Download Warranty Cases

WARRANTY
1. Horizon Paper v. Domtar, No. 93 CIV. 5079 (LAP), 1994 WL 97135 (S.D.N.Y. Mar 21, 1994)
Issue: Domtar, a paper manufacturer, told Horizon, a paper merchant, that if it made a sale of paper
to a certain book publisher with a reduced rate of 2 percent, Domtar would fulfill that order to
Horizon with a 2 percent cost discount. After Horizon made that sale, Domtar claimed that there
was no agreement, because a writing is required under the Statue of Frauds for the sale of goods
valued over $500.
Decision: The Statute of Frauds requirement for a writing does not apply to an agreement to
reimburse losses. Because the agreement for the discount was separate from any sale of goods, the
Statute of Frauds does not apply.
Significance: The UCC is the law that most states use to address issues regarding the sale of goods
valued at more than $500. To determine if the contract is primarily for the sale of goods, courts will
look for an exchange of personal property for money.
2. Roto-Lith, Ltd. V. F.P. Bartlett & Co., 297 F2d 497 (1st Cir 1962) [NEW]
Issue: The glue purchased by the plaintiff to be used in bag manufacturing failed to adhere properly
and resulted in merchandise that was unsalable. The plaintiff argues that there was sufficient
evidence that an agreement existed between the two parties and that the defendant had broken their
contract.
Decision: The UCC states that a contract exists where there is conduct by both parties that
recognizes its existence. Thus, the shipping and receiving of the goods was conduct
sufficient to generate a contract. In addition, the warranty disclaimer on the reverse of the
acceptance form was not an "additional" or
"different" term and so should have been treated as a proposal for addition to the contract.
Significance: Material terms of a contract need to be clearly agreed upon, and any attempt to add
important terms without the other party’s understanding will be ineffective.
3. House v. Armour of America, Inc., 886 P.2d 542 (Utah Ct. App. 1994)
Issue: The widow of a police officer asserted that her husband died from a gunshot wound while
wearing a bulletproof vest that did not protect her husband as was promised by the defendant.
Decision: There was no express warranty made by the marketing materials. However, the seller’s
agent recommended the “Cadillac” of vests when the officer told him what kind of bullet it would
have to stop. The seller’s knowledge of the buyer’s needs coupled with the buyer’s reliance on the
seller’s expertise sufficiently created an implied warranty of fitness for a particular purpose under
the UCC. The court also determined that the seller limited his liability of “consequential damages”
by stating such on the invoice signed by the buyer.
.
Significance: Where goods are not expressly guaranteed to do something, the law can imply a
warranty for a particular purpose if the seller knows about the purpose and the buyer relies upon it.
Whereas express warranties cannot be waived, certain damages can be waived and liability can be
limited.
4. Yong Cha Hong v. Mariott Corp. 3 UCC Rep. Serv. 2d 83 (D. Md. 1987) [NEW]
Issue: The plaintiff asserted that she bit into a worm while eating a chicken dish served at one of the
defendant’s restaurants.
Decision: The UCC allows for an implied warranty of merchantability that goods will be acceptable
for the ordinary purpose for which the goods are bought. There is a requirement that the defendant
is a merchant dealing in goods of the kind bought by the plaintiff. The court in this case
acknowledged injuries while keeping in mind that the object was likely an odd piece of the chicken.
The court denied the plaintiff’s motion for summary judgment, saying that restaurants who serve
food with the occasional bone are not violating the warranty of merchantability.
Significance: If the case involves a merchant dealing in goods sold, then the goods must be fit for
their ordinary purpose.