California First-Year Law Students' Exam (Baby Bar) — MCContractsMedium
A manufacturer sells 1,000 units of a product to a retailer. The written contract contains a disclaimer stating, 'Seller makes no warranties, express or implied, including the implied warranty of merchantability, concerning the goods sold hereunder.' The products are delivered, and many are found to be defective and unfit for their ordinary purpose. Can the retailer successfully sue the manufacturer for breach of the implied warranty of merchantability?
- ANo, because the retailer should have inspected the goods before accepting delivery.
- BYes, because the disclaimer was not conspicuous enough.
- CYes, because the implied warranty of merchantability cannot be disclaimed in a commercial contract.
- DNo, because the contract explicitly disclaimed the implied warranty of merchantability.
Show answer & explanationAnswer & explanation
Correct answer: D. No, because the contract explicitly disclaimed the implied warranty of merchantability.
Under the UCC, the implied warranty of merchantability can be disclaimed, but the disclaimer must be conspicuous and, if in writing, must mention 'merchantability.' The given disclaimer explicitly mentions and disclaims the implied warranty of merchantability.
Why the other options are wrong
- A. This is incorrect. While inspection can sometimes negate implied warranties for patent defects, an effective disclaimer overrides this.
- B. This is incorrect. The question does not provide information to suggest it wasn't conspicuous, and typically an explicit mention in the main contract body is considered sufficient.
- C. This is incorrect. While often difficult, the implied warranty of merchantability can be disclaimed under the UCC.
Implied Warranty of Merchantability
An implied promise in a contract for the sale of goods by a merchant that the goods are fit for the ordinary purposes for which such goods are used.
- Applies only to sales by merchants.
- Goods must be fit for ordinary purpose.
- Can be disclaimed, but disclaimer must be conspicuous and mention 'merchantability'.
Memory trick: Warranties are promises about goods; merchantability means it works like it should, unless they explicitly say 'no promises!'