Week 8 - E. - Warranties - Coggle Diagram
Week 8 - E. - Warranties
E1. Express Warranties
- Warranties provided by the seller.
a. Distinguished from Condition
b. From Opinion, Dealer's Talk (1546)
c. From False Representation (Gochangco v. Dean)
- An active misstatement of fact or, events demonstrate a withholding of that which is not stated makes that which is stated absolutely false.
- There must be intent to deceive or mislead the other party to their prejudice.
- Mere fact that the vendor does not volunteer detailed statement of all he knows is not fraud per se.
- Any affirmation of the value of the thing or statement purporting to be opinion of the seller. These cannot be taken as warranties.
- When the seller is an expert and the buyer relies upon their opinion.
An uncertain event or contingency, the happening of which the obligation or contract depends on.
- Refers to the compliance of one of the parties to an obligation. Such compliance gives rise to a reciprocal prestation on the other party.
REMEDIES IN NON-FULFILLMENT(1191)
refuse to proceed with the contract; or
proceed with the contract, waiving the performance of the condition.
PROMISE (1545) -
If the condition is in the nature of a promise that it should happen, the non-performance of such condition may be treated by the other party as a breach of warranty.
E2. Implied Warranties
- Warranties provided by law.
a. Implied Warranty of Title (1547 & 1590)
- Warranty that the seller has a right to sell the thing at the time when the ownership is to pass, and that the buyer shall from that time have and enjoy legal and peaceful possession of the thing.
b. Implied Warranty Against Encumbrances or Defects (1567)
c. Implied Warranty of Quality (1562)
(See Section on Sale by Sample)
c1. Fitness for a particular Purpose (1562, 1563-1564)
EFFECTS OF BREACH (1567) -
Vendee has option of either remedy with a right to damages in either case.
b1. Hidden Encumbrances or Defects (1561-1580)
b.2. Warranties in Sales of Animals/Redhibitory Defects (1547-1580)
- Note that these provisions don't apply to sales of large cattle, which are governed by special laws. (1581)
b3. Sale by Sample or Description/Merchantable Quality (1481, 1574, 1562 par. 2, 1565)
SALE BY DESCRIPTION (1481)
- Sale of a thing described as being of a particular kind; Buyer relies on seller's representation as true.
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WARRANTY OF FITNESS
- No implied warranty as to the quality or fitness for any particular purpose.
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SALE OF MULTIPLE ANIMALS (1572)
- Redhibitory defects in one will not affect the non-defective animals. UNLESS it has been shown that vendee would not have purchased the sound ones without those which are defective.
SALE OF MULTIPLES (1573)
- Same rules as 1572 applies to sale of multiple items in general.
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WHEN SALE OF ANIMALS ARE VOID (1575)
1. DISEASE -
Sale of animals suffering from a disease are void.
2. UNFIT -
If animals are found unfit for the use or service for which they were acquired for.
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RIGHTS OF VENDEE (1580)
- If animals have redhibitory defects, then rights in 1576 available, subject to the prescriptive period.
Vendor shall be responsible against hidden defects of the thing sold which renders it unfit for the use for which it is intended OR defect is of an extent that vendee would not have acquired it or given a lower price for it.
- No implied warranty against apparent defects. UNLESS these have been concealed/misrepresented or seller acted in bad faith
LOSS OF THE THING DUE TO HIDDEN DEFECTS (1567-1568)
VENDOR HAD KNOWLEDGE
- Vendor must bar the loss. Here, Vendee has right to recover:
Expenses of the Contract
VENDOR HAD NO KNOWLEDGE
- Vendor shall only be obliged to return:
Price and Interest Thereon
Reimburse the Expenses of the Contract
LOSS OF DEFECTIVE THING (1569)
- This contemplates loss NOT due to defect. Here, defective thing but lost due to a Fortuitous event or fault of the vendee.
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- Following most concur for a warranty against defects to exist.
- Defect must be important or serious
- Defect must be hidden i.e. not visible or could not have been known to the vendee. If there is knowledge, no liability on the part of the vendor.
- Defect must exist prior to the time of the sale
- Vendee must give notice of defect within a reasonable time
- No waiver of warranty on the part of the vendee
- Vendor's liability for warranty cannot be enforced if the buyer was an expert who, by reason of their trade or profession should have known of it, even if the defect is hidden.
JUDICIAL SALES (1570)
- Here, rights of the buyer are set up against the judgment debtor, not the judicial authorities. However, there can be no liability for damages as caveat emptor applies.
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IGNORANCE OF THE VENDOR (1566)
- Does not relieve them of the liability. UNLESS parties provide otherwise in the contract OR Vendor had knowledge of the defects.
- Civil Code adopts Caveat Venditor. On the basis that a sound price warrants a sound article. Consequently, a manufacturer/seller cannot be held liable for any damage caused by the product in the absence of proof of defect.
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1. Accion Redhibitoria
- An action for rescission. This allows the vendee to withdraw from the contract.
2. Accion Quanti Moris
- Vendee demands a proportionate reduction of the price.
Redhibitory Vice or Defect
- A defect in the article sold against which the seller is bound to warrant. such vice must constitute an imperfection, a defect in the nature of the thing and of certain importance. Cannot be a minor defect or a mere absence of a certain quality in the thing sold.
PRESCRIPTION OF ACTIONS (1571)
(6) months from delivery of the thing sold
(40) days from the date of delivery in case of animals (NCC 1577).
- In express warranties, prescription is (4) years, unless another is specified.
a1. Eviction by Judgment (1548)
- Vendor shall answer for the eviction, though nothing has been said on the contract about the subject.
- Contracting parties may increase, diminish or suppress this legal obligation of the vendor.
- Any stipulation exempting the vendor from liability to answer for eviction shall be void if he acted in bad faith.
- A judicial process whereby the vendee is deprived, in whole or in part of the thing purchased due to a final judgment based on a right prior to the sale OR an act imputable to the vendor.
a2. Effects of Eviction (1555)
- When warranty is established, either agreed upon or contract is silent, vendee shall have the right to demand of the vendor the following in case of eviction.
a3. Waiver (1554)
- If a waiver is established, vendor is liable only for the value for which the thing sold had at the time of the eviction.
- If vendee made the waiver with the knowledge of the risk of eviction and assumed its consequences, the vendor shall not be liable.
KINDS OF WAIVER
- Waiver voluntarily made by the vendee WITHOUT the knowledge and assumption of the risks of eviction.
- Waiver is made with knowledge of the risks of eviction and assumption of its consequences.
- Every waiver is disputably presumed to be Consciente
TOTAL LOSS (1555)
1. Return of value of the thing at the time of the eviction
- If at the time of the eviction, the value is different than that of the value at the time of the sale, vendor should pay the excess or not suffer the damage.
2. Income or Fruits
- Vendee is liable to the party who won the suit as regards the income or fruits received ONLY if decreed by the court.
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WHEN ENFORCEABLE (1557)
- Enforceable only after a final judgment of eviction and deprivation of the vendee of the thing acquired or part thereof.
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PARTIAL LOSS (1556)
- Here, vendee may either enforce the vendor's liability for the eviction or demand rescission of the contract.
- Remedy limited to partial loss. As rescission contemplates ability of the vendee to return what was received under the contract, which they cannot do in case of total loss..
RIGHT OF 2nd PURCHASER
- If warranty is assigned to 2nd purchaser, they shall have the rights of action against the 1st vendor.
Acquisitive Prescription (1550)
- Note that not applicable if the subject of the sale is titled land, as titled land cannot be subject to prescription under the Torrens system.
Prescription Completed Before Sale
- The vendee can enforce the warranty against eviction. The deprivation is based on a right prior tot he sale and an act imputable to the vendor.
Prescription Completed After Sale
- Vendor is not liable for the eviction, even if the prescription started prior to the sale. Rationale is vendee could have interrupted the prescription by filing the necessary action.
- Not an essential element of a contract, as it is deemed incorporated into every contract of sale but may be waived or modified by express stipulation.
WHEN NOT APPLICABLE
1. As-is-where-is Sales
- Where the vendor makes no warranty as to the quality/condition of the goods. Buyer takes them in the as they are found, where they are found.
2. Sale of 2nd-hand goods
- No implied warranty as to condition, adaption, fitness or suitability for the purposes in which the goods are made.
3. Sale by virtue of authority in fact or law
- No warranty of title is implied in a sale by one who admits no ownership. Applies to sheriffs, etc.
4. Suspicious Circumstances
- No warranty on title When the circumstances surrounding the sale should have put the purchaser on notice as to interests of 3rd persons over the thing sold
5. Execution Sales
- Does not guarantee the title to the real property, sheriff also not bound to place the purchaser in possession of the property sold.
- Any affirmation of fact or any promise by the seller relating to the thing is a warranty IF the natural tendency of affirmation/promise is to induce the buyer to purchase the same.
- May either be oral or written. So long as induces.
ELEMENTS (PH Steel Coating Corp v. Quinones)
An affirmation of fact or any promise
by the seller relating to the subject matter of the sale
of the affirmation or promise is to induce the buyer to purchase the thing; and
Buyer purchases the thing relying
on that affirmation or promise.
EFFECTS OF BREACH (1599) -
The buyer at the option may either:
- Accept or keep the goods and set up against the seller, the breach of warranty by way of recoupment in diminution or extinction of the price;
- Seller's damages are cut down to an amount which will compensate him for the value of the thing which he gave. Here, the initial contract is rendered void and a quasi-contract is substituted for value of thing given.
2. Action for damages and breach of warranty -
a. Accept or keep the goods and maintain an action against the seller for damages for the breach of warranty;
b. Refuse to accept the goods, and maintain an action against the seller for damages for the breach of warranty;
AMOUNT OF DAMAGES (1596)
- Estimated loss directly and naturally resulting int he ordinary course of events from the buyer's breach of contract. This covers profits lost, expenses incurred, etc. (Rodriguez v. Findlay)
- Rescind the contract of sale and refuse to receive the goods or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid.
WHEN NOT ALLOWED -
When the buyer does any of the following
- the goods knowing of the breach of warranty without protest
2. FAILS TO NOTIFY
the seller within a reasonable time of his election to rescind
3. FAILS TO RETURN OR OFFER
to return the goods in substantially as good condition as they were in at the time of the transfer of ownership to him.
- where the injury to the goods was caused by the very defect against which the seller warranted, the buyer may still rescind the sale
EFFECT OF REMEDIES
- Once a remedy has been claimed, other remedies are barred.
- When, after the buyer has chosen fulfillment, it should become impossible. Here, rescission is allowed.