Business Degree Certification Practice Test

Which statement about a seller's rights to limit legal liability in sales is incorrect?

1. The seller can limit the remedy clearly and fairly

2. The seller can place reasonable conditions on warranty coverage

3. The seller can disclaim consequential damages clearly

4. The seller can disclaim all implied warranties simply by stating so

The correct answer is: The seller can disclaim all implied warranties simply by stating so

The statement regarding a seller's rights to limit legal liability that is incorrect asserts that a seller can disclaim all implied warranties simply by stating so. In reality, while sellers have some ability to limit their legal liability through disclaimers, the effectiveness of such disclaimers varies depending on the context and the jurisdiction. For a disclaimer to be valid, it typically must meet certain legal standards that ensure it is communicated clearly and conspicuously to the buyer. Courts often scrutinize blanket disclaimers of all implied warranties, such as the implied warranty of merchantability or the implied warranty of fitness for a particular purpose, to ensure that they are not unfairly imposed on consumers. In many cases, particularly in transactions involving consumers, a simple statement may not be sufficient to effectively disclaim all implied warranties. On the other hand, the other statements reflect permissible limits on liability. Sellers are indeed allowed to limit remedies and place reasonable conditions on warranty coverage, as these practices align with legal standards and may enhance fairness in transactions. Clear and fair limitations on remedies, as well as properly stated disclaimers of consequential damages, are generally recognized as valid, as they provide essential protections for sellers while maintaining the overall integrity of the sales process.