Implied Warranties in Contracts of Sale

A contract is “a legally enforceable agreement to do or not to do something.” See, Model Charge No. 4.10C, “Bilateral Contracts- Existence of a Legally Enforceable Contract”. We enter into contracts every day, probably without even realizing it. Anytime we purchase or sell something, we enter into a contract. For instance, simply by purchasing a pack of gum at a convenience store, a contract forms. We agree to pay the price of the gum, and the store agrees to give us the gum.

And with those contracts often come certain warranties or guarantees by the seller. These warranties, particularly with regard to smaller or cheaper items, may be unspoken and unwritten. Nonetheless, the warranties certainly still apply. Two particular warranties implied into a contract are the implied warranty of merchantability, and the implied warranty of fitness for a particular purpose.

The Implied Warranty of Merchantability

This implied warranty serves to ensure that goods sold on the market are “merchantable.” A good must meet several qualifications to be considered merchantable. It must “pass without objection in the trade,” be of “fair average quality,” and be “fit for the ordinary purpose for which such goods are used.” N.J.S.A. 12A:2-314(2). Essentially, the implied warranty of merchantability requires that goods sold be of at least average quality in the industry. Schipper v. Levitt & Sons, Inc., 44 N.J. 70, 92 (1965). For instance, if your new pen doesn’t write, that would not be considered “fair average quality,” and the pen would not pass without objection. Nor would a non-working pen be fit for its ordinary purpose-writing.

This warranty only applies when the seller is a “merchant.” The term “merchant” is not to be limited to any dictionary meaning as a mere buyer or seller of goods. Rather, New Jersey law defines a merchant as one who “deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.” N.J.S.A. 12A:2-104(1).

Thus, the key determination is whether a person is so experienced and knowledgeable under the circumstances that he should be charged with the more substantial burden imposed upon a merchant. Sea Harvest, Inc. v. Rig & Crane Equipment Corp., 181 N.J. Super. 41, 48 (Ch. Div. 1981). So, if you by a chair on Craigslist, but one of the legs falls off, you probably do not have a claim for breach of the implied warranty of merchantability. But if you buy a chair from a furniture store and a leg falls off, the seller would most likely be considered a merchant, and you could have a claim.

The Implied Warranty of Fitness for A Particular Purpose

The other common type of implied warranty is the warranty of fitness for a particular purpose. This warranty is more precise than the warranty of merchantability. It arises where the buyer alerts the seller of the particular purpose for which the good is required and relies on the seller’s skill or judgment in purchasing an item. N.J.S.A.12A:2-315; Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 364 (1960). For instance, you tell the cashier at the local deli you want to purchase gum for blowing bubbles. The cashier then recommends a certain gum to you and you purchase it. If the gum cannot blow bubbles, there is likely a breach of the warranty of fitness for a particular purpose.

The implied warranty of fitness for a particular purpose requires that the goods be fit for the purpose for which they were intended. McDonald v. Mianecki, 79 N.J. 275, 285 (1979). For the warranty to apply, the seller must know, at the time of the sale, the particular purpose for which the goods are intended, and also know that the buyer is relying on the seller to select or furnish suitable goods. Locks Laboratories v. Bloomfield Molding Co., 35 N.J. Super. 422, 426 (App. Div. 1955). Back to the gum example, the cashier must know you want the gum to blow bubbles. The cashier must also know you are purchasing the gum based on his recommendation. So, if you request a particular gum, you will lose your claim because you are no longer relying on the cashier’s recommendation.

Different from the warranty for merchantability, the implied warranty of fitness does not require the seller be a merchant. The seller must simply know the particular purpose for which the goods are intended. See, Feldman v. Lederle Laboratories, 97 N.J. 429, 447 (1984). For example, you go into a pawn shop looking for an inflatable raft to go white water rafting. You don’t know anything about rafting, but you trust the pawnbroker who says he knows all about it and has just the raft you need for your first whitewater rafting experience. Based on his recommendation, you buy the float he sells. However, you later learn he sold you a pool float. In that instance, even though the pawnbroker may not be a merchant of inflatable rafts, he or she still knew why you needed the raft and you relied on their supposed knowledge in making the purchase. That would likely be enough to imply the warranty into the sale.

New Jersey recognizes a four-year statute of limitations on claims for breaches of implied warranty. Alloway v. Gen. Marine Indus., L.P., 149 N.J. 620, 622 (1997). If you believe you may have a case for a breach of an implied warranty, contact the attorneys at Kardos, Rickles, Hand & Bidlingmaier at 215-970-2755 for your free consultation.