University:
Indiana University Bloomington
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

260

Pages:

2
Author:

bratrochanter

Summary of Product Liability 553-556 (Implied Warranty Disclaimers and the Wilke v. Woodhouse Ford, Inc. Case) Implied Warranty Disclaimers under UCC § 2–316 1. Basic Requirements: o Merchantability Disclaimer: Must use the term "merchantability" and be conspicuous if written. Oral disclaimers are allowed. o Fitness Disclaimer: Must be written and conspicuous but does not need specific language. Common disclaimers like "as is" or "with all faults" are often used, though courts may require them to be conspicuous and are more accepted with used goods. 2. Other Disclaiming Situations: o If a buyer inspects goods and does not discover an obvious defect or refuses an offered inspection, they may not claim an implied warranty for those defects. o Disclaimers based on past dealings or trade practices can negate implied warranties. 3. Remedy Limitations and Disclaimers: o Disclaimers eliminate liability entirely under specific legal theories, whereas remedy limitations only block certain types of recoverable damages, maintaining the original theory of recovery. 4. Unconscionability of Disclaimers: o Disclaimers are sometimes deemed unconscionable if they disadvantage consumers, especially in personal injury cases, though courts are less likely to invalidate disclaimers between businesses in commercial contexts. Case Analysis: Wilke v. Woodhouse Ford, Inc.    Facts: Elizabeth and Mark Wilke bought a used van “as is” from Woodhouse Ford, with a disclaimer that negated all express and implied warranties. Shortly after, a malfunction with the gearshift caused an accident, injuring Elizabeth. Implied Warranty Claim: o The Wilkes argued that the disclaimer should not shield Woodhouse from liability for a safety defect. However, the Nebraska Supreme Court upheld the disclaimer, affirming that “as is” language effectively excluded the implied warranty of merchantability, as permitted by § 2–316. o The court also ruled that Nebraska’s legislative adoption of § 2–316 implied no public policy exception for safety defects in cases where an “as is” clause is applied. Negligence Claim: o o The Wilkes claimed Woodhouse was negligent in not inspecting the van for safety issues before selling it. The court evaluated if used-car dealers have a duty to inspect for obvious safety defects (patent defects) that could endanger buyers or others. Many courts hold that used-car dealers must exercise reasonable care to inspect for patent defects affecting safety. The Nebraska Supreme Court similarly found that Woodhouse had a duty to inspect the van for obvious defects, as safety risks posed by such defects to both the buyer and public were substantial and foreseeable. Conclusion: The court upheld the disclaimer against the implied warranty claim but ruled that Woodhouse had a duty of care to inspect for obvious safety defects. The case highlights how implied warranty disclaimers are typically enforceable if they meet statutory criteria, but sellers may still be liable under negligence for failing to conduct safety inspections.