Dorman v. International Harvester Co.
120 Cal. Rptr. 516, 46 Cal. App. 3d 11, 16 U.C.C. Rep. Serv. (West) 952 (1975)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A written disclaimer of the implied warranties of merchantability and fitness for a particular purpose is ineffective unless it is conspicuous, which requires it to be written in a way that a reasonable person would notice it, such as through larger or contrasting type, a clear heading, and unambiguous language.
Facts:
- William A. Dorman entered into a “Retail Instalment Conditional Sales Contract” with International Harvester Company (I.H.) to purchase a new tractor and backhoe for his earth-grading business.
- Dorman took delivery of the equipment on November 4, 1968.
- The tractor experienced significant problems starting on the day of delivery and broke down numerous times over the subsequent nine-month period, requiring repeated repairs by I.H.
- The sales contract contained a disclaimer provision located near the signature line, printed in a slightly larger typeface than the preceding text.
- The disclaimer provision contained italicized language stating that warranties of "merchantability and fitness for particular purpose shall apply."
- The contract stated Dorman acknowledged receipt of a standard manufacturer's warranty, but Dorman testified he did not receive it at the time he signed the contract.
- The manufacturer's standard warranty, which also contained disclaimers, was printed on the reverse side of a separate purchase order form not shown to have been signed by or delivered to Dorman at the time of the sale.
Procedural Posture:
- William A. Dorman sued International Harvester Co. (I.H.) in the trial court for breach of warranty and rescission.
- At trial, Dorman dismissed the rescission claim and proceeded solely on the breach of warranty cause of action.
- The trial court ruled as a matter of law that the contract's disclaimer of implied warranties was valid and conspicuous, thereby limiting the issues for the jury.
- The jury returned a verdict for Dorman in the amount of $19,500.
- I.H. filed a motion for judgment notwithstanding the verdict (JNOV).
- The trial court granted the JNOV motion, reducing the jury's award to Dorman to $7,233.68.
- Dorman (appellant) appealed the trial court's judgment to the California Court of Appeal. I.H. (appellee) filed a cross-appeal.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a warranty disclaimer in a sales contract effectively negate implied warranties under UCC § 2316 if it is printed in only slightly larger text, lacks a bold heading, and contains potentially misleading italicized language?
Opinions:
Majority - Stephens, J.
No. The warranty disclaimer is ineffective because it is not conspicuous. California Uniform Commercial Code § 2316 is designed to protect buyers from unexpected and unbargained-for language of disclaimer by requiring such provisions to be conspicuous, meaning a reasonable person ought to have noticed it. Here, the disclaimer was not sufficiently conspicuous because the only contrast was a slightly larger typeface, which is not enough. Furthermore, the provision lacked an adequate heading to call attention to it, such as 'Disclaimer of Warranties.' The language was also ambiguous and misleading, as the italicized phrase 'merchantability and fitness for the particular purpose shall apply' would lull a buyer into a false sense of security. Finally, a disclaimer of warranties must be part of the bargain; the manufacturer's warranty containing a disclaimer was on a separate document not delivered until after the contract was signed, and therefore it is not binding.
Analysis:
This case provides a key interpretation of the 'conspicuousness' requirement for warranty disclaimers under the Uniform Commercial Code. It establishes that a mere mechanical test, such as a slightly larger font, is insufficient to make a disclaimer effective. The court adopted a more holistic, buyer-protection-oriented approach, focusing on whether the disclaimer would genuinely alert a reasonable person, considering factors like headings, clarity of language, and overall presentation. This decision makes it more difficult for sellers to use boilerplate fine print to negate implied warranties and reinforces the principle that such disclaimers must be clearly communicated and part of the bargained-for exchange to be valid.
