Present: Carrico, C.J., Compton, Stephenson,1

 Lacy, Hassell, 

Keenan, and Koontz, JJ. 

BEARD PLUMBING AND HEATING, INC. 

v. Record No. 970131 OPINION BY JUSTICE ELIZABETH B. LACY 

 September 12, 1997 

THOMPSON PLASTICS, 

INCORPORATED, ET AL. 

UPON A QUESTION OF LAW CERTIFIED BY THE 

 UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT 

 Pursuant to our Rule 5:42, the United States Court of 

Appeals for the Fourth Circuit certified a question of Virginia 

law to this Court which we accepted by order entered February 

18, 1997. The question involves the application of two 

sections of the Uniform Commercial Code, Code §§ 8.1-101 

through 8.11-108 (UCC), to a case in which consequential 

damages are sought for breach of an implied warranty of 

merchantability in the absence of privity. 

 The following facts are set forth in the Court of Appeals' 

order of certification. Beard Plumbing and Heating, Inc. 

(Beard) was the plumbing subcontractor in a condominium 

development in Woodbridge, Virginia. Beard installed postchlorinated polyvinyl chloride plumbing fittings in the homes 

in the project. The fittings were manufactured by Thompson 

Plastics, Inc. (Thompson) and NIBCO, Inc. (NIBCO) and purchased 

from third-party suppliers. There was no contract between the 

manufacturers and Beard. The fittings cracked and subsequently 

leaked when hot water was used in the system. The general 

 

 1 Justice Stephenson participated in the hearing and 

decision of this case prior to the effective date of his 

retirement on July 1, 1997. 
 2 

 

contractor required Beard to replace the fittings and to repair 

the damage to the homes and then dismissed Beard from the job. 

 Beard filed suit against Thompson and NIBCO in the United 

States District Court for the Eastern District of Virginia, 

alleging both negligence and breach of warranty.2

 Beard 

claimed the fittings were defective and that "certain adapters 

failed when they attempted to shrink around thermally-expanded 

metal fittings during cool-down." Beard identified its damages 

as the uncompensated cost to repair the homes, loss of the 

remainder of its contract with the general contractor, revenue 

lost due to damage to business reputation, $165,878.93 which it 

paid to settle a lawsuit filed against it by the general 

contractor, and legal fees it incurred. NIBCO and Thompson 

filed motions for summary judgment. The district court granted 

the motions, holding that Beard's damages were economic loss 

damages which could not be recovered in the negligence claim 

and that Beard failed to "meet the basic requirements" for 

establishing its breach of warranty claim. Beard appealed this 

ruling. 

 In its order of certification, the Court of Appeals 

determined that the district court correctly held that Beard's 

negligence claim was barred as a matter of law because it 

sought only economic damages. Finding that no Virginia case 

 2 Beard also named a third-party supplier as a defendant 

but was granted a voluntary dismissal as to that defendant. 
 3 

has construed § 8.2-318 to determine whether it abrogated the 

privity requirement for recovery of economic loss damages in 

negligence cases, the Court of Appeals nevertheless concluded 

that its own precedent and Virginia case law, particularly 

Blake Construction Co. v. Alley, 233 Va. 31, 353 S.E.2d 724 

(1987), and Sensenbrenner v. Rust, Orling & Neale, Architects, 

Inc., 236 Va. 419, 374 S.E.2d 55 (1988), "strongly supports the 

conclusion that § 8.2-318 has not abrogated the privity 

requirement in negligence actions seeking recovery for economic 

loss."3

 The Court of Appeals, however, determined that the 

district court's ruling addressed only Beard's claims for 

negligence and breach of the implied warranty of fitness for a 

particular purpose and did not resolve Beard's claim that NIBCO 

and Thompson had also breached the implied warranty of 

merchantability. 

 Before remanding the case to the district court for 

resolution of Beard's breach of the implied warranty of 

merchantability claim, the Court of Appeals observed that 

Beard's claim would be barred, as a matter of law, if privity 

were required to recover the damages claimed by Beard for 

breach of the warranty. The Court of Appeals noted that, as in 

the case of negligence actions, the effect of § 8.2-318 on the 

privity requirement in breach of warranty actions seeking 

 

 3 The certified question does not ask that we consider or 

comment on this issue. 
 4 

 

economic loss damages has not been considered by this Court. 

The Court of Appeals concluded, however, that unlike negligence 

actions, Virginia precedent did not provide sufficient 

direction for the construction of § 8.2-318 as it relates to 

the damages sought in this case. To resolve this issue, the 

Court of Appeals certified the following question to us and 

stated that the answer would be determinative of the proceeding 

pending before it: 

 Is privity required to recover economic loss under 

Va. Code § 8.2-715(2) due to the breach of the 

implied warranty of merchantability, notwithstanding 

the language of Va. Code § 8.2-318? 

 To answer this question, we must first determine whether 

§ 8.2-715(2) requires the existence of a contract for the 

recovery of economic loss damages in breach of warranty cases.4

Section 8.2-715(2) provides: 

 Consequential damages resulting from the seller's 

breach include 

 (a) any loss resulting from general or 

particular requirements and needs of which 

the seller at the time of contracting had 

reason to know and which could not 

reasonably be prevented by cover or 

otherwise; and 

 (b) injury to person or property proximately 

resulting from any breach of warranty. 

This section does not address economic loss damages. However, 

because the Court of Appeals directed its inquiry specifically 

 4 Although Beard asserts that its damages went beyond 

economic loss, our consideration of the certified question is 

premised on the Court of Appeals' determination in the 

certification order that Beard's damages are solely economic 

loss damages. 
 5 

 

to this section, we assume that the Court of Appeals concluded 

that the economic loss damages claimed by Beard were 

consequential damages rather than direct damages.5

 We also 

limit our discussion to subparagraph (a), since injury to 

persons or property is not involved in this case. 

 Section 8.2-715(2)(a) is part of the UCC, a comprehensive 

statutory scheme affecting commercial transactions. Although 

the UCC is based on a uniform act now adopted by virtually 

every state, we found no case interpreting the language of 

§ 8.2-715(2)(a) as it relates to the requirement of a 

contractual relationship between the parties.6

 

 Nevertheless, the language of the section itself contains 

a presumption that there is a contract between the parties. 

The phrase "at the time of contracting" in subparagraph (a) 

conveys the understanding of a contract between two parties. 

 5 Consequential damages are not defined in the UCC, but 

"are used in the sense given them by the leading cases on the 

subject." § 8.1-106 cmt. 3. Whether damages are direct or 

consequential is a matter of law to be determined by the court. 

R. K. Chevrolet, Inc. v. Hayden, 253 Va. 50, 56, 480 S.E.2d 

477, 481 (1997). 

 6 See, e.g., Beyond the Garden Gate, Inc. v. Northstar 

Freeze-Dry Mfg., Inc., 526 N.W.2d 305, 309-10 (Iowa 

1995)(remote nonprivity buyers cannot recover consequential 

economic loss damages as a matter of policy, citing reasons 

given in White and Summers, Uniform Commercial Code, § 11-5, at 

536 (3d. ed. 1988)); Horizons, Inc. v. Avco Corp., 714 F.2d 

862, 865-66 (8th Cir. 1983)(lost profits allowed because 

seller, as a factual matter, had "reason to know" business 

requirements of buyer); Sullivan Industries, Inc. v. Double 

Seal Glass Co., 480 N.W.2d 623, 631-32 (Mich. Ct. App. 

1991)(economic loss damages disallowed because not proved with 

reasonable certainty). 
 6 

To assert, as Beard did at oral argument, that the purpose of 

the phrase is only to establish the historical moment for 

judging the seller's foreseeability, does not eliminate the 

connotation of the existence of a contract inherent in the 

phrase. Beard's interpretation would require substituting the 

word "sale" for the word "contracting," and we decline the 

invitation to rewrite the statute. Therefore, we conclude that 

§ 8.2-715(2)(a) requires a contract between the parties for the 

recovery of consequential economic loss damages incurred as a 

result of a breach of warranty by the seller. 

 The second part of the certified question asks us to 

determine whether the provisions of § 8.2-318 supersede the 

contract requirement of § 8.2-715(2)(a). Section 8.2-318 

provides in pertinent part: 

 Lack of privity between plaintiff and defendant shall be 

no defense in any action brought against the manufacturer 

or seller of goods to recover damages for breach of 

warranty, express or implied, or for negligence, although 

the plaintiff did not purchase the goods from the 

defendant, if the plaintiff was a person whom the 

manufacturer or seller might reasonably have expected to 

use, consume, or be affected by the goods[.] 

 The provisions of this section appear to conflict with 

§ 8.2-715(2)(a) regarding the requirement of a contract for the 

recovery of consequential damages in a breach of warranty 

action. Rules of statutory construction, however, resolve the 

apparent conflict. In construing conflicting statutes, if one 

section addresses a subject in a general way and the other 

section speaks to part of the same subject in a more specific 
 7 

manner, the latter prevails. Dodson v. Potomac Mack Sales & 

Service, Inc., 241 Va. 89, 94-95, 400 S.E.2d 178, 181 (1991). 

Applying this rule, we conclude that, to the extent the two 

statues conflict, § 8.2-715(2)(a) prevails. 

 The general subject of § 8.2-318 is the ability to raise 

the common law requirement of privity as a defense. We have 

not previously construed § 8.2-318; however, we have referred 

to it as modifying the common law privity rule. Ward v. Ernst 

& Young, 246 Va. 317, 325-26, 435 S.E.2d 628, 632 (1993); 

Copenhaver v. Rogers, 238 Va. 361, 366, 384 S.E.2d 593, 595 

(1989). Similarly, commentators have considered the section 

and its predecessor as eliminating the common law privity 

requirement in certain instances.7 See, e.g., Time to Adopt 

the Uniform Commercial Code, Report of the Virginia Advisory 

Legislative Council, H. Doc. No. 5, at 113 (1963); and 1 James 

J. White and Robert S. Summers, Uniform Commercial Code § 11-3, 

at 591 n.11 (4th ed. 1995). 

 The contract requirement of § 8.2-715(2)(a), however, is 

not a privity requirement imposed by the common law. Part 7 of 

Title 8.2 of the UCC imposes a number of limitations and 

conditions on the recovery of damages in a breach of warranty 

claim. See, e.g., §§ 8.2-714(defining measure of damages), -

715(1)(identifying recoverable incidental damages), and -

 

 7 In 1964, former § 8.654.3 was repealed and reenacted as 

§ 8.2-318 of the UCC without change. 
 8 

719(b)(3)(ability to exclude consequential damages). The 

contract requirement of § 8.2-715(2)(a) is one of those 

limitations. Section 8.2-715(2)(a) does not address the 

general subject of the common law privity requirement's effect 

on the ability of a litigant to maintain an action for breach 

of warranty. It is limited to that part of the litigation 

dealing with the damages which may be recovered and imposes a 

contract requirement only where recovery of consequential 

damages is sought. Applying the rule of statutory construction 

recited above, the limited contract requirement of § 8.2-715(2) 

prevails over the general provisions relating to common law 

privity in § 8.2-318. 

 Accordingly, because § 8.2-715(2)(a) requires a contract 

between the parties for recovery of consequential economic loss 

damages in a claim for breach of the implied warranty of 

merchantability, we answer the certified question in the 

affirmative. 

Certified question answered in the affirmative.