4-81 WARRANTY LIABILITY 4.04 U.C.C

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1 4-81 WARRANTY LIABILITY Section 2-315: The Implied Warranty of Fitness for a Particular Purpose Like the implied warranty of merchantability, 1 the implied warranty of fitness for a particular purpose, Section 2-315, arises by operation of law, 2 without regard to the seller s intent 3 or whether the seller has made a representation to the buyer. 4 Both implied warranties pertaining to new or used 5 goods may be breached without establishing culpability on the part of the seller. 6 While the merchantability warranty essentially charges the seller with the obligation to sell goods suitable for ordinary purposes, the warranty of fitness requires the seller to select or properly furnish goods appropriate for the buyer s particular or specific purpose. 7 Section provides that at the time of formation of the contract, the seller must either know, or the circumstances surrounding the transaction must give the seller reason to know, the particular purpose for which the goods are required. 8 The buyer s intended particular 1 U.C.C Thompson Farms, Inc. v. Corno Feed Products, 366 N.E.2d 3, 18 (Ind. App. 1977) (noting implied warranties arise by operation of law for buyer-protection purposes). Sixth Circuit: Price Brothers Co. v. Philadelphia Gear Corp., 649 F.2d 416, 423 (6th Cir. 1981) (noting implied warranties arise by operation and are not based on the parties agreement). Indiana: Woodruff v. Clark County Farm Bureau Cooperative Ass n, 286 N.E.2d 188, (Ind. App. 1972) (holding an implied warranty arose by operation of law). 3 Controltek, Inc. v. Kwikee Enterprises, Inc., 585 P.2d 670, 673 (Ore. 1978) (indicating intent is irrelevant whenever buyer reliance exists and seller is aware of buyer s reliance and purpose). 4 Khan v. Velsicol Chemical Corp., 711 S.W.2d 310, 319 (Tex. App. 1986) (noting is an implied warranty and thus no express representation is necessary). 5 See Gast v. Rogers-Dingus Chevrolet, 585 So.2d 725, 728 (Miss. 1975) (indicating implied warranties apply to used vehicles). 6 See Berkeley Pump Co. v. Reed-Joseph Land Co., 653 S.W.2d 128, 133 (Ark. 1983) (holding implied warranty can be found where seller was aware of the buyer s particular purpose, even without evidence of actual knowledge). 7 Georgia: Fiat Auto U.S.A., Inc. v. Hollums, 363 S.E.2d 312, 314 (Ga. App. 1987) (noting the difference between the merchantability warranty s ordinary purposes requirement and the fitness warranty s specific use requirement). Iowa: Madison Silos v. Wassom, 215 N.W.2d 494, (Iowa 1974) (indicating differences between two implied warranties). 8 Nobility Homes of Texas, Inc. v. Shivers, 557 S.W.2d 77, (Tex. 1977) (noting implied warranty of fitness for a particular purpose requires the seller at the

2 4.04 COMMERCIAL CONTRACTING 4-82 purpose for the goods should, however, be distinguished from the ordinary use of such goods. 9 Thus, Section requires that there must be an intended specific use 10 of the goods, peculiar to the nature 11 of the buyer s particular needs, of which the seller must possess actual or constructive knowledge. 12 For example, comment 2 time of contracting to know the buyer s particular purpose for the sold goods). See also, U.C.C ( [w]here the seller at the time of contracting has reason to know... ). 9 U.C.C , cmt. 2 (describing a particular purpose as involving a specific use by the buyer... peculiar to the nature of his business and an ordinary purpose as involving a use customarily made of the goods in question ). Tenth Circuit: Crysco Oil Field Services, Inc. v. Hutchison-Hayes International, Inc., 913 F.2d 850, 852 (10th Cir. 1990) (holding requirements of not met where plaintiff s intended use was same as manufacturer s intended use). Minnesota: Auto-Owners Insurance Co. v. Heggie s Full Howe Pizza, Inc., 51 U.C.C. Rep. Serv.2d 946, 946 (Minn. App. 2003) (holding restaurant s purchase of pizza ovens to cook pizzas was an ordinary, not a particular, purpose). Texas: Miles v. Ford Motor Co., 922 S.W.2d 572, 587 (Tex. App. 1996) ( In some jurisdictions a specific ordinary purpose will not invoke the warranty.... In other jurisdictions the warranty can protect a buyer whose particular purpose is the ordinary purpose.... We believe the better rule is that a particular purpose must be a particular nonordinary purpose. ). 10 U.C.C , cmt. 2. Eighth Circuit: Stoffel v. Thermogas Co., 998 F. Supp. 1021, 1030 (N.D. Iowa 1997) (discussing the specific use requirement of the implied warranty of fitness for a particular purpose, and noting in the case there was no evidence the buyer communicated any such purpose to the seller). Iowa: Madison Silos v. Wassom, 215 N.W.2d 494, 500 (Iowa 1974) (noting specific use requirement was met where buyer informed seller of his intent to purchase silos that would store wet grain). 11 U.C.C , cmt U.C.C , cmt. 1 ( Under this section the buyer need not bring home to the seller actual knowledge of the particular purpose for which the goods are intended or of his reliance on the seller s skill and judgment, if the circumstances are such that the seller has reason to realize the purpose intended or that the reliance exists. ). Sixth Circuit: U.S. Fibres, Inc. v. Proctor & Schwartz, Inc., 358 F. Supp. 449, 458 (E.D. Mich. 1972) (acknowledging requirement of seller s actual or constructive knowledge as a question of fact for the court to determine). Arkansas: Berkeley Pump Co. v. Reed-Joseph Land Co., 653 S.W.2d 128, (Ark. 1983) (indicating knowledge requirement is met where, under the circumstances, seller had sufficient reason to be aware of buyer s specific purpose or reliance). Delaware: Neilson Business Center, Inc. v. Italo V. Moateleone, M.D., P.A., 524 A.2d 1172, 1176 (Del. 1987) (finding knowledge requirement satisfied where seller knew buyer s purpose through information seller s assistant provided him).

3 4-83 WARRANTY LIABILITY 4.04 to Section notes that the ordinary purpose of shoes is for walking, but a particular purpose may be to use those shoes for climbing. 13 There are a number of other conditions to finding liability. First, the seller must have knowledge, or reason for such knowledge, that the buyer is relying on the seller s skill or judgment to select or furnish suitable goods. 14 Such knowledge may be the result of past dealings between the parties. 15 Second, just as in the case of the implied warranty of merchantability under Section 2-314, the finding of causation is a requisite condition of merchant liability. 16 Third, the buyer must have actually relied on the seller to select or furnish the appropriate goods for the buyer s intended particular needs. 17 The more sophisticated or knowledgeable the buyer is with regard to the type or kind of goods in question, the weaker the case may be for 13 U.C.C , cmt U.C.C See Utah Co-op Ass n v. Egbert-Haderlie Hog Farms, Inc., 550 P.2d 196, 198 (Utah 1976) (finding seller had knowledge of the defendant s purpose as a result of two years of prior dealings). 16 This precondition applies to both implied warranties of merchantability and of fitness. Maryland: Certain-Teed Products Corp. v. Goslee Roofing & Sheet Metal, 339 A.2d 302, 310 (Md. Spec. App. 1975) (noting in implied warranty actions, buyer must show seller s breach was the proximate cause of the harm suffered. ). Pennsylvania: Roupp v. Acor, 384 A.2d 968, 970 (Pa. Super. 1978) (holding causation was not severed as a result of the truck being used for 6,100 miles where witness testified a normal engine would have run for 2,000 to 3,000 miles). Rhode Island: San Antonio v. Warwick Club Ginger Ale Co. 248 A.2d 778, 782 (R.I. 1968) ( [C]ausation between breach and injury as well as the sufficiency of the notice given, and the reasonableness of the time within which it was given... [are] all, ordinarily, questions of fact for the jury. ). 17 U.C.C First Circuit: Glyptal, Inc. v. Engelhard Corp., 801 F. Supp. 887, 898 (D. Mass. 1992) (finding no requisite reliance where buyer performed its own tests on the product and relied on its own conclusions rather than those of the seller); Capitol Fire Protection Co., Inc. v. Fire Specialists, Inc., 13 U.C.C. Rep. Serv.2d 369, 369 (D.N.H. 1990) (denying summary judgment where issue of material fact existed regarding whether buyer of fire detectors actually relied on seller s skill or judgment). Eighth Circuit: Stoffel v. Thermogas Co., 998 F. Supp. 1021, 1030 (N.D. Iowa 1997) (finding no reliance where buyer failed to communicate his anticipated purpose). Illinois: Sieman v. Alden, 341 N.E.2d 713, 716 (Ill. App. 1975) (holding reliance requirement was not met where buyer intended to purchase type of saw before discussing purchase with seller).

4 4.04 COMMERCIAL CONTRACTING 4-84 establishing justifiable reliance. 18 Similarly, if it appears that the buyer is relying on the buyer s own skill or judgment rather than the seller s advice, the prerequisite of reliance will not be satisfied. 19 Finally, although the seller will typically be a merchant, there exists no such precondition to liability, unlike under Section 2-314, where a merchant-seller must deal in goods of the kind. 20 As indicated above, the warranty of fitness for a particular purpose under Section is classified as one of the two implied warranties; the other being the implied warranty of merchantability under Section Although it is true that no express statement of facts or promise with regard to the goods is required under either Section or Section 2-315, 21 the purity of the implied classification of the 18 Seventh Circuit: Binks Manufacturing Co. v. National Presto Industries, Inc., 709 F.2d 1109, 1122 (7th Cir. 1983) (finding no implied warranty of merchantability for complicated transaction where both buyer and seller had equal expertise and skill). Massachusetts: Fernandes v. Union Bookbinding Co., Inc., 507 N.E.2d 728, 733 (Mass. 1987) (finding justifiable reliance where buyer used seller as its only source of spacer plys for over twenty-eight years). Ohio: Norcold, Inc. v. Gateway Supply Co., 798 N.E.2d 618, 626 (Ohio App. 2003) (noting buyer s proficiency concerning product purchased was a pertinent concern in analyzing his reliance on seller). Oregon: Swan Island Sheet Metal Works, Inc. v. Troys Custom Smoking Co., 619 P.2d 1326, 1329 (Ore. App. 1980) (indicating reliance cannot be justifiable if buyer possesses equal or better product understanding than seller). 19 U.C.C , cmt. 5 ( If the buyer himself is insisting on a particular brand he is not relying on the seller s skill and judgment and so no warranty results. ). First Circuit: Glyptal, Inc. v. Engelhard Corp., 801 F. Supp. 887, 898 (D. Mass. 1992) (holding no reliance present where buyer performed its own product testing and came to its own findings prior to purchase). Third Circuit: Sessa v. Riegle, 427 F. Supp. 760, 770 (E.D. Pa. 1977) (holding reliance requirement not satisfied where seller merely sold horse picked by buyer s agent). Ninth Circuit: Casper v. E.I. DuPont De Nemours and Co., 806 F. Supp. 903, 909 (E.D. Wash. 1992) (finding seller failed to provide sufficient evidence to prove, as a matter of law, buyer could not have relied on seller s representations). Oklahoma: Collins Radio Co. v. Bell, 623 P.2d 1039, (Okla. Civ. App. 1980) (finding no reliance where buyer with twenty-seven years of related experience researched products on his own and reviewed three bids he received). 20 U.C.C , cmt. 4 ( Although normally the warranty will arise only where the seller is a merchant with the appropriate skill or judgment, it can arise as to nonmerchants where this is justified by the particular circumstances. ). 21 See U.C.C (requiring affirmative communication of the seller as a prerequisite to breach of that warranty).

5 4-85 WARRANTY LIABILITY 4.04 fitness for a particular purpose warranty remains somewhat questionable. As stated, the implied warranty of merchantability merely requires that the goods sold to the buyer be furnished by a merchant who regularly deals in goods of that kind. 22 The fitness warranty under Section 2-315, however, requires more than a sale by a knowledgeable seller. Instead, Section appears to provide a framework to assess the conduct of a seller who should have possibly made a more suitable choice of product on behalf of the relying buyer. This is arguably a step beyond the mere implication of a warranty. Moreover, the prospect of seller culpability, though clearly not a stated element of plaintiff-buyer s case, should not be entirely dismissed as irrelevant. It can be fairly argued that a seller who has selected an inappropriate product, and has been charged with both knowledge of the buyer s specific needs and the buyer s reliance on that seller s skill or judgment, should be tainted with the scent of culpability. 22 U.C.C Second Circuit: Blockhead, Inc. v. Plastic Forming Co., 402 F. Supp 1017, 1025 (D. Conn. 1975) (holding seller was merchant dealing in goods of the kind even though it produced a wide variety of goods). Third Circuit: Sessa v. Riegle, 427 F. Supp. 760, 769 (E.D. Pa. 1977) (holding seller of race horse was merchant dealing in goods of the kind where he purchased, sold and raced horses). Seventh Circuit: Hemphill v. Sayers, 552 F. Supp. 685, 689 (S.D. Ill. 1982) (finding school athletic director, football coach, and trainer were not merchants dealing in goods of the kind in case concerning defective helmet).