A seller who sells a product by use of or by reference to an example of the product creates an express warranty that the product sold is the same as that example.154 Section 2-313(1)(c) provides that “[a]ny sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.”
As with the two other types of express warranty, the seller need not verbally describe the model or make any particular representations to create an express warranty by model. Merely setting up a model manufactured home on the lot, with some contract reference to the model number, probably creates an express warranty by model. The display of a new car in a dealer’s showroom or a manufactured home on the dealer’s lot may warrant that the same type car or manufactured home, purchased by the buyer, will have the same appearance.
The scope of the express warranty by sample or model is a question of fact, and is often difficult to resolve. Generally, whatever the buyer sees in the example must appear in the product unless the seller warns the buyer of discrepancies before the deal is made.162 A manufactured home with a green carpet, small windows, or missing doors does not conform to a model with blue carpet, large windows, or doors in place.163
To constitute an express warranty, an affirmation of fact or promise must be “part of the basis of the bargain.”165 The UCC incorporates this requirement for all express warranties, whether created by affirmations of fact, promises, descriptions of the goods, models, or samples.
Under the Uniform Sales Act, the UCC’s predecessor, actual reliance on a statement was a necessary element in an express warranty case. Section 2-313(1) omits any reference to reliance, substituting the “basis of the bargain” language. Comment 3 to section 2-313 makes it clear that this omission was deliberate: “[n]o particular reliance on such statements need be shown in order to weave them into the fabric of the agreement.”
The “basis of the bargain” requirement functions to prevent express warranties from arising from statements that the buyer knew were incorrect before proceeding with the sale.187 Thus, if the seller tells the buyer that a manufactured home will be just like a model except that it will not have a refrigerator, the express warranty by model does not promise a refrigerator.
In approaching the basis of the bargain requirement, it is helpful to provide some evidence of the consumer’s lack of sophistication192 with regard to the goods and contracts. Evidence of the buyer’s relative lack of sophistication with regard to the goods will help show that the buyer placed more weight on the seller’s statements than on their own experience.
A seller’s statements made at delivery, including oral statements and statements on the product label or in the enclosed warranty given to the buyer at delivery, should be part of the basis of the bargain.
It is quite common in consumer transactions for the buyer not to read all warranty statements by the time of delivery. The consumer may not read the written warranty, the product instructions, or even the labels or other product information until after delivery or when something goes wrong. There also may be affirmations in the contract documents that the buyer does not notice. Do these statements then create express warranties?
Oral (and sometimes written) statements of fact or promises are often made by sellers or manufacturers to buyers after delivery. For example, the seller, upon delivering a product, may for the first time make assurances about the product or the seller’s obligations. The post-sell is an established sales technique to increase goodwill and reduce buyer’s remorse. Other post-sale statements occur when problems arise, and the seller promises repair or price adjustment.
The one potential obstacle, for post-sale oral statements, to the modification argument discussed in § 3.6.3.2.1, supra, is the statute of frauds. Section 2-201 requires contracts for the sale of goods for the price of $500 or more to be evidenced in writing.
Even if a court finds that the statute of frauds requires the modification to be in writing, there are a number of ways that courts can still give effect to an oral modification.
A buyer who wants to introduce evidence of the seller’s oral statements or prior written statements to demonstrate the extent of the seller’s express warranty must overcome the hurdle of the parol evidence rule. The parol evidence rule is a rule of substantive contract law that makes extrinsic evidence inadmissible to vary a written agreement.
Section 2-202 is the UCC’s version of the parol evidence rule. It reads in full:
The UCC’s parol evidence rule is basically a rule to determine what the parties intended the contract terms to be.262 It does not even apply unless both buyer and seller intended the written contract to control over earlier statements and promises. Therefore, the first question is the parties’ intent regarding the finality and scope of the writing.
The UCC parol evidence rule is intended to liberalize the common law rule and abolish any presumption that a writing is intended to be a completely integrated contract.265 Use of the word “certainly” in comment 3 to section 2-202 emphasizes the presumption that parol evidence is admissible. Before the court can exclude evidence of a term, it must find that the term would “certainly” have been included in the writing had it been agreed upon.
Some courts have used a “four corners of the document” test to determine whether a writing is the parties’ complete and exclusive agreement. If the writing appears on its face to be complete and exclusive, the court refuses to allow any other evidence on this question.269
Consideration of whether to exclude parol evidence should encompass the equities and surrounding circumstances of the case.
Sometimes the writing plainly shows that it was not intended to be final or not intended to be complete and exclusive.
Another essential step in determining whether a writing is final, or complete and exclusive, is to compare the writing with the parol evidence a party seeks to use.289 The nature of the parol evidence may, in and of itself, be sufficient to demonstrate that it should be admitted.290 As Corbin on Contracts says:
Which party drafted the contract is a significant factor in determining whether parol evidence is admissible. For example, a number of courts have held that the party that drafted the contract cannot introduce parol evidence.293
The parties’ post-sale conduct is also relevant to the issue of intent. Post-sale conduct helps show the parties’ beliefs regarding the nature of the actual agreement. A seller’s act of repairing a product without charge indicates that an express warranty was made, so a writing without such a warranty could not have been intended as final.296
A merger or integration clause creates an additional complexity when analyzing the admissibility of parol evidence. Such a clause states that the writing is the complete and exclusive agreement of the parties. A similar clause reads: “Our sales staff has no authority to make any statements or promises about the goods. Buyer understands and agrees that seller is not bound by any such statements.
There is considerable support for refusing to give effect to an inconspicuous merger clause.
A merger clause in a contract is ineffective if the contract itself is not binding. For example, in one case the contract contained a merger clause but provided that the contract was not binding until it was signed by the seller. The court held that this contractual language had to be construed strictly against the seller, who had drafted it. The court concluded that the contract was not binding and the merger clause therefore had no effect.315
The merger clause limits oral statements in determining the meaning of an agreement between two parties. A merger clause thus cannot prevent oral statements from being used to determine the nature of a consumer’s separate agreement with a third party.318 This principle is most often relevant to warranty claims against manufacturers.