Breach Of Implied Warranty Of Merchantability

1. A breach of warranty gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated.

The effect of a breach of a warranty is that the aggrieved party cannot repudiate the whole contract however, can claim for the damages. Unlike in the case of breach of condition, in the breach of warranty, the buyer cannot treat the goods as repudiated.

An implied warranty of merchantability is an unwritten and unspoken guarantee to the buyer that goods purchased conform to ordinary standards of care and that they are of the same average grade, quality, and value as similar goods sold under similar circumstances.

Breach of warranty is the violation of an express or implied contract of warranty, and thus it is a breach of contract. In other words, it occurs when the warrantor fails to provide the assurance warranted. A seller can expressly or implicitly assure the buyer about the quality or title of an item sold.

As a default, the remedies for a breach of a warranty are indemnification, termination (requires a material breach) or proportionate reduction of the purchase price. The purchase agreement usually will limit the remedy for breaches to indemnification.

The warranty of merchantability is based off the idea that the seller is in a better state to know whether a product will perform properly. It encourages merchants to ensure the quality of their products before placing them on the market.

A breach of a warranty will not allow for termination, no matter how serious the breach may be.The breach must go to the root of the contract, frustrate its commercial purpose or deprive the innocent party of substantially the whole of its benefit. If it doesn't, the remedy will be damages.

If a warranty is breached, the aggrieved party is not normally entitled to terminate the contract (unless it can be shown that the breach goes to the 'heart of the contract'), but may be entitled to claim damages for breach of contract (see below).