Opinion ID: 2198876
Heading Depth: 1
Heading Rank: 1

Heading: The question of warranty.

Text: Does the disclaimer contained in the underlined language apply to goods not manufactured by United, or does it apply only to United's own products? United contends for the former construction; Pan American for the latter. It will be noted that the paragraph at the outset defines the goods manufactured by United as products; whereas the language of the disclaimer refers to the goods generally and not to the products. This distinction suggests that the disclaimer was intended to apply to all goods sold under the contract. This is the natural reading of the language, for the difference in terminology must have some significance. And this construction of the language is, we think, the reasonable one. Pan American's contention comes to this: that United's liability for breach of warranty in respect of its own products is strictly limited by the contract to replacement or repair; whereas its liability for breach of warranty in respect of goods made by others is not limited at all by the contract. This seems highly unreasonable. Why should United, after having carefully limited its liability in respect of defects in its own products, leave itself wide open to liability in respect of defects in goods manufactured by others? Pan American attempts to develop an argument that there is nothing unlikely, or unreasonable, in such a result, but it is wholly unconvincing. Moreover, the provisions of paragraph (C) are inconsistent, to some extent at least, with an intent to subject United to its common-law liability of implied warranty in respect of goods of others sold by it. If United was intended to be so liable to Pan American, the additional warranty from the manufacturer would be unnecessary; whereas, if United was intended to be released from such liability, the covenant in paragraph (C) has real value to Pan American. Such a warranty in respect of Woodward governors was actually obtained by United from Woodward. Before the General Terms Agreement was executed, Pan American inquired about Woodward's warranty of its governors to United. United then advised Pan American that Woodward's warranty of material and workmanship and of fitness ran to United's purchasers as well as to United. This was satisfactory to Pan American's counsel. He wrote that he would recommend that the goods should be excluded from the United warranty in the proposed General Terms Agreement. This seems conclusive of the matter. Pan American advances a subsidiary contention based on an alleged express warranty given by United in respect of the governors after the General Terms Agreement had been executed. The facts are these: On March 31, 1954, Pan American ordered from United 43 model 5Y20-8 governors, for use on Douglas aircraft DC-7B. These governors are Hamilton Standard governors manufactured by United. Shipment was expected to be made in early 1955. During January and February of 1955 trouble developed with these governors in testing them for use on the aircraft. On February 4, 1955, United advised Pan American that it had placed 5Y20-8 governors in a stop-work category, and that it would have to ship 5U18 governors instead until the problem of the 5Y20's had been solved. (The 5U18 is the Woodward governor.) On February 22 United wrote that it was investigating both types, and felt sure that the program would produce a satisfactory 5Y20. Further correspondence followed. United was still unable to remedy the trouble with its 5Y20's and in reply to a request from Pan American for its recommendation said that if a final decision had to be made today it could only recommend the 5U18. On March 14, 1955 Pan American issued a supplemental purchase order for the 5U18 governors in lieu of the 5Y20's. Upon this correspondence Pan American seeks to build a claim of warranty overriding the General Terms Agreement. It is said that the recommendation of the 5U18 governors was a warranty of fitness, and that the statement that the 5Y20 governor was expected to be satisfactory constituted, when United recommended the 5U18's, a warranty that those governors would be satisfactory. The argument is highly artificial and strained. We do not read the correspondence as containing any express warranty whatever. Moreover, it is quite unreasonable to believe that the parties intended any modification of the General Terms Agreement. The correspondence was between various persons in the sales, engineering and purchasing departments of the companies. We cannot find in it any intent to override the express provisions of the General Terms Agreement. Certainly, the Pan American representatives could not reasonably have understood that United's willingness to analyze and grapple with the problems attending the selection of a type of governor indicated an intention to modify an agreement which was expressly designed to cover the whole subject of warranty of goods. Cf. Bartlett v. Stanchfield, 148 Mass. 394, 19 N.E. 549, 2 L.R.A. 625. This contention must fail. It follows that the judgment for defendant on Count 1 of the complaint must be affirmed.