Elements of an Arizona Breach of Warranty Claim

Arizona’s version of the Uniform Commercial Code (UCC) provides for causes of action based on breach of: (1) express warranty, (2) implied warranty of merchantability, and (3) implied warranty of fitness for a particular purpose. This article will discuss:

Under Arizona law, an express warranty is created by (1) “[a]ny affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain that warrants that the goods shall conform to the affirmation or promise”; (2) “[a]ny description of the goods which is made part of the basis of the bargain that warrants that the goods shall conform to the description”; or (3) “[a]ny sample or model which is made part of the basis of the bargain that warrants that the whole of the goods shall conform to the sample or model.” Ariz. Rev. Stat. § 47-2313(A). To prevail on a claim for breach of express warranty, the plaintiff must show that a warranty existed, the warrantor failed to perform pursuant to the express warranty, and the plaintiff suffered damages as a result.

A seller of goods need not use “formal words” such as “warrant” or “guarantee” to create a warranty, nor must the seller intend to create a warranty. Id. § 47-2313(B). However, an express warranty is not created when a seller merely engages in “puffing” about the product or otherwise gives an “opinion” as to the value of the goods. See id.; Downs v. Shouse, 18 Ariz. App. 225, 229 (Ct. App. 1972) (noting that “puffing” does not give rise to an express warranty (citation omitted)); Dillon v. Zeneca Corp., 202 Ariz. 167, 171 (Ct. App. 2002) (concluding that a statement regarding the use of a product was not an “affirmation of fact but merely an opinion about the reliability of the directions” for using the product).

Notably, an express warranty is not necessarily created by the sales contract or direct statements from the seller to the buyer but can arise through mere advertisements. See Eck v. Helene Curtis Indus., Inc., 9 Ariz. App. 426, 429 (1969) (“[A] manufacturer’s liability for breach of express warranty regarding a cosmetic or similar product may arise out of statements made by the manufacturer in his advertisements of the product.” (citation omitted)).

Unless there is a modification or disclaimer, an implied warranty of merchantability is created when the seller is a merchant with respect to the goods sold. A.R.S. § 47-2314(A); see Pac. Am. Leasing Corp. v. S.P.E. Bldg. Sys., Inc., 152 Ariz. 96 (Ct. App. 1986). To recover for a breach of an implied warranty of merchantability, the plaintiff must show that the “defect” complained of existed at the time of sale and that the defect renders the product unfit “for the ordinary purposes for which such goods are used.” Dietz v. Waller, 141 Ariz. 107, (Ct. App. 1984).

“Merchantability” requires that the goods: (1) pass without objection in the trade; (2) are of fair average quality, in the case of fungible goods; (3) are fit for the ordinary purposes for which such goods are used; (4) run of even kind, quality and quantity; (5) are adequately contained, packaged, and labeled; and (6) conform to promises or affirmations of fact on the container or label. Ariz. Rev. Stat. § 47-2314(B). Overall, the implied warranty of merchantability is very broad and applies to all sellers who are merchants regardless of whether they themselves caused the defect. See id. § 47-2314(A).

An implied warranty of fitness for a particular purpose is created between a buyer and a seller when (1) the seller knew of the particular purpose for which the product was required, (2) the buyer relied upon the seller’s skill and judgment to select or furnish suitable goods, and (3) the warranty has not been properly excluded or modified. A.R.S. § 47-2315; see Tri City Prop. Mgt. Servs., Inc. v. Research Prods. Corp., 149 Ariz. 596, 599 (Ct. App. 1986).

In some cases, the seller can likely foresee what a particular good will be used for by the very nature of the product. In these situations, an implied warranty of fitness for a particular purpose exists. The other element that must be proven to establish liability is that the buyer relied on the seller’s purported or actual skill and judgment. See A.R.S. § 47-2315; A.R.S. § 47-2316(C)(2); see Ram Head Outfitters, Ltd. v. Mecham, 2011 WL 1429623, *5 (D. Ariz. 2011) (noting that “[b]efore considering the issue of reliance, the court must first determine whether the [seller] possessed skill and judgment on which the plaintiff could rely.” (citation omitted)). Reliance often occurs where a buyer is an individual but is less likely to occur where the buyer is a merchant, is familiar with the goods, or has identified the product’s specifications. See Pac. Am. Leasing Corp. v. S.P.E. Bldg. Sys., Inc., 152 Ariz. 96 (Ct. App. 1986) (finding that no warranty for fitness for particular purpose was implied where computer lessee selected computer it wanted and told lessor exactly what to buy). On the other hand, in some circumstances, “[a] buyer may rely on a seller’s judgment even though the buyer selected the object to be purchased.” Ram Head Outfitters, 2011 WL 1429623, *5 (citation omitted).

A buyer may revoke his acceptance of a “lot or commercial unit” whose nonconformity substantially impairs its value to him if he has accepted it either (1) “[o]n the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured” or (2) “[w]ithout discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.” A.R.S. § 47-2608(A).

Revocation of acceptance must occur within a “reasonable time” after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. Id. § 47-2608(B). Revocation of acceptance is not effective until the buyer notifies the seller of it. Id. Notably, a buyer is not required to elect between revocation of acceptance and recovery of damages for a breach of warranty as both are available to him. Id. § 47-2608(C). However, revocation of acceptance is not available to a plaintiff against a remote manufacturer, see Chaurasia v. Gen. Motors Corp., 212 Ariz. 18, 22 (Ct. App. 2006), nor does it apply to a new motor vehicle subject to the provisions of Arizona’s “Lemon Law,” see A.R.S. § 47-2608(D).

Sellers may limit or exclude consequential and incidental damages and also disclaim all warranties, express or implied, unless the disclaimer/exclusion is unconscionable, A.R.S. §§ 47-2316, 47-2719(C), or if the party asserting the disclaimer/exclusion “acts fraudulently or in bad faith,” Airfreight Exp. Ltd v. Evergreen Air Center, Inc., 215 Ariz. 103, 111 (Ct. App. 2007). In addition, a seller may limit a buyer’s remedies under the warranty to returning the non-conforming goods, reimbursement, or repair or replacement. Id. § 47-2719. However, when the limited remedy fails its “essential purpose,” the buyer is allowed to pursue other remedies available to him. Id. § 47-2719(B). A warranty fails in its essential purpose if, for example, a warrantor is unable to repair or replace a defective part under the “repair or replace” provision of its limited warranty. See Kalil Bottling Co. v. Burroughs Corp., 127 Ariz. 278, 282 (Ct. App. 1982); Roberts v. Morgensen Motors, 135 Ariz. 162, 166 (Ct. App. 1982).

If a defendant has made an express warranty but has also attempted to disclaim its warranties, the court must determine whether the express warranty conflicts with the disclaimer or whether they can be construed consistently with one another. See Ariz. Rev. Stat. § 47-2316(A). In the event the express warranty and disclaimer cannot be read consistently, “the express warranty is given effect over the disclaimer.” Sierra Diesel Injection Serv., Inc. v. Burroughs Corp., Inc., 890 F.2d 108, 113 (9th Cir. 1989).

The implied warranty of merchantability may be excluded or modified only as follows: (1) the exclusion must mention merchantability, and, in the case of a writing, the language must be “conspicuous”; (2) if the goods are sold “as is” or in some similar fashion; (3) if the buyer has examined the goods, the warranty is excluded to the extent that the examination should have revealed the defects complained of; or (4) by the course of dealing, course of performance, or usage of trade. Ariz. Rev. Stat. § 47-2316(C). Similarly, the implied warranty of fitness for a particular purpose can be excluded or modified only as follows: (1) if it is in writing and conspicuous; or (2) in the manners described in “(2),” “(3),” and “(4)” for the implied warranty of merchantability. Id. § 47-2316(B).

“Conspicuous” is defined by Ariz. Rev. Stat. § 47-1201(B)(10) as “written, displayed or presented that a reasonable person against which it is to operate ought to have noticed it.” Conspicuous terms include the following: “(a) [a] heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font or color to the surrounding text of the same or lesser size; and (b) [l]anguage in the body of a record or display in larger type than the surrounding text, or in contrasting type, font or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language.” Id. § 47-1201(B)(10).

Although the primary scope of this article is breach of warranty claims under Arizona law, the federal Magnuson-Moss Warranty Act (MMWA) is also relevant.

The MMWA creates minimum disclosure and content requirements for written consumer product warranties. See 15 U.S.C. § 2301 et. seq. The MMWA authorizes a private right of action by a consumer when a warrantor has failed “to comply with any obligation under ... a written warranty, implied warranty, or service contract,” 15 U.S.C. § 2310(d)(1), and the amount of the controversy is over $50,000.00, see id. § 2310(d)(3). However, “while the MMWA creates additional requirements for consumer protection warranties and creates a private cause of action for breach of a warranty, state warranty law lies at the base of all warranty claims under [the MMWA].” De Shazer v. Nat’l RV Holdings, Inc., 391 F. Supp. 2d 791, 794 (D. Ariz. 2005) (citation omitted); see 15 U.S.C. § 2301(7) (defining “implied warranty” as “an implied warranty arising under state law ... in connection with the sale by a supplier of a consumer product”).