Opinion ID: 457751
Heading Depth: 2
Heading Rank: 2

Heading: Count II: Implied Warranty of Merchantability

Text: 28 The district court instructed the jury that 29 inasmuch as the limited warranty and exclusion of implied warranty of merchantability, as set out in Ford's Warranty Facts Booklet and the Detroit Diesel Allison warranty booklet, were admittedly known to the president of Sanco at the time of Sanco's purchase of the trucks, and known to him to be the routine and only way in which Ford warranted its trucks and engines, such documents formed a part of the agreement of sale as a matter of law. Therefore, the defendant has proved its first affirmative defense [of disclaimer and limitation of remedies]. 30 Sanco's brief raises a tangle of issues concerning this instruction. We shall try to untangle, and address, these arguments in turn.
31 Sanco first argues that the district court improperly found the warranty facts booklets were part of the agreement of sale between Sanco and Ford. In order to form a part of that agreement, Sanco argues, there would have to be evidence that Sanco consciously bargained for the warranties. See e.g., Royal Business Machines v. Lorraine Corp., 633 F.2d 34, 46 (7th Cir.1980). We agree with Sanco that, as a general proposition, a seller may not spring a warranty disclaimer on a customer after a sale has been consummated; the parties must have understood that the warranty, and any disclaimers or limitations, were part of their deal. We believe that the evidence here conclusively establishes that both parties fully expected the warranty booklets, and the limitations and disclaimers contained therein, to be part of the sale of the trucks. We cannot ignore the fact that Philip Wiseman, president of both Sanco and Fairway Ford, placed the order for the trucks with Ford Motor Company, and that Wiseman knew that Ford only warranted the trucks in the manner described in the warranty booklet. In fact, Fairway Ford's dealership agreement with Ford makes it clear that Wiseman could have had no expectation that any other warranty would protect the trucks. Had Wiseman sold the trucks through his dealership to any other party, it would be abundantly clear that he would be in violation of his agreement with Ford were he not to disclaim any implied warranties. Moreover, Wiseman testified that he knew the DDA engines were separately warranted by DDA before he purchased the trucks. We believe that the district court's conclusion that the booklets were a part of the agreement as a matter of law was correct. 7
32 Sanco argues that even if the warranty booklets were part of its agreement with Ford, the district court erred in excluding testimony by Wiseman and another witness to the effect that Ford had routinely ignored the limitations of remedies provisions in the booklets when dealing with heavy trucks. Under Sanco's view, the warranty's inclusion in the agreement was established through course of dealing evidence, and it was unfair to exclude other course of dealing evidence tending to show that Sanco did not expect Ford to rely on the limitations of remedy provided in the warranty booklets. 33 It is important to remember, however, that Sanco's theory of liability is based on an implied warranty of merchantability. The warranty booklet established the following things: (1) that Ford expressly warranted its own parts for 12,000 miles or one year, whichever came first; (2) that Ford did not warrant DDA engines at all; (3) that Ford disclaimed all implied warranties; and (4) that Ford limited the remedies available under its express warranty to repair and replacement in certain instances. It is also important to distinguish between a disclaimer of implied warranties and a limitation of remedies. See, e.g., Hahn v. Ford Motor Co., Ind.App., 434 N.E.2d 943, 952-53 (1982) (distinguishing between disclaimer and limitations of remedy); see also Richards v. Goerg Boat & Motors, Inc., 179 Ind.App. 102, 384 N.E.2d 1084 (1979) (court first determined whether implied warranties had been effectively disclaimed; finding that they had not, court then considered whether limitations on remedies under express warranties were effective). 34 Sanco's proffered evidence was perhaps relevant to the question whether Ford was estopped to rely on the limitations of remedies provision. Sanco's theory of recovery, however, was not that Ford had unjustifiably hidden behind the remedy limitations in its warranty booklet. Rather, it was that Ford had sold unmerchantable trucks in violation of an implied warranty of merchantability. Evidence that Ford could not rely on its limitations provision would not also show that Ford could not rely on its disclaimer of implied warranty provision. The two provisions are distinct. The fact that the remedies provided might not be exclusive does not mean that an effectively disclaimed warranty of merchantability was somehow resurrected. Accordingly, the evidence excluded was irrelevant to any issue in the case, and its exclusion was proper.
35 Sanco also argues that the disclaimer of implied warranties is ineffective because Charles Hennessey made certain representations in the course of discussing the possibility of placing a model fleet with Sanco that amount to express warranties. We first note that Sanco did not pursue a theory of recovery based on express warranty below. Moreover, Hennessey testified without contradiction that no agreement had been reached concerning placing a model fleet with Sanco. 36 More importantly, however, Hennessey's representations were relevant only to the question of whether the limitations of remedies provision was exclusive. According to Wiseman and Hennessey, if a model fleet were placed with Sanco, Hennessey expected Ford to monitor the fleet and expected Ford engineers to follow up on the trucks' performance and correct problems, if possible. Sanco's conclusion that such representations somehow resurrect, or contradict, a disclaimer of implied warranty is incorrect. 8 For the reasons expressed in Section 2, supra, we find no error with respect to this evidence. 9 37