Randy Knitwear, Inc. v. American Cyanamid Co.
226 N.Y.S.2d 363, 11 N.Y.2d 5, 181 N.E.2d 399 (1962)
Rule of Law:
A manufacturer may be held liable for breach of an express warranty, made through advertisements and labels, to a remote purchaser who relies on those representations, even in the absence of direct contractual privity between the manufacturer and the purchaser.
Facts:
- American Cyanamid Company manufactured chemical resins, marketed under the trade-mark “Cyana,” used by textile manufacturers and finishers to prevent fabrics from shrinking.
- Apex Knitted Fabrics and Fairtex Mills were fabric manufacturers licensed or authorized by Cyanamid to treat their goods with “Cyana” and to sell them with a “Cyana” label and guaranty.
- Bandy Knitwear, a manufacturer of children’s knitted sportswear, purchased large quantities of these “Cyana”-treated fabrics from Apex and Fairtex.
- Cyanamid provided labels or garment tags, bearing the legend “A Cyana Finish This Fabric Treated for Shrinkage Control Will Not Shrink or Stretch Out of Fit Cyanamid,” to Fairtex and Apex.
- With Cyanamid’s knowledge and approval, Fairtex and Apex passed these labels to garment manufacturers, including Bandy, so they could attach them to clothing made from the purchased fabrics.
- Bandy Knitwear relied on Cyanamid’s representations, made in trade journal advertisements, direct mail pieces, and the supplied labels, that the “Cyana” finished fabrics would not shrink or lose their shape when washed.
- After most of the fabrics were made into garments and sold by Bandy, it was claimed that ordinary washing caused them to shrink and to lose their shape.
Procedural Posture:
- Bandy Knitwear initiated an action against American Cyanamid Company (among others, including Fairtex Mills) in the trial court (Special Term) for breach of express warranty.
- American Cyanamid Co. moved for summary judgment, arguing lack of privity of contract with Bandy Knitwear.
- The trial court (Special Term) denied American Cyanamid Co.'s motion for summary judgment.
- The Appellate Division unanimously affirmed the trial court's order.
- The Appellate Division granted leave for appeal to the New York Court of Appeals on a certified question regarding the necessity of privity.
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Issue:
Is privity of contract between a manufacturer and a remote purchaser essential for maintaining an action for breach of express warranty when the manufacturer's representations induced the purchase?
Opinions:
Majority - Fuld, J.
No, privity of contract is not essential for an action against a manufacturer for breach of express warranty when the manufacturer's representations induced the purchase. The court held that the traditional privity limitation should be dispensed with, particularly in cases where a manufacturer makes express representations (through advertising and labeling) that induce reliance by remote purchasers. The historical characterization of warranty actions as purely contractual is questionable, as their origin was in tort. Modern commercial practices involve manufacturers using mass advertising and labeling to induce purchases by ultimate users with whom they have no direct contractual relationship. To deny liability solely on the absence of technical privity is unrealistic and unjust, as the manufacturer intends and expects reliance on its express assurances of quality. Adhering to privity would lead to wasteful circuity of action and could leave aggrieved parties without a remedy, especially if an intermediate seller disclaims warranties. The court emphasized that liability turns on the representation itself, not on the character of the product or the type of injury suffered (rejecting the argument that liability should be limited to personal harm). Furthermore, the New York Personal Property Law does not mandate privity for express warranties. The court asserted its historic function to bring the law into harmony with modern needs and concepts of justice and fair dealing.
Concurring - Froessel, J.
The court should affirm the lower court's decision in this specific case, but not on the broader ground that the requirement of privity should be dispensed with without limitation. While agreeing that American Cyanamid Company could be held liable for its express representations regarding “Cyana Finish” fabrics because these representations were made in newspapers and periodicals and repeated on labels and tags provided by Cyanamid to fabric manufacturers, which were then passed to garment manufacturers (like Bandy) with Cyanamid’s knowledge and authorization, Justice Froessel believed the court should decide cases as they arise rather than adopting a sweeping modification of the privity rule.
Analysis:
This landmark decision significantly eroded the doctrine of privity in New York for express warranty claims, aligning the state's product liability law with modern commercial realities dominated by mass advertising and branding. It expanded manufacturer liability by recognizing that direct contractual relationships are less relevant than a manufacturer's public assurances that induce consumer reliance. The case set a precedent for holding manufacturers directly accountable for their product claims, reducing the burden on injured parties and streamlining litigation by eliminating the need for a 'circuity of action.' Its reasoning laid groundwork for future developments in product liability, moving towards broader consumer protection.
