SW Legal studies in Business

Buyer May Not Pursue Damages Restricted by Terms of Contract
Description

Appeals court held that a commercial buyer of a boat, that was claimed to be defective, failed to pursue the exclusive remedy provided in the contract agreement. The other claims made by the buyer were prohibited by the contract.

Topic Sales
Key Words

Implied Warranty of Merchantability; Fitness for a Particular Purpose

C A S E   S U M M A R Y
Facts

Bimini Boat Sales bought a fishing boat from Luhrs, a boat manufacturer, for the purpose of reselling the boat to the general public. Finding many defects in the boat, the boat needed extensive repairs before it could be made merchantable. Bimini sued Luhrs, claiming the boat was unmerchantable and unfit for the particular purpose of reselling to the general public. Hence, Bimini sued Luhrs for breach of warranties and for damage to its business reputation. The trial court dismissed the suit; Bimini appealed.

Decision

Affirmed. Bimini established a prima facie case entitling it to judgment with respect to liability on its causes of action to recover damages for breach of the implied warranty of merchantability and breach of the implied warranty of fitness for a particular purpose. However, these causes of action for damages for loss to plaintiff's business were barred by terms of the agreement between the parties. The agreement did not effectively disclaim the warranties since the disclaimers in the agreement were not conspicuous. The UCC requires disclaimers to be conspicuous; the ones in the contract were not, so were not effective. Nevertheless, the dealer agreement under UCC 2-719 held that the seller, Luhrs, was not liable for consequential damages, such as damage to business reputation. Bimini had the right to demand to return the boat, but did not pursue that remedy. The remedies sought were not allowed by the contract.

Citation Bimini Boat Sales v. Luhrs Corp., ---N.Y.S.2d--- (2010 WL 191532, App. Div., N.Y., 2010)

Back to Sales Listings

©1997-2010  SW Legal Studies in Business. All Rights Reserved.