A beauty products store owner shows a car to a customer; the seller tells the customer to test drive; The sale price is agreed; After purchase, the buyer learns the car will require a costly engine overhaul. Is the buyer entitled to relief?

• A. Yes, because the seller was a merchant and should have disclosed defects.
• B. Yes, because the car had latent defects the seller knew about.
• C. No, because the storeowner was not a merchant.
• D. No, because the buyer had opportunity to inspect.

Answer: (C)

The key idea is how the law treats warranties based on whether the seller is a merchant in the goods being sold. Under the UCC, the implied warranty of merchantability attaches only when the seller is a merchant in that kind of goods. A merchant is someone who regularly deals in the goods or who holds themselves out as having special knowledge or expertise in them. In this scenario, a beauty products store owner selling a car is not operating as a merchant in cars, so the car is not subject to the implied warranty of merchantability.

Because the seller isn’t a car merchant, the buyer cannot rely on that warranty for relief from a costly engine overhaul. Relief would only come from a different source, such as an express warranty or evidence of fraud/misrepresentation, but not from the merchantability warranty. The fact that the buyer had an opportunity to inspect does not create a warranty here since the key protection—the implied merchantability warranty—does not apply to a non-merchant seller.