Case No. 81-1505
Transamerica Oil Corporation, Plaintiff-Appellee,
Lynes, Inc. and Baker International Corporation, Defendants-Appellants. 723F.2d 758; 1983 U.S. App. LEXIS 14288; 37 U.C.C. Rep. Serv. (Callaghan) 1076 -------------------------------------------------
December 21, 1983
Plaintiff brought suit under the Kansas Uniform Commercial Code (UCC) to recover damages resulting from the breach of an express warranty by the defendant. A jury in the United States District Court for the District of Kansas found in favor of the plaintiff. The defendant appealed the decision.
SUMMARY OF KEY FACTS
1. Plaintiff filed suit in the United States District Court for the District of Kansas against the defendant for breach of an express warranty under Kansas law. 2. Plaintiff argued that the product purchased from defendant failed to perform. 3. Jury found in favor of the plaintiff and plaintiff was awarded damages. 4. Defendant appealed the decision.
5. Defendant claimed suit was barred by the Kansas statute of limitations. 6. Defendant claimed plaintiff expressly agreed to a limitation of liability and a limitation of remedies by signing invoices that contained disclaimers. 7. The trial court excluded from evidence invoices that contained the limitations of remedy.
Overview: Transamerica conducts global oil and gas exploration, development, and production. Lynes, a subsidiary of Baker International, provides the world’s oil and gas industry with products and services for drilling and production. Lynes/Baker advertised its production injection packer product in a trade journal as being suitable for permanent use in open holes even though most production injection packers were only employed for temporary use. Subsequently, Harold Brown, President of Transamerica, spoke with a Lynes/Baker sales representative and district manager, both of which assured Mr. Brown that the packers would perform as advertised. Based on the original advertisement and subsequent literature received from Lynes/Baker as well as oral conversations with individuals from Lynes/Baker, Mr. Brown purchased ten production injection packers in six shipments. Five out of six shipments contained invoices. Each invoice contained a rider stating that Lynes/Baker disclaims any express or implied warranties other than the product being free from defects in material and workmanship, and that remedy for such was limited to replacement of or credit for defective equipment and parts. Mr. Brown signed at least one of the invoices. After the product failed to perform, Transamerica filed a suit based on implied warranty only later to drop the suit in favor of a claim based on breach of express warranty. The jury found in favor of Transamerica and awarded the sum of $196,577.62. The award exceeding the original cost of the production injection packers.
What is the appropriate statute of limitations?
Did the disclaimer of warranties and limitations of remedies on the invoices have an effect on the case under Kansas law?
The United States Court of Appeals for the Tenth Circuit reversed and remanded the case for further proceedings regarding damages only. The trial court failed to properly instruct the jury on damages.
The Court held that the jury was given proper instruction on the issue of liability on the express warranty.
The defendant was entitled to present evidence that the plaintiff agreed to a limitation of liability. The jury was entitled to view the invoice signed by plaintiff’s president, Mr. Brown. The defendant was entitled to present to the jury additional invoices in order to establish course-of-dealing and trade usage.
SUMMARY OF THE COURT’S REASONING
1. Defendant claims suit was barred by the Kansas statute of limitations.
K.S.A. § 60-512 states actions upon...