Know The Law: Uniform Commercial Code

Steven J. Dutton
Director, Litigation Department
Published: Union Leader
January 1, 2011

Q:  We are a watch manufacturing company.  When a customer experiences a problem with one of our products, we offer to repair or replace the product.  Repairs generally take six to eight weeks.  We currently have a customer, however, for whom we cannot find the cause of the problem in her product.  Is there a limit to the amount of time we can take to repair this customer’s watch?

A:  Transactions involving the sale of goods are generally governed by the Uniform Commercial Code (“UCC”), which has been adopted in some form by almost all states.  It provides for the uniform treatment of most common business transactions and covers such things as the offer to sell goods, the acceptance and the terms of the sale, including any warranties included as part of the sale.

Under the UCC, there are two types of warranties – implied and express.  An implied warranty is made regardless of it is specifically mentioned in the sale.  An express warranty is an affirmative promise about the goods being sold.  Because warranties only become an issue when a buyer is dissatisfied, a prudent seller tries to limit the scope of the warranties it makes before a problem arises.  The UCC allows a seller to disclaim, under certain circumstances, the warranties on goods sold and to limit remedies available to a buyer.

Specifically, the UCC provides that agreements may limit damages to the repair or replacement of nonconforming goods and may designate this as the buyer’s exclusive remedy.  The UCC is clear, though, that if a remedy fails in its essential purpose, a buyer is entitled to resort to other remedies such as damages.  A repair or replace warranty provision will fail in its essential purpose when the seller does not cure the nonconformity within a reasonable time, or is unable to cure it at all.  Courts have found that commendable efforts to repair will not relieve the seller of its obligation to repair.

What constitutes a reasonable time to make repairs, so as to fulfill the essential purpose of the warranty, depends on the circumstances of each case.  The law is plain, however, that a seller cannot tinker with the nonconforming goods indefinitely.  In this case, where the typical watch repair takes six to eight weeks, this timeframe is a good benchmark for what might be considered a “reasonable time” for repair.  If the watch cannot be repaired within this general timeframe, the seller would be wise to replace the product; otherwise it may expose itself to liability for breach of warranty.