In common law jurisdictions, an implied warranty is a contract law term for certain assurances that are presumed to be made in the sale of products or real property, due to the circumstances of the sale. These assurances are characterized as warranties regardless of whether the seller has expressly promised them orally or in writing. They include an implied warranty of fitness for a particular purpose, an implied warranty of merchantability for products, implied warranty of workmanlike quality for services, and an implied warranty of habitability for a home.
The warranty of merchantability is implied, unless expressly disclaimed by name, or the sale is identified with the phrase "as is" or "with all faults". To be "merchantable", the goods must reasonably conform to an ordinary buyer's expectations, i.e., they are what they say they are. For example, a fruit that looks and smells good but has hidden defects would violate the implied warranty of merchantability if its quality does not meet the standards for such fruit "as passes ordinarily in the trade". In Massachusetts consumer protection law, it is illegal to disclaim this warranty on household goods sold to consumers.
The warranty of fitness for a particular purpose is implied when a buyer relies upon the seller to select the goods to fit a specific request. For example, this warranty is violated when a buyer asks a mechanic to provide snow tires and receives tires that are unsafe to use in snow. This implied warranty can also be expressly disclaimed by name, thereby shifting the risk of unfitness back to the buyer.
Another implied warranty is the warranty of title, which implies that the seller of goods has the right to sell them (e.g., they are not stolen, or patent infringements, or already sold to someone else). Theoretically, this saves a buyer from having to "pay twice" for a product, if it is confiscated by the rightful owner, but only if the seller can be found and makes restitution.
Fitness for a particular purpose
An implied warranty of fitness for a particular purpose occurs if a seller knows or has reason to know of a particular purpose for which some item is being purchased by the buyer. The seller then guarantees that the item is fit for that particular purpose.
International sales law
In international sales law, the obligation is found in Article 35(2)(b) of the United Nations Convention on Contracts for the International Sale of Goods.
Australia
In Australia, the obligation is in section 55 of Schedule 2 ("The Australian Consumer Law") of the Competition and Consumer Act 2010 (Cth) for consumers. The Sale of Goods Acts in each state also implies the warranty and is not limited to consumer contracts.
United States
In the United States, the requirement for an implied warranty of fitness for a particular purpose (sometimes shortened to warranty of fitness) is found in . Absent an exclusion or modification pursuant to , the warranty applies to transactions for goods where the buyer is relying on the seller's guidance or expertise to select "suitable goods" that meet that buyer's particular purpose or requirements.
Merchantability
An implied warranty of merchantability is a warranty implied by law that goods are reasonably fit for the general purpose for which they are sold.
International sales law
In international sales law, merchantability forms part of the ordinary purpose of the goods. According to Article 35(2)(a) of the United Nations Convention on Contracts for the International Sale of Goods, a seller must provide goods fit for their ordinary purpose.
Australia
In Australia, the obligation is in section 54 of Schedule 2 ("The Australian Consumer Law") of the Competition and Consumer Act 2010 (Cth). Each State and Territory now applies the Australian Consumer Law (ACL) as the law of the state. That has created a uniform consumer protection law across the entire country.
United Kingdom
The Sale of Goods Act 1979 states that in a contract for the sale of goods it is an implied condition that the goods supplied are of merchantable quality. The implied condition is excluded if any defects are drawn to the buyer's attention before the contract is concluded or if the buyer examines the goods before the contract is concluded and finds, or ought to have found, a defect.
United States
In the United States, the requirement for an implied warranty of merchantability is found in . The warranty applies to merchants, as defined by , as opposed to casual sellers.
As proscribed by , goods are merchantable if they meet the following conditions: