Source: https://law.justia.com/cases/federal/appellate-courts/F2/957/1102/1674/
Timestamp: 2020-02-27 12:22:12
Document Index: 39896615

Matched Legal Cases: ['§ 2314', '§ 2315', '§ 336', '§ 2207', '§ 2207', '§ 2207', '§ 2715']

Altronics of Bethlehem, Inc. Altronics of Philadelphia, Inc. v. Repco, Inc. Appellant, 957 F.2d 1102 (3d Cir. 1992) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Third Circuit › 1992 › Altronics of Bethlehem, Inc. Altronics of Philadelphia, Inc. v. Repco, Inc. Appellant
Altronics of Bethlehem, Inc. Altronics of Philadelphia, Inc. v. Repco, Inc. Appellant, 957 F.2d 1102 (3d Cir. 1992)
US Court of Appeals for the Third Circuit - 957 F.2d 1102 (3d Cir. 1992) Submitted Under Third Circuit Rule 12(6)Feb. 14, 1992
Decided Feb. 28, 1992
Both the implied warranty of merchantability and the warranty of fitness for a particular purpose arise by operation of law and serve to protect buyers from loss where the goods purchased are below commercial standards or are unfit for the buyer's purpose. Vlases v. Montgomery Ward & Co., 377 F.2d 846, 849 (3d Cir. 1967). In order to be merchantable, goods must be "fit for the ordinary purposes for which such goods are used." 13 Pa.C.S.A. § 2314(b) (3). The warranty of fitness for a particular purpose is more exacting. It requires that the seller had reason to know of the buyer's particular purpose at the time of contracting and that the buyer was relying on the seller's expertise. In that case, the goods are implicitly warranted to be fit for that particular purpose. 13 Pa.C.S.A. § 2315. To establish a breach of either warranty, plaintiffs must show that the equipment they purchased from defendant was defective.
One way to demonstrate a defect is by the submission of circumstantial evidence. Greco v. Bucciconi Engineering Co., 407 F.2d 87, 89-90 (3d Cir. 1969); MacDougall v. Ford Motor Company, 214 Pa.Super. 384, 257 A.2d 676, 679-80 (1969), overruled by implication on other grounds, REM Coal Co., Inc. v. Clark Equipment Co., 386 Pa.Super. 401, 563 A.2d 128 (1989). Under Pennsylvania law a product may be found defective if it "functioned improperly in the absence of abnormal use and reasonable secondary causes." Greco, 407 F.2d at 89-90. We believe that plaintiffs were required to shoulder the burden not only of demonstrating a malfunction, but of negating abnormal use and other causes. Id. at 89-90 & n. 3; see also Brill v. Systems Resources, Inc., 405 Pa.Super. 603, 592 A.2d 1377, 1379 (1991). Therefore, in order to carry their burden plaintiffs were required to show: (1) that the product malfunctioned; (2) that plaintiffs used the product as intended or reasonably expected by the manufacturer; and (3) the absence of other reasonable secondary causes.
The district court decided that given the failure of the Bethlehem system, it was not unreasonable for the plaintiffs to choose not to install the third system. That conclusion is supported by the record. Lubsen testified that the Commonwealth system might not be subject to the same problems because of very short distances and flat terrain between the subscriber antennas and the main antenna in that location. It was not unreasonable to infer that due to the differences in distances and terrain, the Commonwealth and Bethlehem systems were not comparable. Understandably, plaintiffs feared that setting up the third system under conditions similar to those in the Bethlehem location would result in the same failures. Plaintiffs' justified fear that the third system was defective was compounded by the fact that Bateman's inspection of the boxes containing the third system revealed various problems with the inventory. Bateman assured plaintiffs that these problems would be resolved. He further testified that the missing parts were supplied. The inventory problem, however, gave added support to a reasonable belief on plaintiffs' part that problems existed with regard to the third system. Thus, we cannot say that the district court erred in concluding that plaintiffs acted reasonably in deciding not to try to implement the final system. Moreover, plaintiffs' decision not to install the third system comported with the general duty to mitigate damages arising from a breach of contract. Henry Shenk Co. v. Erie Cty., 319 Pa. 100, 178 A. 662, 666 (1935); Wurlitzer Co. v. Oliver, 334 F. Supp. 1009, 1011 (W.D. Pa. 1971); Restatement, Contracts § 336 (1932).
Under the UCC, an expression of acceptance or written confirmation that includes additional or different terms operates as a legal acceptance of the offer notwithstanding the inclusion of the new terms. 13 Pa.C.S.A. § 2207(a). The statute goes on to provide that, between merchants, the additional terms become part of the contract unless "they materially alter it." Diatom, Inc. v. Pennwalt Corp., 741 F.2d 1569, 1575 (10th Cir. 1984) (applying Pennsylvania law); 13 Pa.C.S.A. § 2207(b) (2). Although defendant contends that the terms were an integral part of the contract, it cannot escape the application of 13 Pa.C.S.A. § 2207. Herzog Oil Field Service v. Otto Torpedo Co., 391 Pa.Super. 133, 570 A.2d 549 (1990) (section 2207 applies to the terms contained on an invoice accompanying or following delivery of the goods). Section 2207 clearly dictates how a court must construe these terms.1 The only question remaining, therefore, is whether the exclusion of the consequential damages from the remedies available to plaintiffs would materially alter the existing contract.
Consequential damages are available as a standard remedy for "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 be prevented by cover or otherwise ..." 13 Pa.C.S.A. § 2715(b) (1). Defendant does not dispute that it had knowledge of plaintiffs' specific needs. Defendant's additional terms would operate to prevent plaintiffs from taking advantage of the remedies otherwise available to them under Pennsylvania law. It follows that inclusion of the additional terms in the contract would constitute a material alteration. Air Products & Chemicals, Inc. v. Fairbanks Morse, Inc., 58 Wis.2d 193, 206 N.W.2d 414, 425 (1973) (applying Pennsylvania law). Thus, the district court correctly held that in order to be bound by the exclusion, the parties must have expressly agreed to it. Id., 206 N.W.2d at 425. Defendant does not suggest that plaintiffs expressly agreed to the new terms. Rather, it seems to assert that plaintiffs' continued performance with constructive or actual knowledge of the disclaimers demonstrated their acceptance of the new terms. This argument is foreclosed by Step-Saver Data Systems, Inc. v. Wyse Technology, 939 F.2d 91 (3d Cir. 1991). In that case we held: