Sellers: Your Sales Pitches May Create Express Warranties

SELLERS: YOUR SALES PITCHES MAY CREATE EXPRESS WARRANTIES

By: Larry R. Leiby, Esq. and Robert S. Tanner, Esq.

About the Author: Larry Leiby, Esq. was the founder and first chairman of the Florida Bar Construction Law Committee in 1976. He is the author of the Florida Construction Law Manual. He is Board Certified in Construction Law and was on the Construction Law Certification Committee that creates and grades the tests for construction law board certification. He was awarded the lifetime achievement award by the Florida Bar Construction Law Committee and teaches construction law at the Florida International University College of Law. He can be reached at leiby@mkpalaw.com. For more information, please visit www.mkpalaw.com.

Product warranties assure or guaranty character, quality, fitness, or title of the product. Warranties may be implied, meaning that they are "read into" the parties' contract as a result of judicial or legislative policy. Warranties may also be express, often resulting from the seller's statements of "warranty" or "guarantee". Hopefully, when a seller makes a statement of "warranty" or "guaranty", it intends to take on product warranty liability. It is important for sellers to remember, however, that express warranties may also arise from less conspicuous representations.

In State Farm Insur. Co. v. Nu Prime Roll-A-Way of Miami, Inc., 557 So.2d 107 (Fla. 3d DCA 1990), Nu Prime Roll-A-Way of Miami, Inc. ("Seller") distributed flyers stating:

When fully closed, Rollaway Shutters automatically lock to prevent break ins.

Emmet and Evelyn Barham entered into a contract with Seller for the purchase of Seller's shutters. Fourteen months after the shutters were installed in their home, someone broke in by forcing the shutters open and then stole some personal property. The Barhams' made a claim on their insurance policy, which the insurer paid to some extent, but the insurer's payment did not cover the entire loss. The insurer sued Seller for the amount it had covered and the Barhams sued Seller for the amounts that their insurer had not covered.

In support of their claim for breach of an express warranty, the Barhams claimed that they relied upon Seller's representations in the flyer in deciding to buy the shutters. The trial court dismissed the claim, but on appeal the dismissal was reversed. The appellate court noted that express warranties may arise even where the seller does not use terms such as "warrant" or "guarantee" and, further, may arise even where the seller does not intend to make a warranty. The appellate court also pointed out that a seller's advertisements in newspapers, circulars, etc. may become part of the sales contract and create an express warranty "for breach of which the seller will be liable for damages to one who, in making the purchase, relies thereon to his injury." Importantly, the appellate court further noted that a contract clause stating that all agreements are contained in the written contract will not bar recovery under a warranty theory.

The law of warranties justifies a seller's careful review of the representations it makes, both in writing and orally, including the more difficult to control representations of its sales personnel. Managing risk is an important part of being a profitable business.