Opinion ID: 426248
Heading Depth: 1
Heading Rank: 4

Heading: Express Warranties

Text: 31 A seller can create an express warranty by making an affirmation of fact to the buyer which relates to the goods and becomes part of the basis of the bargain between the parties. Fla.Stat.Ann. Sec. 672.313(1)(a). Appellees presented evidence regarding three statements which allegedly satisfied the above requirements. They were: (1) that the rental or lease of the RBC-I's would produce a profit; (2) that the RBC-I had a profitable and useful life of ten years, calculated at the rate of 8,000 copies per month (i.e. almost 1 million copies); and (3) that the maintenance factor for each RBC-I was 1/2 cent per copy. The Court of Appeals for the Seventh Circuit held in Royal Business Machines, Inc. v. Lorraine Corp., 633 F.2d 34, 41 (7th Cir.1980) that 32 --[t]he decisive test for whether a given representation is a warranty or merely an expression of the seller's opinion is whether the seller asserts a fact of which the buyer is ignorant or merely states an opinion or judgment on a matter of which the seller has no special knowledge and on which the buyer may be expected also to have an opinion and to exercise his judgment. 33 Applying this test to the affirmations in the case at bar, we hold that Royal's statement that the rental or lease of the RBC-I's would produce a profit did not create an express warranty. Royal's statements that the RBC-I had a useful life of ten years calculated at the rate of 8000 copies per month and that the maintenance factor for each RBC-I would be 1/2 cent per copy constitute the type of affirmations which give rise to express warranties. These statements clearly related to the goods. 34 For these affirmations to constitute express warranties, appellees must have presented evidence that the affirmations became part of the basis of the bargain. Fla.Stat.Ann. Sec. 672.313(1)(a). Royal asserts that appellees' experience with copiers generally, their testing of a sample RBC-I prior to their first purchase of RBC-I's in 1973, their reading of available information, and their consultations with dealers, negate any inference that these affirmations formed the basis of the bargain. The requirement that a statement be part of the basis of the bargain is essentially a reliance requirement and is inextricably intertwined with the initial determination as to whether given language may constitute an express warranty since affirmations, promises and descriptions tend to become part of the basis of the bargain. Royal Business Machines, Inc. v. Lorraine Corp., 633 F.2d at 44 n. 7 (quoting Sessa v. Riegle, 427 F.Supp. 760, 766 (E.D.Pa.1977), aff'd, 568 F.2d 770 (3d Cir.1978)). The buyer's knowledge or absence of reliance will negate the existence of an express warranty. See Carter Hawley Hale Stores, Inc. v. Conley, 372 So.2d 965, 969 (Fla.App.1979). Appellees presented sufficient evidence from which a jury could infer that they relied on these affirmations by noting that appellees lacked prior experience with bond copiers prior to purchasing the RBC-I's. 4 35 Appellees assert that Royal expressly warranted the profitability of the RBC-I's at a meeting in Curacao based on several assumptions. At that meeting, Royal distributed to dealers and their representatives a document explaining the economic feasibility of marketing the RBC-I. Royal argues that the document was prepared for a seminar which compared the tax benefits that could be realized from renting and/or selling RBC-I's. In illustrating the possible tax benefits of an all-rental program, Royal's representative assumed an average of 8000 copies per month for the first three years at a charge to customers of several cents per copy, producing a rental revenue of $273 per month per machine; a maintenance factor of 1/2 cent per copy for the first three years, exclusive of supplies; depreciation based on a useful life of seven years; and general and administrative expenses of 15% for the first three years. Royal's representative informed the attending dealers that for exact computations, they should use their own figures. 36 Appellees contend that these representations warranted both a specific profitability and a definite maintenance level. We hold that the record contains insufficient evidence to show that Royal warranted a specific profitability for the machine. One could construe the evidence as a warranty by Royal that dealers could obtain the profit level contained in the Curacao assumptions; but such a warranty would depend upon many variables--at least on the dealers' conforming to the pricing scheme envisioned by the presentation. The record is devoid of any evidence that XSC rented RBC-I's on this basis. 37 The evidence supports submission of the issues of whether Royal breached warranties regarding the useful life of the RBC-I and the maintenance costs. See Royal Business Machines, Inc. v. Lorraine Corp., 633 F.2d at 44. In their counterclaim, appellees alleged that Royal had expressly warranted that the maintenance factor for each RBC-I was 1/2 cent per copy produced. Such an express warranty regarding maintenance costs would be tantamount to a guarantee by Royal that no matter what XSC's wage costs and other expenses might reach during the life of the machine, XSC would spend 1/2 cent per copy for maintenance. To state the nature of such a statement illustrates the difficulty of its proof. Nevertheless, a guarantee is actionable under Fla.Stat.Ann. Sec. 672.313. See Dailey v. Holiday Distributing Corp., 260 Iowa 859, 151 N.W.2d 477 (1967). As unrealistic as such a guarantee may appear, Royal may have made such an express warranty regarding maintenance costs. 38 Appellees claim that the representation regarding maintenance costs constitutes both an express warranty and an actionable misrepresentation. See Section V. supra. An allegation of breach of express warranty does not require proof of intent. See Carter Hawley Hale Stores, Inc. v. Conley, 372 So.2d 965, 968 (Fla.App.1979). To prove that this representation is an actionable misrepresentation, appellees must show that at the time the representation was made, Royal either lacked the intent to perform or specifically intended not to perform. Bernard Marko & Associates, Inc. v. Steele, 230 So.2d 42 (Fla.App.1970). Appellees would not prove actionable misrepresentation merely by showing higher maintenance costs resulting from inflation or higher wages and other unanticipated maintenance expenses. Such a showing would, however, prove breach of an express warranty, if Royal made such a guarantee regarding maintenance costs. 39 The Curacao Assumptions do not constitute such a warranty. Those representations show, as a matter of law, only how assumptions regarding certain maintenance costs, exclusive of supplies, could be used to compute certain tax advantages of renting RBC-I's. The Curacao presentation warrants only that Royal could perform its mathematics properly. Whether other statements by Royal representatives constitute an express warranty regarding maintenance costs is a matter for the fact-finder to determine at the new trial. 40 Royal contends that appellees' failure to give timely notice of any breach and their improper maintenance and unauthorized modifications of the RBC-I's preclude any breach of warranty claims. As a condition precedent to recovery for breach of warranty, a buyer must notify the seller of the breach within a reasonable time after he discovers or should have discovered any breach .... Fla.Stat.Ann. Sec. 672.607. The buyer bears the burden of showing that he gave the required notice within a reasonable time. General Matters, Inc. v. Paramount Canning Co., 382 So.2d 1262, 1264 (Fla.App.1980). The notice must be both timely and sufficient under the circumstances and is governed by the buyer's obligation to act in good faith. Fla.Stat.Ann. Secs. 671.203, 672.103; see Eastern Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957, 970-71, 976-79 (5th Cir.1976) (applying Florida law). Where the buyer gives some notice of the breach, the issues of timeliness and sufficiency are questions of fact. See T.J. Stevenson & Co. v. 81,193 Bags of Flour, 629 F.2d 338, 359 (5th Cir.1980). 41 Royal asserts that appellees breached these obligations by not giving unequivocal notice and by continuing to order repair and replacement parts from Royal and to pay without protest. See K & M Joint Venture v. Smith International, Inc., 669 F.2d 1106, 1112-16 (6th Cir.1982). Appellees, however, presented sufficient evidence from which a jury could infer that the notice was both sufficient and timely. Appellees brought various maintenance, parts, shortages and defective supply problems to the attention of Royal representatives. In response to one letter noting these problems, several Royal representatives went to XSC's offices in January 1976 to resolve problems. Additionally, appellees presented evidence that Royal repeatedly assured appellees that it would resolve the problems. These complaints related to the alleged express warranties regarding useful life and maintenance costs and were sufficient to let the seller know that the transaction [was] still troublesome and [needed to] be watched. Fla.Stat.Ann. Sec. 672.607, Official Comment 4. 42 Royal also maintains that XSC's improper maintenance and unauthorized modifications preclude any breach of warranty claim. Appellant contends that uncontroverted evidence established that XSC never properly maintained its RBC-I's and made numerous unauthorized modifications to them. Appellant's Brief at 25. A breach occurs only if the goods are defective upon delivery, not if the buyer's abuse and neglect results in the goods becoming defective. Royal Business Machines, Inc. v. Lorraine Corp., 633 F.2d at 44. Appellees assert that they submitted evidence showing that Royal authorized the modifications to the RBC-I's by assisting dealers, including XSC, in obtaining non-Royal quiet down and speed up kits and publishing a letter in November 1973 informing dealers where and how to purchase the kits and instructing dealers that the speed up and quiet down kits had to be installed simultaneously. Royal also demonstrated these kits at trade shows, showed dealers how to install quiet down kits, and allegedly itself used the quiet down kit on its RBC-I's for demonstration at trade shows. 5 Whether these modifications were unauthorized in view of Royal's notice that such modifications would remove warranty protection and whether improper maintenance precluded any breach of warranty claim are matters for the jury to determine. Posey v. Pensacola Tractor & Equipment Co., 138 So.2d 777, 780 (Fla.App.1962).