Navigating Breach of Warranty Claims in Commercial Transactions
When a business transaction goes awry, the fallout can disrupt operations and result in substantial financial losses. A common point of contention is a breach-of-warranty claim. For companies facing these disputes, securing proper legal guidance is a fundamental step toward resolution.
William B. Hanley, Attorney at Law, provides seasoned legal representation for businesses involved in such conflicts. With over 40 years of dedicated experience, Attorney Hanley is a prominent California civil trial attorney known for his direct approach and history of successful outcomes. His firm serves clients throughout Irvine, Newport Beach, Orange County, Los Angeles County, and San Diego County, offering a strong advocate for those who have been wronged in commercial dealings.
Understanding Warranties in Business Deals
A warranty is a promise or guarantee made by a seller to a buyer regarding the quality, condition, or performance of goods. When that promise is broken, it can serve as the basis for a commercial litigation legal claim. In the world of commercial transactions, warranties are not just fine print; they are foundational elements of a contract that establish expectations and provide recourse if those expectations are not met.
There are two primary categories of warranties: express and implied. Understanding the difference between them is the first step in addressing a potential breach.
Express Warranties
An express warranty is a specific, stated promise from a seller. It can be communicated in several ways:
Written guarantees: This is the most straightforward form, often found in sales contracts, on packaging, or in product manuals. For example, a manufacturer might provide a written warranty stating a piece of machinery will be free from defects for one year.
Verbal promises: A salesperson's statement about a product's capabilities can also create an express warranty. If a supplier tells you a specific software is compatible with your existing systems, that can be considered a binding promise.
Descriptions and samples: The description of goods in an advertisement or a sample provided to the buyer can create an express warranty that the final product will conform to that description or sample. If you order 1,000 units of a specific fabric based on a sample, you have a right to expect the delivered fabric will match.
An express warranty is formed by any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain.
Implied Warranties
Unlike express warranties, implied warranties are not explicitly stated by the seller. Instead, they are automatically included in most commercial sales by law, unless they are specifically disclaimed. Two main types of implied warranties frequently appear in business disputes.
The Implied Warranty of Merchantability
This is one of the most common and important implied warranties. It guarantees that the goods sold are fit for their ordinary purpose. This means they are of at least average quality, are adequately packaged and labeled, and conform to the promises made on the container or label. For instance, if a business purchases a fleet of delivery vans, the implied warranty of merchantability implies that the vans should be capable of driving on public roads and transporting goods safely. They do not have to be perfect, but they must meet a basic level of performance for what they are intended to be.
The Implied Warranty of Fitness for a Particular Purpose
This warranty arises when a buyer relies on the seller's skill or judgment to select or furnish suitable goods for a specific, known purpose. For this warranty to apply, the seller must have reason to know the particular purpose for which the buyer needs the goods, and the buyer must be relying on the seller's expertise to provide the right product. An example would be a construction company telling a supplier it needs an adhesive that can bond steel beams in sub-zero temperatures. If the supplier recommends a product that fails under those conditions, it could be a breach of the implied warranty of fitness for a particular purpose.
California Law and Breach of Warranty Claims
In California, breach of warranty claims are primarily governed by the California Commercial Code, which adopts many provisions from the Uniform Commercial Code (UCC). This set of laws provides a consistent framework for handling commercial transactions across the state.
Under the California Commercial Code, a buyer who believes a warranty has been breached must take certain steps. A key requirement is to give the seller a timely notice of the breach. The law requires the buyer to notify the seller within a reasonable time after discovering the defect. Failure to do so can bar the buyer from any remedy. What constitutes a "reasonable time" can depend on the circumstances of the transaction and the type of goods involved.
When a breach is established, the buyer may be entitled to damages. Typically, the measure of damages is the difference between the value of the goods as accepted and the value they would have had if they had been as warranted. For example, if a business paid $50,000 for a machine that is worth only $20,000 due to defects, the direct damages would be $30,000.
Additionally, the buyer may be entitled to recover incidental and consequential damages, which can include costs incurred for inspecting or storing the defective goods, as well as lost profits resulting from the breach.
California law also allows sellers to disclaim certain warranties, but they must do so clearly and conspicuously. To disclaim the implied warranty of merchantability, the language must specifically mention "merchantability" and, if in writing, must be conspicuous. To disclaim the implied warranty of fitness, the disclaimer must be in writing and conspicuous. General language like "as is" or "with all faults" can also effectively disclaim implied warranties.
The statute of limitations for filing a breach of warranty lawsuit in California is generally four years from when the goods are delivered. This is an important deadline, and missing it can prevent a business from ever pursuing its claim.
What Constitutes a Breach of Warranty?
A breach occurs when a seller fails to uphold the promise made in an express or implied warranty. This can occur in various ways, ranging from a product that breaks down prematurely to goods that do not match the provided sample.
To build a successful breach of warranty claim, a business must typically demonstrate the following:
The existence of a warranty: Proof that an express or implied warranty was part of the transaction.
The breach of that warranty: Evidence showing that the goods did not conform to the warranty at the time of sale.
Notice to the seller: Proof that the seller was notified of the breach in a timely fashion.
Resulting damages: Evidence that the business suffered losses as a direct result of the breach.
Proving these elements requires careful documentation, including contracts, invoices, communications with the seller, and evidence of the product's failure. An attorney can help gather the necessary evidence and build a strong case to protect your company's interests.
Business Litigation Attorney Serving Irvine and Newport Beach, California
When you need an attorney experienced in business litigation, choose one with extensive experience and a proven track record of success. As a distinguished attorney with over four decades of practice, William B. Hanley, Attorney at Law, is recognized as one of California's leading civil trial attorneys. Attorney Hanley takes a straightforward and honest approach to client representation, emphasizing open and frequent communication regarding all important case decisions to keep his clients fully informed.
His firm serves clients across California, including Irvine and Newport Beach, Orange County, Los Angeles County, and San Diego County. Call William B. Hanley, Attorney at Law, for legal representation in breach of warranty claims in commercial transactions.