warranty provisions of Article 2 of the Uniform Commercial Code (UCC Sections 2-314 through 2-316). Copies of these sections are attached. They are also reproduced on pages B11 – B12 of Appendix B in the textbook. You may also wish to review the discussion of Implied Warranties and Disclaimers and Defenses on pages 477-482 of the textbook.
- Draft a notice for Liarliar Pantsonfire to display in the new store that will serve to disclaim the implied warranties of fitness and merchantability that would otherwise be incorporated into every contract for a sale of goods under the warranty provisions of the UCC.
- Include additional exculpatory language that could help in defending claims that might be asserted by any disgruntled purchaser. Be as creative as you wish, but please limit the total notice to 200 words or less.
- Submit your notice through Canvas (as an attachment in Word document format). Make sure your name (First Name plus Last Initial) is included.
- Scoring will be as follows:
Adequate legal disclaimers (1.5 points per implied warranty) 3 points
Creative additional exculpatory language/art/design/etc. 2 points
LITTLE RED RIDE-IN-THE-HOOD
Liarliar Pantsonfire is the owner of Little Red Ride-in-the-Hood, which is a bicycle store that sells used bicycles, bicycle equipment and cycling accessories for people of all ages. The store’s name refers to the fact that the building in which it is located is a bright red color.
Little Red Ride-in-the-Hood’s inventory includes children’s bicycles, which are designed for ordinary use by children; adult bicycles, which are larger and have stronger frames to support heavier adults; mountain bikes that are designed and built to withstand the extra stress of riding over rough terrain; and racing bikes designed to be light and aerodynamic to maximize speed in road races.
One day, Peter Dinklage, who is an actor in the HBO series “Game of Thrones,” comes in to buy a bicycle. A video showing his appearance on the Daily Show with Jon Stewart is here:
Peter browses around the store for a while and picks out a bike helmet, a pair of sunglasses and clothes to wear for bike riding. Then he goes to Liarliar Pantsonfire and asks him to recommend a bicycle to buy because Peter plans to start riding in bicycle races, but he has never ridden a bicycle before. Liarliar looks at Peter and tells him that a children’s bicycle would be best because it would be the right size for him.
So. Peter buys a children’s bicycle and before long he enters in a bicycle race in San Francisco that goes from the Ferry Building up California Street, over a steep hill and ends up in Golden Gate Park. Unfortunately, the child’s bike does not have gears, so it is very hard to pedal up the hill, but eventually Peter gets to the top of the hill . . . in last place. Nevertheless, he figures that he will make good time going down the other side. Not surprisingly, the brakes on the kid’s bike were not designed for this kind of use, so when Peter tries to slow down, the brakes fail and he crashes.
Sadly, this is when he discovers that the bicycle helmet he bought is made of the same material as Humpty Dumpty’s shell. It does not protect him at all, so his bicycle-racing career ends on the same day as it starts.
Peter talks to his lawyer, who tells him about the implied warranty of merchantability and the implied warranty of fitness for a particular purpose under Uniform Commercial Code Sections 2-314 and 2-315.
Peter plans to sue Little Red Ride-in-the-Hood, but there is just one problem with that plan: Before opening his store, Liarliar Pantsonfire hired you as a consultant to advise him how to exclude those implied warranties from any sales at the store. You reviewed UCC Sections 2-314, 2-315 and 2-316 and you designed a sign that is prominently displayed in the store to exclude those implied warranties. If your sign is effective, Liarliar Pantsonfire will not have to worry about any liability to Peter on account of the implied warranties of merchantability and fitness for a particular purpose.
UCC IMPLIED WARRANTIES
2314. (1) Unless excluded or modified (Section 2316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.
(2) 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.
(3) Unless excluded or modified (Section 2316) other implied warranties may arise from course of dealing or usage of trade.
2315. Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.
2316. (1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this division on parol or extrinsic evidence (Section 2202) negation or limitation is inoperative to the extent that such construction is unreasonable.
(2) Subject to subdivision (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that “There are no warranties which extend beyond the description on the face hereof.”
(3) Notwithstanding subdivision (2):
(a) Unless the circumstances indicate otherwise, 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; and
(b) 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; and
(c) An implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.
(4) Remedies for breach of warranty can be limited in accordance with the provisions of this division on liquidation or limitation of damages and on contractual modification of remedy (Sections 2718 & 2719).