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New York Appellate Court Discusses the Warranty of Fitness in Product Liability Case


The Facts:

On 27 January 1970, the job superintendent of a Company, plaintiffs’ employer, ordered a quantity of lumber from defendant by telephone, including 200 pieces of 2 9 scaffold planking, and specifically asked for scaffold planking. He had 20 years of experience in the trade and had dealt with defendant for 15 or 16 years; this was the normal way he gave an order and was the standard procedure for ordering. The scaffold planking was a standard item 13 feet long, suitable for scaffolding, and should be number one grade–free from any imperfections that would affect the quality of the material. Thereafter, defendant’s vice-president, who received the telephone order, stated that the latter specifically asked for rough spruce planking without saying which of two available grades he wanted. This was a repeat of many orders he had received from the superintendent for other jobs during the previous two or three months and the superintendent did not mention scaffold planking or say what he was going to use it for. When the superintendent gave him the order, he wrote it down in an order book as it was given to him. The trade custom and usage is to sell rough spruce as is; and defendant, which buys it lumber from a mill, does not cut or grade it in any way and does not inspect it for quality upon delivery to it. The defendant lumber yard then delivered the lumber and one of the Company’s foremen checked it for quantity, not quality, and signed a receipt for it. Following the delivery, the Company’s employees branded the firm name on both edges of the planking (it was two inches thick), about a foot from one end, and then stacked it in a pile. At that time, only the edges of the plank were visible. The Company’s foreman ordered planks to be brought from the first floor of the building under construction down to the C-3 level and placed side by side across steel beams. Two men took planks from the pile and passed them down, floor by floor. About five or six planks were then laid side by side over an opening, about an inch or so apart, one end of each plank resting on a concrete platform and the other on a steel beam which it overhung by a foot. Plaintiffs stepped on the scaffold at about the same time and a few seconds later the middle plank cracked, causing them to fall some 25 feet to the foundation below. After the accident, plaintiff looked over and saw that the broken plank was rotted.

Subsequently, plaintiffs brought the instant action against the defendant lumber supply company to recover damages, on the theories of breach of warranty and negligence, for personal injuries sustained, broken bone and the like, when a scaffolding plank broke under their weight and caused them to fall; a scaffolding accident or construction accident.

The plank was not produced at the trial but the uncontroverted testimony was that it was rotted on one side with a split or egg-shaped break all the way across in the rotted area, which was about 20 inches in diameter and ran completely across the plank. This defect was visible only on one side of the plank and was hidden from view on the other side. Moreover, the invoice for the lumber was received in evidence. The word “Note” is printed in the largest type used on the invoice, except for defendant’s name at the top and the invoice number at the bottom, but the text of the disclaimer is printed in the smallest type used on the invoice.

The trial court dismissed the negligence causes of action and reserved decision on defendant’s motion to dismiss the causes of action for breach of warranty. The jury found for plaintiffs on the theory of breach of warranty and at the subsequent trial on the issue of damages a different jury awarded them substantial damages. The trial court held that the disclaimer was not conspicuous; that before a merchant can disqualify for the implied warranties the public has become accustomed to, it must show that the customer was clearly placed on notice. Since the disclaimer is smaller, not larger, than the rest of the purchase order, it is not conspicuous.

Defendants appeal the aforesaid order.

The Issues:

The issues here are: whether or not the trial court erred in deciding for plaintiffs; and, whether or not the disclaimer was conspicuous enough, effective enough as an exclusion of warranty of fitness, to relieve defendants of liability.

The Ruling:

The only serious question presented on this appeal is the effect to be given to this exclusion of warranty of fitness.

As a rule, to be effective, an exclusion of warranty of fitness must be written and conspicuous. A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals is conspicuous. Language in the body of a form is conspicuous if it is in larger or other contrasting type or color; but in a telegram, any stated term is conspicuous. Whether a term or clause is conspicuous or not is for the court to decide.

The court finds that the statutory language is illustrative rather than exclusive; it presents guidelines to assist the court in deciding whether a particular disclaimer of warranty is conspicuous so that the person against whom it is to operate ought to have noticed it. Each case should be judged on the basis of its own facts and the court should take into consideration the pertinent circumstances.

Here, the record indicates that the Company’s job superintendent had actual knowledge of the presence of the disclaimer of warranty of fitness for purpose on invoices in the trade. In his dealings with defendant for 15 or 16 years and in his 20 years of experience in the trade, he had seen quite a few invoices. It had been his experience to see such a disclaimer on these invoices and he could not recall ever seeing one without it.

Thus, the trial court should have taken these circumstances into consideration together with the fact that the disclaimer appeared at the bottom of the invoice roughly opposite the total amount of the bill and immediately underneath the conspicuous legend “No claims allowed unless made immediately after delivery”. In addition, the disclaimer of warranty was preceded by the word “NOTE” which appeared in conspicuous capital letters calling further attention to it.

Under the circumstances together with the superintendent’s actual knowledge that invoices in the trade contain a disclaimer of warranty, rendered the disclaimer in the present case sufficiently conspicuous so that he ought to have noticed it despite the smallness of the type used. The disclaimer was conspicuous as to the superintendent; and, as the Company’s agent, he was the person against whom the disclaimer was to operate.

In sum, the disclaimer of warranty was effective against plaintiffs’ employer and effectively barred plaintiffs’ causes of action for breach of warranty.

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