Defective goods? Warranties limit sellers' liability.

• Author: Spendlove, Gretta
• Position: Legal Briefs

"A PICTURE IS WORTH a thousand words," goes the old saying. Not so, said the Utah Supreme Court in the recent case of Baud v. SDNCO, Inc. dba Wasatch Marine. In a fight between buyer, seller and manufacturer over a defective yacht, a full-color picture of the $150,000 yacht wasn't worth anything.

The buyer, Joseph Baud, bought the yacht after looking at a photo in a brochure that claimed the yacht offered "the best performance and cruising accommodations in its class" and "superb handling." After the air conditioning, generator, alarm and carbon monoxide detector went out on the yacht, Boud returned it and asked for his money back, based on the warranty contained in the brochure. Nope, said the manufacturer and seller, backed up by the court. The photo and blurb in the brochure were merely "puffery," not an express warranty. All Boud got was the limited warranty in his sales contract, which required the seller to fix defective parts but not take the boat back.

"I don't think there's anything surprising about the Supreme Court's decision," says Bob Wilde, attorney for the seller. "Regardless of any pictures or pamphlets your seller gives you, what your sales agreement says is what you get. The limited warranty was printed in bold letters on the contract Boud signed. Wasatch Marine, the seller, and Cruisers Yachts, the manufacturer, gave Baud what they agreed to give him. He just had buyer's remorse."

The broad reach of warranties

The law of warranties is contained in the Utah Uniform Commercial Code (UCC) and covers all "goods." "Goods" includes most tangible things that are bought and sold, from cars and trucks to toys, tacos, stucco and computers. "There are no limited warranties printed on the tacos at Taco Bell," comments Wilde, "but there could be. Both food and yachts are goods."

Basically, sellers give express or implied warranties by how they offer an item for sale, and they can also limit or disclaim those warranties in their sales contracts. Carefully limiting warranties can drastically lower a seller's liability to customers.

Express warranties--be careful what you say

In the Boud yacht case, the court noted that express warranties can be created by promotional materials, including...