As we’ve often noted in the past, every seller of goods, upon each and every sale of such goods, makes various warranties to the one to whom he is making the sale. Some of these warranties are implied upon the seller by the Uniform Commercial Code (UCC) and need not be stated in the sales contract. Other warranties are those that are specifically expressed by the seller either prior to or at the time of the sale and which become a part of the sales contract.

None of these warranties however, last forever. As between a seller and his immediate buyer the code provides that “an action for breach of any contract for sale must be commenced within four years after the cause of action has occurred.” In most instances the “accrual” of the cause of action occurs at the time that the goods are delivered. Since a claim that the goods purchased are defective, or are in any manner not fit for use is, in fact, a claim of a breach of the warranties contained in the contract, the four-year period would usually apply.

We must keep in mind here that the term contract as used in these sections does not necessarily imply a 10-page written document signed by both sides. It may, in fact, be nothing more than an invoice, a delivery receipt or a purchase order. Sometimes it is nothing more than a handshake. As Professor Kingsfield might say, “So long as we have a meeting of the minds, we have a contract.” (Each case must be individually examined to see if all the requirements are present to form a contract but that is not our discussion today.)

The statue of limitations section of the UCC, although providing for four years originally, also allows that “by the original agreement the parties may reduce the period of limitations to not less than one year but may not extend it.” Other sections allow a seller to limit or even exclude not only the warranties themselves, but also its obligations in the event they are, in fact, breached.

One seller in a recent case took advantage of these sections of the law. His sales contract, with regard to this specific sale, provided that he would, at his own cost and at his sole option “during the first 12 months,” repair or replace any defective goods. His sales agreement further provided:

“To the extent allowed by law, this warranty is in place of all other warranties, expressed or implied, including any implied warranty of merchantability or fitness. Under this warranty repair or replacement is the only remedy.”

As you have probably guessed, just about two years after the sale the buyer complained that the goods had become useless. In the lawsuit he stated he also claimed the goods were, in fact, defective from the start and that most of the damage and wear occurred during the first-year warranty period. Apparently though, no complaints were made until well after one year from the date of sale.

The buyer’s court papers stated, in part, that although the goods actually became totally useless after the 12-month period had expired, the first signs of the problem did occur within the first year. Since, according to the buyer, the agreement provided for replacement or repair of goods, “found to be defective during the first 12 months,” these goods were then covered.

Apparently, this buyer was attempting to argue that since the defect showed up within the first year, even though it was not reported until later, it still came under the warranty. (Obviously this buyer would have a credibility problem but for the moment let’s assume that he could prove that the defects were apparent in the first year).

The first thing the judge did was examine some existing laws. “Parties to a contract are given broad latitude within which to fashion their own remedies for breach of contract; Whenever this act [the UCC] requires any action to be taken within a reasonable time, any time which is not manifestly unreasonable may be fixed by agreement.” He then determined that the one-year limited warranty was reasonable and binding.

The last question now was how to interpret it. This particular judge decided to enforce it just as it was written, specifically the clause that said the seller would repair or replace all defects “during the first 12 months.” Since no defect was reported during this first year, according to the judge, even though it may have existed, the seller no longer has any responsibility to repair, replace or to do anything whatsoever.

So, once again we see a buyer lose simply because he did not enter his complaints in a timely manner, preferably in writing. A seller cannot be responsible for something he is not notified of.