Implied Warranties Case Study

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Implied Warranties Case Study

Implied Warranties

FACTS: Peter and Tanya Rothing operated Diamond R Stables near Belgrade, Montana, where they bred, trained and sold horses. Arnold Kallestad owns a ranch in Gallatin County, Montana, where he grows hay and grain, and raise Red Angus cattle. For more than twenty years, Kallestad has sold between 300 and 1,000 tons of hay annually, sometimes advertising it for sale in the Bozeman Daily Chronicle. In 2001, the Rothing’s bought hay from Kallestad for $90 a ton. They received a delivery on April 23. In less than two weeks, at least nine of the Rothings’ horses exhibited symptoms of poisoning that was diagnosed as botulism. Before the outbreak was over, nineteen animals died. Robert Whitlock, associate professor of medicine and the director of the Botulism Laboratory at the University of Pennsylvania concluded that the Kallestad’s hay was the source. The Rothing’s filed a suit in a Montana state court against Kallestad, claiming in part, breach of the implied warranty of merchantability. Kallestad asked the court to dismiss the claim on the grounds that, if botulism had been present, it had been in no way foreseeable.

ISSUE: Should the court grant this request? Why or why not? [Rothing v. Kallestad, 337 Mont.193.159.P.3d22 (2007)]

DECISION: The court should not grant Kallestad’s request for dismissal because he breached his contract with the Rothings and failed to honor the implied warranty of merchantability. In addition, Kallestad should be ordered to reimburse or compensate the Rothings for the goods and products they’ve lost due to the defective product they received from Arnold Kallestad’s ranch.

REASONS: From a personal standpoint, Arnold Kallestad may have not known the true conditions of the hay he sold to Peter and Tonya Rothing. For more than two decades Kallestad provided quality alfalfa hay at a competitive price. This, from what the facts tell us, is the first major incident to occur within...
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