Question

True or False:

1. A warranty of title may not be disclaimed by general language.                        
2. The UCC authorizes the recovery of both incidental and consequential damages in case of breach of warranty.
3. A buyer can return a used car to his seller one week after purchase on the basis of a dented fender.                                                                                                          

4. If a buyer pays for lost profits, seller’s recovery is reduced by an allocable portion of seller’s overhead.                                                                                                   

5. Under the provisions of the UCC, a buyer can elect to reject only non-conforming goods.                              

6. After delivery of the goods, but before acceptance, the buyer generally has the right to nspect the goods delivered.

Answer 1

1. False - warranty of title cannot be disclaimed by general language. It must be disclaimed using 'special language' and in clearly communicated writing according to UCC 2-312. This applies to all types of implied warranties of title.

2. True - if breach of warranty can be proved then incidental and consequential damages can be recovered according to UCC 2-714(3), including any damages for personal injury. This recovery is fully authorised by the code.

3. False - this is likely to be false on two counts,

first - assuming dent was made after purchase - the used car may have no stated liability post purchase,

second - assuming dent was there pre-purchase and would have been noticed on inspection suggesting that the buyer noticed it and proceeded to buy the car anyway, and acceptance can be revoked only if the discovery was not done/possible before purchase (hidden issue like bad battery or worn out clutch). UCC 2-608.

4. False - If a buyer is directed to pay damages due to lost profits, then the seller's recovery is reduced by this amount as per UCC 2-708(2) however this amount is over and above the seller's overhead that also needs to be accounted for. A seller can claim overheads + profit (net) or overheads including profit (gross).

5. True - According to UCC 2-601, in case of non-conforming goods, the buyer can choose to accept all goods, reject all goods or accept some and reject some of the goods. The buyer has no liability to pay for rejected goods.

6. True - According to UCC 2-513, the buyer has the right to inspect any delivered goods before signalling an acceptance. The inspection must be within a reasonable time, and at a reasonable place and conducted in a reasonable manner.