Product Cases Flashcards

the service aspect of the transaction predominates the transaction. Here the plaintiffs made a contract for labor, not goods. The defendants only had a duty of care that a reasonably prudent and skilled qualified person would exercise under the same circumstances.

gravamen test – allows court to escape the predominate purpose test. If the problem is with the stuff, art. 2 applies. If problem is with the labor, common law applies. Here the goods were defective

Evidence of the course of dealing and use of trade is admissible, unless the contract says that the course of dealing and use of trade should not be included in the K. This was not disclaimed in the K.

such an instruction fails to inform the jury as to whether the defendant has warranted the goods to be free from the propensity that caused the plaintiff's injuries. Warranty liability is not absolute liability, and manufacturer of motor vehicle is not obliged to make product collision-proof, nor is motor vehicle manufacturer obliged to design against bizarre, unforeseeable accidents; however, manufacturer must anticipate environment in which its product will be used, and must design against reasonably foreseeable risks attending product's use in that setting. The question on remand for the jury was whether the motor home was “fit for the ordinary purposes for which such goods are used.”

The ordinary purpose of the trunk was for carrying goods and she didn’t think about how to exit the trunk when she bought it.

TC did not abuse discretion in admitting expert and nor in submitting issues re: breach of warranty, and the jury’s verdict did not lack consistency.

court’s reasons for the result/results –

· 2-313 commentary says warranty provision is to be construed and applied liberally in favor of a buyer of goods.

· Formal writing and specific intent by seller are not necessary to create a warranty. The language in the manual describing the purpose of the helmet and they way its design worked are express warranties.

· Can’t disclaim item description: Their limited 5 year warranty did not disclaim other warranties b/c sellers can not reduce their obligation they created in their description of their product.

· Express warranties can’t be disclaimed

· negligence issues focus on the conduct of the manufacturer, while breach of warranties evaluate the products.

• implied warranties can only be changed by conspicuous lang. 2-316(2). An object standard is applied to determine what is conspicuous. Here, the disclaimer is hidden by attention grabbing language and disclaimers should not been hidden within guarantees
• the object of the conspicuous lang. requirement is to protect buyers from surprise and unknowing waiver or their rights; therefore if the buyer has actual knowledge of the disclaimer conspicuous lang. is not material. Implied warranties may be excluded by course of dealings, course of performance, or usage of trade. The seller has the burden of proving that the buyer had actual knowledge. Dover was unable to present sufficient evidence of Cate’s knowledge to warrant a grant of its motion for summary judgment.

• post sale disclaimers are not effective b/c don’t form a part of the basis of the bargain between parties to the sale.
• FMC’s argument that Showell should have known about the disclaimer b/c of manual received in prior equipment is not sufficient evidence of actual knowledge.

Catalina unilaterally drafted damages bar and breach deprived the Pierces of a substantial benefit of their bargain. Court takes an Independence approach. Pierces are entitled to consequential damages

-What is reasonable time for taking any action depends on the nature, purpose and circumstances of such action.

-A party is justified in relying on a representation made to the party as a positive statement of fact when an investigation would be required to ascertain its falsity.

3 Reasons for reasonable notice to seller in order of importance:

1. provides the seller the opportunity to correct any defect

2. Allows seller to prepare for litigation

3. protects seller against stale claims after it is too late for seller to investigate (same policy as statutes of limitations)

-Fitl would have had to conduct an investigation after his purchase to determine its authenticity, something he was not required to do.

-Strek is unable to show that he could have fixed the problem if he knew of the alterations earlier

• majority rule: tort and warranty causes of action should be separated between monetary harm and personal and property injury.
• Policy reason for adopting the majority rule:
• gives parities the benefit of their bargains – allows parties to decide how to allocate their risks
• limits manufactures liability leading to lower cost for purchasers of goods
• warranty actions have built in limitations, but tort liability is unlimited
• shortens privity
• damages under contract law are more appropriate b/c would place buyer in the same position as if the product was not defective

(1) any fraud by supplier's employees could not be imputed to lessor or assignees; (2) thus, “hell or high water” clause requiring lessees to continue making payments to lessor regardless of condition of equipment and protecting assignees from defenses assertable against lessor was viable; (3) lessees' contractual agreement not to assert against assignees defenses against lessor estopped lessees from asserting failure of consideration as defense to counterclaim; (4) lessees' contractual waiver of warranty defeated claim of failure of consideration; and (5) question of fact precluded summary judgment on claim for negligent release of funds.

-the court could have determined that the parties agreed to the sticker price and the buyer would win

- the court could have determined there was never a price in the K and the gap filler 2-305 would apply. Gap filler says reasonable price. 2-305. Reasonable price is often the market price and seller would win.

- could find a lack of a meeting of the minds. §20 Restatement. The parties, when they said “price” meant different things. There would be no K.

Damages = highest price between receipt and notice

The court looks at the price of soybean oil between the time that goods were delivered and the time that owner was notified of the loss and damages are paid at the highest point. This encourages the warehouse to tell the owner that the goods are missing as soon as they realize the problem.

Doesn’t have to be a mirror image, but if an expert would look at them and see that the documents clearly related to same transaction.

discrepancy between listings of beneficiary's name on letter of credit and in documents presented to issuing bank did not warrant rejection of presentation documents by issuing bank. The misspelling of the destination is not a basis for dishonor of the letter of credit where the rest of the document has demonstrated linkage to the transaction on its face.

- if the bank doesn’t know about the fraud then they are acting in good faith. 5-109(a)(2). “The issuer, acting in good faith may honor or dishonor the presentation in any other case.” Id.

-If there was not fraud, the issuer must honor the letter of credit and the applicant must pay the issuer.

(1) honoring a presentation of letters of credit by provider would facilitate a material fraud sufficient for the issuance of a temporary injunction, and (2) Guatemalan injunction was entitled to comity.

This was not a negotiable instrument; therefore, the bank is not a holder in due course and may only rely on contract remedies

-Yes, b/c in order to prevent one from being a bona fide holder in due course, the holder must have notice of notice of a defense to payment at the time the instrument is negotiated. There are no facts indicating the finance company could have discovered any defect in the note when it was transferred.

-No. Sullivans will have to pay the holder of the note, then sue the contractor separately.

No, Revocation of acceptance must show non-conformity substantially impairs value, but the court doesn’t have to address that b/c the buyer never accepted the camper and if you don’t accept you don’t have to reject.

yes, includes custom made good that are moveable. They aren’t going to become part of real estate. Milau (Art. 2 didn’t apply b/c ultimate product was not moveable). Did the buyer accept the goods? Yes, the engineer, at the seller’s premises said the goods were acceptable. 2-606(1)(a) or (b). Under either analysis they’ve accepted. There is no proof that they tried to revoke acceptance. 2-608. Must prove non-conformity substantially impairs the goods.

Remedy: seller recovers contract price b/c they aren’t going to be able find another buyer through reasonable efforts. The tubes were especially made for the buyer. The seller can recover the price of goods accepted and these goods were accepted by the buyer.

The court decides to toll the time during which the RV was in the repair shop. Their patience shouldn’t work to their disadvantage. Must substantially impair standard to him or her. It is a mixed objective, subjective standard. They adopt the Oregon principle. They look at the needs and interests of the particular buyer then objectively ask if that was impaired to the buyer. The impairment was substantial and made within a proper amount of time. Ps win.