Deck 21: Warranties

Question 1

Sam expressed an interest in buying a painting from Jasper, who claimed that the painting was a family heirloom. Jasper's asking price was $15,000, but Sam was only willing to offer $13,000. Jasper told him that it was a very old painting worth a fortune and that others would gladly pay $20,000 for it. He also told him that he was only selling it under its market value because he needed the money immediately. He then implied that Sam could sell it for a higher rate if he wanted. In legal terms, Jasper's words to Sam would be considered as ________.

A) an express warranty
B) an implied warranty of merchantability
C) a statement of opinion
D) an oral contract

Answer 1

C

Question 2

A statement of opinion may be which of the following?

A) a type of guarantee
B) an affirmation of the value of the goods
C) an implied assurance not expressly stated
D) an explicit description of the goods

Answer 2

B

Question 3

Only written express warranties are valid.

Answer 3

False

Question 4

A warranty that is created when a seller or lessor makes an affirmation that the goods he or she is selling or leasing meet certain standards of quality, description, performance, or condition is known as a(n) ________ warranty.

A) implied
B) conditional
C) closed
D) express

Question 5

Damages that are generally equal to the difference between the value of the goods as warranted and the actual value of the goods accepted at the time and place of acceptance are known as ________.

A) punitive damages
B) incidental damages
C) compensatory damages
D) future damages

Question 6

Which of the following is true of express warranties?

A) A manufacturer is liable for express warranties made by wholesalers.
B) A retailer is liable for the express warranties made by manufacturers of goods it sells.
C) A retailer is not allowed to make warranties on manufacturer goods.
D) A manufacturer is obligated by law to make an express warranty on all its goods.

Question 7

Express warranties must contain the word "express" in writing to be legitimate.

Question 8

Sellers and lessors are not required to make express warranties.

Question 9

A retailer is not liable for the express warranties made by manufacturers of goods it sells.

Question 10

An affirmation of the value of goods creates an express warranty.

Question 11

Warranties are the buyer's or lessee's assurance that the goods meet certain standards.

Question 12

Which of the following would constitute the creation of an express warranty for goods?

A) description of the goods
B) commendation of the goods
C) prior experience with the goods
D) affirmation of the value of the goods

Question 13

What was the doctrine of caveat emptor in sales or lease contracts?

A) It was a law that balanced risk of loss between seller and buyer.
B) It was a law that stated the risk of loss was on the buyer.
C) It was a law that gave more protection to the buyer in a sales contract.
D) It was a law that stipulated the issue of warrants in sale or lease transactions.

Question 14

Sam expressed an interest in buying a painting from Jasper, who claimed that the painting was a family heirloom. Jasper's asking price was $15,000, but Sam was only willing to offer $13,000. Jasper told him that it was a very old painting worth a fortune and that others would gladly pay $20,000 for it. He also told him that he was only selling it under its market value because he needed the money immediately. He then implied that Sam could sell it for a higher rate if he wanted. Sam decided to buy the painting for $15,000 on the condition that if he found that the painting was worth less than $15,000, Jasper would have to take the painting back and refund Sam. Which of the following warranties did this sales contract have?

A) an implied warranty of merchantability
B) an express warranty
C) a statement of opinion
D) an implied warranty of fitness

Question 15

A seller's or lessor's statement of opinion of the goods does not create an express warranty.

Question 16

Where there has been a breach of warranty, the buyer or lessee may sue the seller or lessor to recover ________ damages.

A) compensatory
B) future
C) punitive
D) liquidated

Question 17

An express warranty is created upon description of the goods.

Question 18

A ________ is a seller's or lessor's express or implied assurance to a buyer or lessee that the goods sold or leased meet certain quality standards.

A) bond
B) caveat emptor
C) warranty
D) collateral

Question 19

A commendation of goods made by a seller or lessor that does not create an express warranty is referred to as a(n) ________.

A) statement of opinion
B) implied warranty
C) guarantee
D) caveat emptor

Question 20

A manufacturer is liable for express warranties made by wholesalers and retailers.

Question 21

Under the foreign substance test, if a person were injured by a chicken bone while eating a chicken salad sandwich, then the implied warranty would be breached.

Question 22

Which of the following is true of how an implied warranty of merchantability is created?

A) It is made by the buyer or lessee.
B) It is implied by law if the seller or lessor is a nonmerchant.
C) It is implied by law if the seller or lessor is a merchant.
D) It has to be explicitly expressed in a contract.

Question 23

An implied warranty of ________ is a warranty that applies to food or drink consumed on or off the premises of restaurants, grocery stores, fast-food outlets, and vending machines.

A) statement of opinion
B) express warranty
C) stamp of approval
D) fitness for human consumption

Question 24

Which of the following is NOT one of the three most common forms of implied warranties?

A) the implied warranty of merchantability
B) the implied warranty of fitness for human consumption
C) the implied warranty of fitness for a particular purpose
D) the implied warranty of purity

Question 25

Which of the following is a similarity between the foreign substance food test and the consumer expectation test?

A) They are both used to determine a buyer's knowledge of a particular food product.
B) They are both used to determine a buyer's interest in a particular food product.
C) They are both part of the implied warranty of fitness for human consumption.
D) They are both part of the express warranty an eatery provides.

Question 26

In a shipment of containers of widgets, which of the following would be considered an implied warranty?

A) that the seller of the widgets has given an oral approval of the widgets in the containers
B) that the description of the uses of widgets is mentioned in the contract
C) that the widgets are of an even kind, quality, and quantity within each unit
D) that a sample of the widget was given to the buyer for inspection

Question 27

The implied warranty of merchantability does not apply to sales or leases by nonmerchants or casual sellers.

Question 28

The three most common forms of implied warranties are the implied warranty of merchantability, the implied warranty of fitness for human consumption, and the implied warranty of fitness for a particular purpose.

Question 29

Unless properly disclaimed, a warranty is implied that sold or leased goods are fit for the ordinary purpose for which they are sold or leased, as well as other assurances, known as the implied warranty of ________.

A) volatility
B) cause of action
C) assertion
D) merchantability

Question 30

Which of the following would constitute an implied warranty?

A) affirmation of the facts of the goods
B) description of the goods
C) model or sample of the goods
D) adequate packaging and labeling of the goods

Question 31

The implied warranty of merchantability warrants that goods must be fit for the ordinary purposes for which they are used.

Question 32

That "goods must be fit for the ordinary purposes for which they are used," would be an example of a(n) ________.

A) implied warranty
B) explicit warranty
C) statement of opinion
D) stamp of approval

Question 33

Under the consumer expectation test, if a person were injured by eating a nail in a cherry pie, then the implied warranty would be breached.

Question 34

Thoroughly and completely explain express warranties.

Question 35

Implied warranties are expressly stated in the sales or lease contract.

Question 36

A test to determine merchantability based on unfamiliar objects found in food is known as the ________.

A) foreign substance test
B) consumer expectation test
C) contamination test
D) contagion test

Question 37

What damages are recoverable for a breach of warranty?

Question 38

If a seller is a merchant with respect to certain goods, there is an implied warranty that the quality of the goods must pass without objection in the trade.

Question 39

Express warranties are always implied by law.

Question 40

The ________ is used to determine merchantability of food products based on what the average buyer is supposed to find in particular food products.

A) foreign substance food test
B) contagion test
C) contamination test
D) consumer expectation test

Question 41

A disclaimer of the implied warranty of fitness for a particular purpose may be oral.

Question 42

To be effective, a disclaimer of the implied warranty of merchantability must specifically mention the term merchantability.

Question 43

Implied warranties of quality cannot be disclaimed.

Question 44

Explain the implied warranty of fitness for a particular purpose.

Question 45

A disclaimer of the implied warranty of merchantability must be in writing to be valid.

Question 46

The implied warranty of fitness for human consumption applies to vending machines.

Question 47

An implied warranty of ________ is a warranty that arises where a seller or lessor warrants that the goods will meet the buyer's or lessee's expressed needs.

A) merchantability
B) fitness for a particular purpose
C) fitness for human consumption
D) good title

Question 48

Which of the following is true of the display of warranty disclaimers?

A) It can be implied as an understanding between the buyer and seller.
B) It should be conspicuous and noticeable.
C) It need only be present in the contract.
D) It must be published in the local newspaper before actually being displayed.

Question 49

Mark goes to Tony's Lumber Yard to buy some lumber to build a new roof for his cabin. Mark tells Tony, the lumber yard owner, to provide him an exact type of wood that can resist the wood decay caused due to the damp environment around the cabin. Mark buys the lumber after Tony assures him that the wood is exactly what Mark is looking for. But then the dampness affects the wood and it caves in. Which of the following warranties has Tony explicitly breached by not providing Mark the lumber he needed?

A) express warranty
B) statement of opinion
C) implied warranty of fitness for human consumption
D) implied warranty of fitness for a particular purpose

Question 50

An express warranty can only be limited if the warranty disclaimer and the warranty can be reasonably construed with each other.

Question 51

Explain the different types of warranty disclaimers.

Question 52

Written disclaimers must be conspicuously displayed to be valid, meaning these disclaimers must be noticeable to a reasonable person.

Question 53

The implied warranty of fitness for a particular purpose applies only to merchants.

Question 54

An implied warranty of fitness for a particular purpose is breached if the goods do not meet the buyer's or lessee's expressed needs.

Question 55

A statement that negates express and implied warranties is known as a ________.

A) warranty disclaimer
B) limited warranty
C) warranty infringement
D) warranty of no interference

Question 56

Under the foreign substance test, the court asks what a consumer would expect to find or not find in food or drink that he or she consumes.

Question 57

An "as is" disclaimer implies that all implied warranties are disclaimed.

Question 58

A warranty disclaimer is considered to be conspicuous when ________.

A) the seller implies the disclaimer
B) a reasonable person is able to notice it
C) it is present in the contract
D) it is expressed and approved by both seller and buyer

Question 59

The foreign substance test is used to find breaches in the implied warranty of fitness for human consumption.

Question 60

Written disclaimers must be conspicuously displayed to be valid.

Question 61

Kirsten just bought a car that had a one-year warranty stating that it covered the cost of parts, but not labor. It also stated that the warranty only covered the powertrain, and no other part. What kind of warranty did Kirsten's car have?

A) full warranty
B) limited warranty
C) disclaimer warranty
D) implied warranty of fitness for a particular purpose

Question 62

The Magnuson-Moss Warranty Act does not govern warranties of commercial or industrial transactions.

Question 63

StoryBoard Creatives approached Logos Studios with a script for a movie. Logos Studios liked the script, and bought the rights for the script from StoryBoard. Subsequently, Mr. Simpson, a former employee of StoryBoard claimed that he had the copyright to that script. Mr. Simpson proved his copyright in court. He then notified Logos Studios that they could not start production on the script without his permission, and adequate payment of fees. Logos Studios then rescinded the contract with StoryBoard based on the breach of ________.

A) warranty of no security interests
B) warranty against infringements
C) warranty of no interference
D) warranty of good title

Question 64

The ________ is a federal statute that regulates written warranties on consumer products.

A) Purchaser's Act
B) Industry Loss Warranty Act
C) Magnuson-Moss Warranty Act
D) Consumer Warranty Act

Question 65

What type of transaction is covered under the Magnuson-Moss Warranty Act?

A) consumer transactions
B) commercial transactions
C) industrial transactions
D) governmental transactions

Question 66

In a limited warranty, the warrantor must guarantee that a defective product will be repaired or replaced free during the warranty period.

Question 67

A full warranty is an example of a(n) ________.

A) express warranty
B) disclaimer warranty
C) implied warranty of fitness for a particular purpose
D) implied warranty of fitness for human consumption

Question 68

What is the difference between a full warranty and a limited warranty?

Question 69

Limited warranties are made more often by sellers and lessors than are full warranties.

Question 70

Which of the following is true of the Magnuson-Moss Warranty Act?

A) It requires all warrantors to make express written warranties.
B) It obligates all warrantors to make disclaimer warranties for their products.
C) It authorizes warrantors to establish an informal dispute-resolution procedure.
D) Implied warranties are voidable under this Act.

Question 71

A warranty that guarantees that a defective product will be repaired or replaced free during the warranty period is known as a(n) ________.

A) implied warranty
B) full warranty
C) disclaimer warranty
D) limited warranty

Question 72

What of the following is true of an "as is" disclaimer?

A) It disclaims all implied warranties.
B) It disclaims all express warranties.
C) It is a type of implied warranty.
D) It cannot be replaced by another warranty.

Question 73

Eliza buys a car from TinCar Autos with a warranty that says that any defect of the car will be repaired or replaced free for a period of six months after the sale. TinCar has taken security interests in the car. Before completely paying for the car, Eliza sells the car to Mona for cash. Mona is unaware of TinCar's security interest in the car. After Eliza misses several of her payments, TinCar discovers that Mona has the car, and repossesses it. What kind of warranty did TinCar provide to Eliza?

A) limited warranty
B) full warranty
C) warranty of good title
D) warranty of no interference

Question 74

Eliza buys a car from TinCar Autos with a warranty that says any defect of the car will be repaired or replaced free for a period of six months after the sale. TinCar has taken security interests in the car. Before completely paying off for the car, Eliza sells the car to Mona for cash. Mona is unaware of TinCar's security interest in the car. After Eliza misses several of her payments, TinCar discovers that Mona has the car, and repossesses it. Which warranty breach can Mona assert to recover from Eliza?

A) warranty of no security interests
B) warranty against infringements
C) warranty of good title
D) warranty of no interference

Question 75

A ________ is a warranty in which sellers of goods warrant that the goods they sell are delivered free from any third-party security interests, liens, or encumbrances that are unknown to the buyer.

A) warranty of good title
B) warranty of quiet possession
C) warranty against infringements
D) warranty of no security interests

Question 76

The Magnuson-Moss Warranty Act does not require a seller or lessor to make an express written warranty.

Question 77

Monty, a career criminal, steals a diamond from Prime Cut Jewelers. He then sells it to Adamas Jewelers, who is unaware of the stolen nature of the diamond. If Prime Cut discovers that the diamond is with Adamas, and reclaims the diamond, what warranty breach can Adamas declare to recover the cost from Monty?

A) warranty against infringements
B) warranty of no security interests
C) warranty of no interference
D) warranty of good title

Question 78

A warranty in which the seller warrants that he or she has valid title to the goods he or she is selling and that the transfer of title is rightful is known as a warranty ________.

A) of no security interests
B) of no interference
C) of good title
D) against infringements

Question 79

A ________ is a warranty in which the lessor warrants that no person holds a claim or an interest in the goods that arose from an act or omission of the lessor that will interfere with the lessee's enjoyment of his or her leasehold interest.

A) warranty against infringements
B) warranty of good title
C) warranty of quiet possession
D) warranty of no security interests

Question 80

An automatic warranty provided by a seller or lessor who is a merchant that regularly deals in goods of the kind sold or leased which warrants that the goods are delivered free of any third-party patent, trademark, or copyright claim is known as ________.

A) warranty of no security interests
B) warranty against infringements
C) warranty of good title
D) warranty of no interference