Leveraging The UCC For Sellers

• Published date: 01 April 2024
• Subject Matter: Corporate/Commercial Law, Contracts and Commercial Law
• Law Firm: Butler Snow LLP
• Author: Mr Michael McWilliams and Caroline Smith

I. Introduction

For sellers of goods, it is all but impossible to escape the reach of the Uniform Commercial Code ("UCC") because its Article 2 applies to sales of goods. The UCC contains several buyer friendly provisions (including certain warranties that are, by default, implied with most transactions), and also provides sellers with tools to limit their exposure in commercial disputes and cases. Breach-of-warranty claims are an obvious area of liability for sellers in commercial cases, but the UCC provides sellers with many tools to restrict such liability, including limiting express warranties, disclaiming implied warranties, limiting available remedies, shortening the applicable statute of limitations, and choosing the governing law. This article describes these tools as well as the UCC's required "pre-suit notice" of an alleged breach of warranty.

II. Limiting Express Warranties

Understanding what an express warranty is and how one is created can help a seller ensure that it does not unintentionally create express warranties.An express warranty includes representations about the quality or specification of the goods.

More specifically, under the UCC, a seller creates an express warranty when it:

1. Provides an affirmation of fact or a promise about the good
2. Describes the good
3. Identifies a sample or a model as representative of the good¹

This may be a claim that a smartwatch can be worn for three days without charging or that tires will last 15,000 miles. Express warranties can go beyond just verbal representations. If a seller places a model product on its showroom floor, that model can create an express warranty that the same "off the shelf" product that is actually sold will be the same quality and type as the sample the buyer saw on the floor.

The UCC nonetheless provides that an "affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty."² Courts distinguishing such statements of opinion from express warranties often call opinion statements "puffery.³

Many sellers may wonder if they can just disclaim express warranties altogether so that stray remarks about a particular product are not later deemed to be express warranties. Yes, a seller can disclaim an express warranty (so long as it is consistent with any words or conduct that created the express warranty),⁴ but sellers should be mindful of the representations they are making about their goods. Courts can be skeptical of sellers invoking a general warranty disclaimer as a defense to a breach of warranty claim when a specific product representation is found elsewhere in marketing materials or on packaging.

For example, the District Court for South Dakota acknowledged that the defendant's incorporation of product specifications into a given contract meant that those specifications were express warranties.⁵ The court found that, as a result, it would be unjust to allow the defendant "to escape its obligation with regard to them" by relying on a general disclaimer of warranties.⁶ Because the court found "no reasonable interpretation of the disclaimer such that both the product specifications and disclaimer remain operative," the court held that the...