For centuries, warranty law has been a back and forth between policies benefiting sellers and those protecting buyers. Current warranty law is a reflection of this. To better navigate today’s policies, an understanding of how history has dealt with warranty regulation is crucial.
Dating back to Medieval times, standards have existed to protect buyers from the sale of substandard goods. The Church required sellers of defective goods to compensate buyers even if a defect was unknown at the time of sale. Thomas Aquinas provided the first warranty codification of sorts. In his Summa Theologica, he divided breaches of warranty into three types: (1) known defects – which the buyer should notice and be responsible for; (2) latent defects – which the seller would bear responsibility for; and (3) latent defects known to the seller – which would void any sale.
During feudal times warranty policy continued to protect the buyer. Caveat venditor – let the seller beware – developed during this period. An implied warranty was imposed on sellers, and products had to meet quality requirements set by merchant law of the time. Shortly thereafter the pendulum swung back to the side of the seller with the breakup of feudalism. Caveat emptor – let the buyer beware – is a theory which traces its roots to England’s Court of Exchequer’s 1603 decision in Chandelor v. Lopus. This common law case involved the sale of a bezoar stone (i.e. a mass formed in the stomach) claimed to have magical healing qualities. The perhaps naïve buyer took issue when the purchased stone turned out to be ordinary, and under existing doctrine the seller would have generally been liable. However, the court in Chandelor refused to void the sale absent either (1) the seller’s knowledge of the error (fraud), or (2) an express warranty by the seller that the object was in fact a magical bezoar stone. The court held that the term “warranty” – which means “promise” – had to be expressly used by the seller in verifying the stone’s authenticity. The court refused to imply a warranty that the stone was merchantable – that it contained magical healing qualities. Thus, the Chandelor court made a fundamental distinction between the two warranties that apply to the sale of personal property – express warranties created by the seller’s affirmative claims and implied warranties that automatically exist absent some action by the seller.
During the 18th and 19th centuries this tug-of-war continued, between the pro-buyer polices of feudalism’s law merchant and the pro-seller protections created under Chandelor. Against this backdrop, America’s law of warranty has developed. During the expansion of America’s frontier and the Civil War, caveat emptor dominated American courts, giving sellers leeway in making sales. However, the advent of mass production in the 1920s and the accompanying decline in presale inspection of goods brought a return to imposing strict guidelines on sellers. The Uniform Sales Act in 1906 and its replacement by the Uniform Commercial Code in 1952 dealt a final blow, of sorts, to caveat emptor, codifying the concept of express warranty without the necessity of “magic” words.