CPA Exam — REG (Regulation)Business LawEasy
A consumer purchases a new smart television from an electronics retailer. The retailer, a merchant, sells the TV in its usual course of business. After two weeks, the TV's screen malfunctions, displaying only static. There was no extended warranty purchased, and the sales contract was silent on specific warranties. Under UCC Article 2, which implied warranty has the retailer most likely breached?
- AImplied warranty of title
- BImplied warranty of fitness for a particular purpose
- CImplied warranty against infringement
- DImplied warranty of merchantability
Show answer & explanationAnswer & explanation
Correct answer: D. Implied warranty of merchantability
The implied warranty of merchantability, which applies to merchants selling goods, guarantees that the goods are fit for the ordinary purposes for which such goods are used. A smart television displaying static rather than a clear picture within two weeks clearly indicates it is not fit for its ordinary purpose.
Why the other options are wrong
- A. Implied warranty of title guarantees that the seller has good title to the goods and the right to transfer them. This is unrelated to the TV's operational malfunction.
- B. Implied warranty of fitness for a particular purpose applies when the seller knows the buyer's specific purpose and that the buyer is relying on the seller's skill to select suitable goods. This scenario describes a general purchase, not a specific purpose.
- C. Implied warranty against infringement guarantees that the goods are delivered free of any rightful claim of patent, copyright, or trademark infringement. This is unrelated to a malfunctioning screen.
Implied Warranty of Merchantability
An implied warranty under UCC Article 2, applicable to merchants, that goods are fit for the ordinary purposes for which such goods are used, are of fair average quality, and conform to any promises or affirmations of fact made on the container or label.
- Applies only when the seller is a merchant with respect to goods of that kind.
- Goods must be fit for their ordinary purpose.
- Can be disclaimed, but specific requirements apply.
Memory trick: Merchantability for Ordinary, Fitness for Specific.