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A Better Partnership
July 01, 2009

COA Opinion: No Express Warranties Without a Contract

On June 30, 2009, the Court of Appeals published its opinion in Heritage Resources, Inc. v. Caterpillar Financial Services Corp. et. al., No. 284036. This case arises from the purchase of a rock classification machine. The machine was purchased by plaintiff from a dealer, and manufactured by defendant. Plaintiff claimed that the machine did not conform to certain specifications, and that there were other quality and performance issues that resulted in damages. Plaintiff sued the dealer and defendant. Plaintiff settled with the dealer prior to trial. After a bench trial between the plaintiff and defendant, the trial court found that defendant had breached express warranties and awarded damages to plaintiff. The Court of Appeals reversed and ordered judgment to be entered in favor of defendant. It is undisputed that there was no contract between plaintiff and defendant. Instead, there were contracts between plaintiff and the dealer, and the defendant and the dealer. Thus, the Court of Appeals concluded, as a matter of law, because there was no contract between plaintiff and defendant, defendant could not have made any express warranties to plaintiff. The Court of Appeals did note that plaintiff could have enforced express warranties in the contract between defendant and the dealer. Plaintiff, however, did not produce a copy of the contract between defendant and the dealer, or pursue this liability theory at trial. Additionally, although the trial court did not address plaintiff's implied warranty claims, the Court of Appeals concluded that even if plaintiff could assert such claims against defendant, those claims were barred by the broad language of plaintiff's settlement with the dealer releasing all claims against anyone "charged or chargeable with responsibility which is or may be derivative from [the dealer]." Justice Hoekstra issued a short concurring opinion regarding the intent rule as related to this settlement agreement.

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