ATV Damages and Claims

ATV Damages and Claims

Phil told Joe, the sole proprietor of Joe's Pre-owned Trucks of Austin, Texas, that he was looking for a used truck that the could purchase for under $1,000. He told Joe that he needed a vehicle that he could use exclusively for towing his boat and trailer the 500 miles between his cabin and the access ramp at the water's edge. Joe said that he had no trucks under $1,000 but, although he does not normally deal in anything other than trucks, he had recently taken as a trade-in, a four wheeled All Terrain Vehicle (ATV). Joe showed Phil the ATV and said, "It's been sitting in the shed for two weeks, and no one has made an offer. It might be just what you need. I can let you have it for $800." Phil did a cursory inspection of the vehicle, started it up, satisfied it ran, and purchased it for $800. The next day, Phil used the ATV to tow the boat and place it in the water. Later, when Phil was pulling the boat out of the water, the transmission of the ATV failed. His mechanic inspected it and found that one of the deals had rotted, allowing all the transmission fluid to leak out. The mechanic said the leak should have been obvious and there would likely be a puddle on the floor where the ATV had been parked. Phil went and checked the place were it had been parked overnight and there was indeed a puddle. The old transmission cannot be repaired. A rebuilt transmission will cost $850. The value of the ATV is $100 for parts.

(1) What claims, if any, might Phil assert against Joe for breach of warranty under Article 2 of the Uniform Commercial Code. Explain fully.
(2) What defenses, if any, can Joe assert under each claim? Explain fully.
(3) What is the measure of damages under the UCC for Phil's breach of warranty claims?