Purchasing used fire apparatus can mean getting low-mileage, high-quality equipment at excellent prices. Currently, there is a surplus of fire apparatus making the market even more attractive. Buying used apparatus is legally distinguishable from buying new apparatus, particularly in regards to warranties and the risk of loss.
Contracts for the sale of fire apparatus are governed by Article II of the Uniform Commercial Code (UCC), which has been adopted in some form in all states except Louisiana. Article II makes a distinction between “merchants,” sellers who regularly deal in goods of a particular kind, and “non-merchants,” sellers that do not regularly deal in particular goods.
In the context of fire apparatus, a dealer of fire apparatus, one that takes title to the apparatus before selling it to its eventual owner, is a merchant under the UCC. Conversely, a fire company selling its used apparatus to another fire company, either directly or through a broker, is likely not a merchant.
Warranties
In addition to any express warranties a seller may make to a purchaser, the UCC implies three warranties into contracts for the sale of used fire apparatus:
1. Merchantability
2. fitness for a particular purpose
3. Title
A seller’s breach of any of these warranties may be grounds for monetary damages or other remedies.
The implied warranty of merchantability is simply a guarantee from the seller to the purchaser that the apparatus being purchased is “fit for the ordinary purposes for which (fire apparatus is) used.” In other words, the apparatus must be able to perform fire suppression and other fire department activities in a satisfactory fashion. Unless expressly disclaimed, the UCC imposes the warranty of merchantability on dealers but not fire-company sellers.
Thus, absent an agreement to the contrary, a purchaser buying apparatus directly from a fire-company seller should assume they are purchasing the apparatus “as is.” By the same token, the cost premium sometimes associated with purchasing apparatus from a dealer may be justified by the accompanying warranty of merchantability.
The implied warranty of fitness for a particular purpose arises when a seller is aware of “any particular purpose for which [the fire apparatus is] required” and “that the buyer is relying on the skill or judgment of the seller to select or furnish suitable [fire apparatus].” This warranty arises both in purchases from fire-company sellers and dealers.
Practically speaking, it may be difficult to demonstrate to a court that a purchaser relied on the skill or judgment of fire-company seller when selecting appropriate apparatus and so they should not assume that the implied warranty of fitness for a particular purpose applies to their transaction. At the same time, fire-company sellers should take care not to represent that a particular piece of apparatus will be able to meet the needs of a potential seller.
The UCC also implies a warranty of title. This simply means that the seller warrants to the purchaser that the seller owns the apparatus free and clear of other claims. This warranty applies equally to dealers and fire-company sellers and is difficult to disclaim.
Rarely is this warranty at issue but fire-company sellers should be sure to extinguish any purchase money security interests or other liens prior to the sale of any apparatus.
Delivery and risk of loss
The risk of loss passes from the seller to a purchaser at different times depending on whether the seller is a dealer or fire-company seller. In the case of a dealer, the risk of loss passes to the purchaser when the purchaser actually receives the fire apparatus. With a fire-company seller, the risk of loss passes to the purchaser when the seller tenders the apparatus to the buyer. Tendering apparatus means alerting the purchaser that the apparatus is ready to be picked up or otherwise offering the apparatus for delivery.
This distinction can be significant. For example, if a dealer alerts a purchaser that a piece of apparatus is ready to be picked up on Tuesday but the purchaser fails to take delivery until Thursday, the dealer will be liable for the loss of the apparatus if it catches fire on Wednesday. With a fire-company seller in the same scenario, the risk of loss would have passed to the purchaser on Tuesday notwithstanding the fact that the purchaser did not pick it up and the purchaser would bear the loss of the fire on Wednesday.
Let’s make a deal
The UCC provides default positions to sales agreements. It is the drafters’ best guess as to what the parties would have agreed had their agreement addressed the issue. This means that sellers and purchasers can change those assumptions with an explicit, preferably written, agreement.
Other UCC provisions and the particularities of the law in your state may affect apparatus purchases. This article is no substitute for competent legal counsel licensed to practice in your state.