Seller Beware

SELLER BEWARE

By: Ian T. Kravitz, Esq. and Larry R. Leiby, Esq.

Product warranties assure or guaranty character, quality, fitness, or title of the product. Warranties may be express, i.e., actually stated, whether in writing or orally. Implied warranties, however, arise by operation of law. Some implied warranties arise because over the years courts have determined such warranties should be "read into the parties' contract." Other implied warranties arise because a statute exists that creates the warranty that is "read into the parties' contract." As that suggests, the general rule is that "privity [a contractual relationship] is required in order to recover damages from the seller of a product for breach of express or implied warranties." However, there are exceptions to the general rule.

In Grovenor House, LLC v. E.I. Du Pont De Nemours and Co., 2010 WL 883647 (S.D. March 8, 2010), Grovenor House, LLC was the developer ("Developer") of the Grovenor House Condominium. The project included glass panels at the entrance canopy. Developer met with E.I. Du Pont De Nemours and Company ("Manufacturer") regarding a product made by Manufacturer for use in the entrance canopy. At that meeting, Manufacturer assured Developer that the product was "a quality product and would provide adequate long term performance" in the canopy application. Based upon Manufacturer's representations, Developer decided to use Manufacturer's glass panels. Although Manufacturer was the ultimate supplier of the glass panels, Developer did not purchase the glass panels directly from Manufacturer. After installation was completed, Developer found that the glass began to delaminate and did not perform as Manufacturer had assured that it would.

Developer sued Manufacturer, alleging breach of implied warranty of fitness and breach of express warranty, among other causes of action. In response, Manufacturer filed a motion to dismiss. Regarding the count for implied warranty of fitness, Manufacturer argued that Developer failed to state a claim because the law required Developer to be in privity [have a contract] with Manufacturer. Developer had not directly purchased the glass and therefore could not allege in the complaint that it had such a direct contractual relationship with Manufacturer. The court found that under Florida Statutes, section 718.203(2), all contractors, subcontractors, and suppliers to condominium construction "are statutorily required to grant to the developer and to the purchaser of each condominium unit implied warranties of fitness as to the work performed or materials supplied by them." Consequently, Developer's allegations that it was the developer of a condominium and that Manufacturer was a supplier of materials to the project were sufficient to state a cause of action for implied warranty. Manufacturer's motion to dismiss the count was denied.

Regarding the count for breach of express warranty, Manufacturer made the same argument that Developer was required, but had failed, to allege that privity existed between Developer and Manufacturer. The court applied the rule that, "[w]here a manufacturer's representatives have had direct contacts with a purchaser, and have made representations regarding the product, which the purchaser relied on, the purchaser has a cause of action for breach of express warranty, even if the purchaser is not in contractual privity with the manufacturer." The court found that Manufacturer's explicit assurances to Developer about the adequacy of its product for the intended use were sufficient to state a cause of action for breach of express warranty. It did not matter that Developer was not a direct purchaser of the goods. Accordingly, Manufacturer's motion to dismiss the count for breach of express warranty also was denied.

The moral of this story to suppliers of goods is that while representations as to the quality of your goods may earn you a sale, they likewise may increase your liability for defects in the products you supply.

About the Author: Larry Leiby, Esq. was the founder and first chairman of the Florida Bar Construction Law Committee in 1976. He is the author of the Florida Construction Law Manual. He is Board Certified in Construction Law and was on the Construction Law Certification Committee that creates and grades the tests for construction law board certification. He was awarded the lifetime achievement award by the Florida Bar Construction Law Committee and teaches construction law at the Florida International University College of Law. He can be reached at leiby@mkpalaw.com. For more information, please visit www.mkpalaw.com.