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CA's Flavor of Implied Warranty Leaves a Sour Taste
The warranty of merchantability, implied in almost every consumer purchase, rarely presents a litigation opportunity, even for the most-savvy advocates. For decades, courts have consistently interpreted the term 'merchantability' to connote a minimal, baseline assurance of product fitness and functionality. Essentially, if a product adequately performs its ordinary purpose, it satisfies the implied warranty. A recent decision from an appellate court in California, however, offers footing for plaintiff attorneys to argue for an expanded definition of 'merchantability.' Such a development, which the Uniform Commercial Code neither compels nor suggests, marks a departure from settled law and presents a significant risk of higher warranty costs for manufacturers and higher prices for consumers.
Merchantability: A Threshold Guarantee of Product Worthiness
Section 314 of Article 2 of the Uniform Commercial Code establishes the warranty of merchantability and provides that 'a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of the kind.' UCC '2-314(1). Although it does not define 'merchantability' with precision, the Code does identify various criteria that goods must satisfy to qualify as merchantable. See '2-314(2). They must:
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, [be] of fair average quality within the description; and
(c) [be] fit for the ordinary purpose for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and
(e) [be] adequately contained, packaged, and labeled as the agreement may require; and
(f) conform to the promise or affirmations of fact made on
the container or label if any.
'2-314(2).
Notwithstanding the multifactor approach suggested by the text of '314, courts ' at least in the context of consumer goods ' almost exclusively focus their merchantability analyses on whether the goods at issue are 'fit for the ordinary purpose.' See, e.g., Fed. Signal Corp. v. Safety Factors, Inc., 886 P.2d 172, 180 (Wash. 1994) ('The requirement most often cited is that of 'fit for the ordinary purposes.”). Although perhaps too limited for certain cases, this tendency to reduce merchantability to a single inquiry is pervasive and appears to capture the thrust of the protection intended. See, e.g., UCC '2-314 cmt. 8. ('Fitness for the ordinary purposes for which goods of the type are used is a fundamental concept.')
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