Printable Format84-2-312. Warranty of title and against infringement; buyer's obligation against infringement. (1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that
(a) the title conveyed shall be good, and its transfer rightful; and
(b) the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.
(2) A warranty under subsection (1) will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have.
(3) Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.
History: L. 1965, ch. 564, ยง 46; January 1, 1966.
KANSAS COMMENT, 1996
1. Subsection (1) declares the expectation of a buyer that it will receive good, clean title to the goods and will not be exposed to a lawsuit to protect that title. The warranty imposed by this section arises automatically by operation of law. It is not, however, an implied warranty of the kind created by sections 84-2-314 and 84-2-315 with respect to the quality of the goods sold. See Official Comment 6 to this section. A seller that sells property subject to a valid claim of title by another party or subject to a valid security interest of which the buyer has no knowledge has breached this warranty, even if the seller does not know of the title defect. Violation of the registration provisions of the motor vehicle law also gives rise to an action for breach of warranty of title. Quigley v. Sears, 11 K.A.2d 468, 726 P.2d 293 (1986). Courts are split on whether privity is required, although the section by its terms speaks only of the buyer and the seller. Compare Universal C.I.T. Credit Corp. v. State Farm Mut. Auto. Ins. Co., 493 S.W.2d 385 (Mo. App. 1973) (privity required) with Mitchell v. Webb, 591 S.W.2d 547 (Tex. Civ. App. 1979) (privity not required). Kansas courts have not addressed the question.
2. Subsection (2) governs how a seller may disclaim the warranty of title. A disclaimer may result from circumstances reasonably showing that the seller does not purport to extend and the buyer does not expect to receive a warranty of title, such as foreclosure sales and sales by sheriffs, executors, and the like. Auctioneers who clearly are selling the goods of others also fall within this category. Otherwise, disclaimer must be by specific language. A general statement that the seller sells only its "right, title and interest" is insufficient. See Jones v. Linebaugh, 34 Mich. App. 305, 191 N.W.2d 142 (1971). Section 84-2-316, dealing with disclaimers of express warranties and implied warranties of quality, does not apply to warranties of title.
3. When the seller is a merchant, subsection (3) extends the warranty of title to include claims by third parties of infringement of patent or trademark rights. When the buyer furnishes specifications, the seller is entitled to indemnity against infringement claims.
4. Damages for breach of the warranty of title are as provided by section 84-2-714. See Ricklefs v. Clemens, 216 K. 128, 531 P.2d 94 (1975); see also 1996 Kansas Comment 3 to 84-2-714.
Law Review and Bar Journal References:
Survey of Kansas commercial law (1965-1969), 18 K.L.R. 388, 389 (1970).
"Beefing Up Product Warranties: A New Dimension in Consumer Protection," Barkley Clark, Michael J. Davis, 23 K.L.R. 567, 572 (1975).
Survey of contracts, UCCC and UCC, Franklin E. Lynch and Larry Schneider, 15 W.L.J. 324, 331 (1976).
"Agricultural Credit and The Uniform Commercial Code: A Need for Change?" Keith G. Meyer, 34 K.L.R. 469, 484 (1986).
"Electronic Commerce in Kansas: Contract Formation and Formalities Under Article 2," Christopher R. Drahozal, 68 J.K.B.A. No. 5, 22 (1999).
CASE ANNOTATIONS
1. Applied with K.S.A. 84-2-714, 84-2-715 in determining measure of damages for breach of warranty of automobile title. Ricklefs v. Clemens, 216 Kan. 128, 133, 134, 531 P.2d 94.
2. Where lease agreements were intended to create security interests under K.S.A. 84-1-201(37)(b), provisions of Article 9 of UCC applicable. CIT Financial Services, Inc. v. Gott, 5 Kan. App. 2d 224, 229, 231, 615 P.2d 774.
3. Cited; damages, attorney fees awarded in small claims case (K.S.A. 61-2701 et seq.) involving fraudulent car title (K.S.A. 8-135) examined. Quigley v. Sears, 11 Kan. App. 2d 468, 471, 726 P.2d 293 (1986).
4. Pawnbroker's interest versus rightful owner's interest in property held by state as evidence in criminal proceeding examined. In re Two Bose Speakers, 17 Kan. App. 2d 179, 183, 835 P.2d 1385 (1992).