You can get good bargains from buying things from classified ads, or Craig’s List, or at a garage sale. Aside from scams, the biggest problem is what happens when you get that new (to you) boat, vacuum cleaner, Betamax, or automatic tomato planter, home and it quits working. What protection do you have? Legally, you have much of the same protection that you have when you buy from a large, commercial realtor. Your protection is in the form of various modifiable warranties that come with your purchase.

The first type of warranty is called an "express warranty." An express warranty is made up of the actual representations of fact made by the person selling the item. The representation can be verbal, contained in the contract, written in advertisements, or any other statement of fact or description of the goods. The representations must be part of the basis of the bargain. Therefore, you actually have had to have seen a particular advertisement or heard a particular representation, before it can form part of an express warranty. Also, the law recognizes that some statements made by a seller are mere seller’s talk or “puffing.” A statement purporting to be simply the seller’s opinion is not an express warranty, nor is a simple affirmation of the value of the goods.

The second type of warranty is an "implied warranty of merchantability."  This type of warranty, unlike the express warranty, does not rely on any actual affirmations regarding the product. This is also where you have better protection from a retailer as opposed to a Craig’s List ad, because for this warranty to apply, the seller has to be a “merchant” in that type of product. A "merchant" is a person who deals in goods and products or represents that has special knowledge and skill regarding such products. The basic test for the implied warranty of merchantability is whether the goods would pass without objection in the trade under the contract description, and whether they are fit for the ordinary purpose for which such goods are used. Also, where the goods are fungible (interchangeable) they must be of fair, average quality. If there are a number of units, they must be within the variations allowed by the agreement, to be of even kind, quality and quantity. They must also be adequately contained packaged and labeled as any agreement may say. Finally, the product should conform to any promise made on the labels. 

The third type of warranty is another implied warranty: The warranty of fitness for particular purpose. The warranty can cover all sellers, merchant or not. This warranty arises when the seller has reason to know of any particular purpose for which the goods are required, and that the buyer is relying upon the seller’s skill to select suitable goods.

So let’s say you see an ad in Craig’s List for a used boat at a good price. The ad says it’s a “fun, little boat.” (seller’s opinion or “puffing.”). The ad also says it has a fuel capacity of 45 gallons and a 1340lbs weight capacity and will run without repair for one year. (express warranty). You meet with the seller who tells you he has a side business of buying used boats and fixing them up and selling then on Craig’s List. (merchant). You want the boat to do what boats do, get you around on the water, and not just sink to the bottom. (implied warranty of merchantability). You also tell the seller you want to be able to take the boat out of the calm waters in the sound, into the ocean, where you’ll do some fishing. (Implied warranty of fitness for particular purpose). 

These warranties are modifiable or can be waived either as to the scope, or as to the damages allowed if the warranty is breached. An express warranty can be modified by express words or conduct, but if the words creating the express warranty contradict the disclaimer, the disclaimer will be ignored. So on our boat example, if the ad said it would run without repair for one year, but then said there was no express warranty, the latter would be ignored. If the ad said it would run without repair for one year, and if it didn’t, the seller would provide a new engine, but not the labor to install it, that would be a valid modification. The implied warranties can also be waived either in writing or verbally. With the implied warranty of merchantability, the magic word “merchantability” must be used and if the disclaimer is in writing, it must be “conspicuous.” For example, written in ALLCAPS or in a different color. In addition, all implied warranties may be excluded by the use of phrases like “as is” or “with all faults” or other similar language. Finally, an implied warranty can be waived if the buyer has examined or has been offered the chance and then refused to examine the product and the defect is something that an examination should have been discovered.

–Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678.