Where the goods delivered as part of the contract fail, are inferior, or do not otherwise conform to the buyer’s requirements, you may have a breach of warranty or breach of contract claim. These claims are not limited to the commercial setting as ordinary purchasers of consumer goods can also file suit when the products they purchase fail or do not conform. As Arizona adopted the Uniform Commercial Code, there are three breach of warranty claims.
An express warranty is created by:
- any affirmation made by a seller to a buyer which relates to the goods and becomes part of the basis of the bargain;
- any description of the goods which is made part of the basis of the bargain that warrants that the goods shall conform to the description; or
- any sample or model which is made part of the basis of the bargain that warrants that the whole of the goods shall conform to the sample or model.
A.R.S. 47-2313. To recover under this theory, the buyer must prove that there was an express warranty made by the seller to the buyer, that the goods did not conform, and that the buyer suffered damages as a result of the breach. As an example, if the seller tells you orally or in writing that the work truck purchased by your business will get 20 miles per gallon when it actually gets 10, the seller has breach an express warranty. If you relied on that representation and suffered damages as a result, you have a breach of express warranty claim.
Implied Warranty of Merchantability
An implied warranty of merchantability is created when the seller is a merchant with respect to the type or class of goods sold. A.R.S. 47-2314. A merchant is “a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.” A.R.S. 47-2104(A). In essence, this claim is based on the buyer’s reliance on the merchant’s expertise with the type of goods sold. An example includes a commercial HVAC unit that, when properly installed, fails and causes a roof top fire. HVAC units are not supposed to fail and start fires and those that do are not merchantable. To recover under this theory, the buyer needs to prove that the defect in the product, the HVAC unit, existed at the time of purchase and that the defect in the product rendered the product unfit for the ordinary purpose for which it was sold. The advantage to pursuing a breach of warranty claim in a commercial context is that contracts often limit liability and damages to replacement of the defective product while a warranty theory allows you to recover for the additional property damage caused by the defective product.
Implied Warranty of Fitness for a Particular Purpose
An implied warranty of fitness for a particular purpose is created whenever the following two circumstances are met at the time the contract is entered into and/or the goods are purchased:
- The seller knows or has reason to know the buyer will use the goods for a particular purpose; and
- The seller knows or has reason to know the buyer is relying on the seller’s skill or judgment to select suitable goods.
A.R.S. 47-2315. An example includes the purchase of a home air-conditioning (AC) unit, something important to Arizonans. If the salesperson is aware that your intent is to cool a 1,500 square foot home and that you are relying on his/her skill and judgment in selecting an AC unit, the salesperson breaches the warranty by selling you an AC unit that will only cool a 1,000 square foot home. Though the seller knew your purpose, cooling a 1,500 square foot home, he/she sold you an air conditioner that was not capable of fulfilling that purpose. In such a case, you have a legal right and should contact a commercial litigation attorney to protect your legal interests.