BLT&E-7e: Practice Quiz
Chapter 21:
Warranties and Product Liability
1. A warranty is:
a. an encumbrance or claim on property.
b. an assurance of the existence of a fact by one party on which another party relies.
c. an infringement of a property right in music held by another.
d. an agreement to pay the debts of another.
Answers:
a. Incorrect. This describes a lien, not a warranty.
b. Correct. This describes a warranty.
c. Incorrect. This describes a copyright infringement.
d. Incorrect. This describes a collateral promise.
2. What is the general rule regarding the warranty of title in most sales contracts?
a. This warranty arises only after the buyer has inspected the goods.
b. This warranty arises only when the seller specifically mentions it.
c. This warranty does not apply to sales contracts, only to lease contracts.
d. This warranty arises automatically in most sales contracts.
Answers:
a. Incorrect. Even though a buyer does not inspect goods, a warranty of title would arise in most sales contracts.
b. Incorrect. This kind of warranty arises automatically in most sales contracts, not just when the seller mentions the warranty.
c. Incorrect. The warranty arises in most sales contracts but never applies to lease contracts.
d. Correct. A warranty of title, which is the seller’s assurance that the seller has good and valid title to the goods being sold, arises automatically in most sales contracts.
3. When Microsoft sells a new piece of software, what warranty does it create?
a. A warranty against surrogation.
b. A warranty against infringement.
c. A warranty of basis.
d. A warranty disclaiming title.
Answers:
a. Incorrect. There is no warranty against surrogation.
b. Correct. Microsoft does warrant that it is not infringing the ownership rights of the person who created the software.
c. Incorrect. There is no warranty of basis.
d. Incorrect. Microsoft claims title to the software; it does not disclaim title.
4. Which of the following statements DO NOT create an express warranty?
a. The seller states that the goods conform to a description of the goods given to the buyer.
b. The seller states that the goods were purchased from a disreputable manufacturer.
c. The seller states that the goods conform to a promise of fact made to the buyer.
d. The seller states that the goods conform to a sample of the goods shown to the buyer.
Answers:
a. Incorrect. This statement would create an express warranty.
b. Correct. This statement would not create an express warranty.
c. Incorrect. This statement would create an express warranty.
d. Incorrect. This statement would create an express warranty.
5. Ordinarily, if a seller expresses an opinion about the value of goods being sold, does the seller create an express warranty?
a. Yes, as long as the buyer relies on the seller’s opinion.
b. Yes, as long as the opinion is in writing.
c. No, because normally opinions are not considered to be express warranties.
d. No, because the seller has created an implied warranty instead.
Answers:
a. Incorrect. An opinion is not an express warranty, and the buyer bears the risk of harm if he or she relies on the seller’s opinion.
b. Incorrect. Even if the opinion is in writing, it is not an express warranty.
c. Correct. An opinion is ordinarily not considered to be an express warranty; it is probably just puffery. (Note, though, that an exception to this rule may be made if the seller is an expert and gives an opinion as an expert to a layperson.)
d. Incorrect. The seller does not create an implied warranty when he or she states an opinion.
6. An implied warranty of merchantability means that:
a. the goods are of less than average quality.
b. the goods are reasonably fit for the ordinary purpose for which they are sold.
c. the goods are fit for a particular use specified by the buyer.
d. the goods do not meet federal standards of safety.
Answers:
a. Incorrect. An implied warranty of merchantability means that the goods being sold are reasonably fit for their purpose, not that the goods are of less than average quality.
b. Correct. An implied warranty of merchantability means that the goods are reasonably fit for the ordinary purpose for which they are sold.
c. Incorrect. Such a warranty would be an implied warranty of fitness for a particular purpose.
d. Incorrect. An implied warranty of merchantability does not mean that the goods fail to meet federal safety standards.
7. Joni is shopping for something to put on the floor of her dairy barn. She goes to Al’s Hardware, and Al tells Joni that he has just the thing, a special rubber flooring that works great in dairy barns. Based on Al’s comments, Joni buys the floor covering and installs it in her dairy barn. Within two weeks two dozen cows slip, fall, and seriously injure themselves on the slippery rubber. If Joni sues Al, what kind of warranty would Joni claim that Al breached?
a. A warranty of title.
b. An implied warranty of fitness for a particular purpose.
c. An implied warranty of merchantability.
d. A void warranty.
Answers:
a. Incorrect. Joni would base her claim on an implied warranty of fitness for a particular purpose.
b. Correct. Joni would argue that Al knew she that wanted to use the flooring for a particular purpose (covering her barn floor) and that she relied on Al’s statements when she decided to purchase the flooring.
c. Incorrect. The floor covering may be merchantable, but it was not fit for Joni’s particular purpose, and Al was aware of that purpose when he sold Joni the floor covering.
d. Incorrect. Joni would not base her claim on a void warranty.
8. The law that is designed to prevent deception in warranties is known as:
a. the Smoot-Hawley Act.
b. the Magnuson-Moss Act.
c. the Lanham Act.
d. the Effective Disclaimer Act.
Answers:
a. Incorrect. Smoot-Hawley was a tariff act enacted in 1930.
b. Correct. This act attempts to prevent deception in warranties by making them easier to understand.
c. Incorrect. The Lanham Act protects trademarks.
d. Incorrect. Although the rules of effective disclaimer do relate to warranties, this is not the name of the act.
9. A court might consider a product to be unreasonably dangerous if:
a. a less dangerous alternative was commercially feasible but was not produced.
b. the product was less dangerous than was expected by the ordinary consumer.
c. the product was frequently misused by consumers, despite adequate warnings about the dangers of misusing the product.
d. the product was adequately labeled with warnings for the ordinary consumer.
Answers:
a. Correct. In such a situation, a court might find a product to be unreasonably dangerous.
b. Incorrect. In such a situation, a court would not find a product to be unreasonably dangerous.
c. Incorrect. If the manufacturer adequately warned of the dangers associated with foreseeable misuses of the product, a court would not deem the product unreasonably dangerous on the basis of inadequate warnings.
d. Incorrect. If the product was adequately labeled with warnings for the ordinary consumer, it would not be unreasonably dangerous.
10. Which of the following is a defense to product liability?
a. Assumption of risk.
b. Self-defense.
c. Bona fide occupational qualification.
d. Justifiable ignorance of the facts.
Answers:
a. Correct. This defense may be raised in a product liability action.
b. Incorrect. This is not a defense to product liability.
c. Incorrect. This is not a defense to product liability.
d. Incorrect. This is not a defense to product liability.