Dealer warranties regarding coins don't last forever, and they shouldn't. In most cases the facts warranted by dealers about a coin are either true or false as of the date of sale, and diligent buyers usually discover any discrepancies within a reasonable period of time.

In addition, the Uniform Commercial Code's express and implied warranty provisions force dealers to maintain back-up documentation for their warranties (or remember what they did or did not say to particular customers), which is a burden. The absolute nature of UCC warranties -- requiring full refunds regardless of whether the dealer was deceitful or even negligent -- increases that burden. At some point, there needs to be closure. Accordingly, UCC 2-725 gives buyers four years from the date of sale to bring suit for breach of any express or implied warranty created by the UCC.

This is a very important limitation on a buyer's rights under the UCC, and is separate from any disclaimers of liability the buyer may sign. Four years from the date of sale, a buyer loses his or her right to sue for breach of warranty. It doesn't matter when the buyer learns that there was a breach, and it often happens that defects relating to coins are not discovered until the four-year period has already expired. The UCC provides no relief in these situations. However, if collectors or investors find that a coin or collectible item they purchased is counterfeit, I encourage them to contact their dealer anyway, because dealers value their reputations and their client goodwill, and often take back counterfeits regardless of when the purchase took place. Indeed, Malletts, an antiques dealer in London, recently discovered that a Russian gold dinner service it had sold an American customer in 1978 was a fake, and refunded the customer's $2.2 million purchase price plus interest, fully aware that the buyer could no longer sue for a refund. The only exception to the four-year UCC statute of limitations is for warranties which extend to future performance, in which case the limitations period does not start running until the future event does (or does not) take place. This exception rarely applies to the sale of coins or collectibles, but it is occasionally offered. For example, I represented a coin dealer in a 1988 breach of warranty case in New York where the plaintiff claimed that certain rare coins were not of the "grade or quality" warranted by my client when she bought them. Plaintiff argued that because the coins were supposed to go up in value and didn't, she could sue seven years after the purchase. The court stated that if there were any warranties concerning grade or quality, they would have been breached at the time of sale, and "there was no 'performance' for plaintiffs to 'await'." The claims was dismissed. However, in a 1990 case involving art, a Hawaii federal judge indicated that art and collectible items were precisely the type of item for which a warranty of authenticity involved future performance, criticizing decisions such as the one in my case:

"In the view of this court, far from being based on sound reasoning, these decisions flow from a too-literalistic application of the Code which takes no cognizance of the unique problem presented by the application of the U.C.C. to artwork and other collectibles....[I]n the case of artwork which is certified authentic by an expert in the field or a merchant dealing in goods of that type, such a certificate of authenticity constitutes an explicit warranty of future performance sufficient to toll the U.C.C.'s statute of limitations."

If this rule were applied to art and collectibles cases, the warranty of authenticity would, in effect, last for as long as the buyer holds the goods. I think the Hawaii decision is an aberration, however. The "future performance" exception is intended to deal with warranties which, by their very nature, might not be satisfied within four years. A good example are tires warranted to last for 40,000 miles. A car owner who drives infrequently will not travel 40,000 miles in four years, but the future performance exception ensures that the dealer will still be responsible legally if the tires fail after four years have passed, but before the driver has logged 40,000 miles.