Contract Law: Sales and Product Liability

Case study (Contract Law: Sales and Product Liabilities)


Facts: When Brain and Clarice Keller installed an indoor swimming pool in the athletic club they owned, customers began to complain that the air near the pool was hot, humid, and foul-smelling. The Kellers sought help from two contractors. Inland Metal submitted a bid to install a seven and a half (71/2) ton dehumidifier for about $30,000, and another company offered to install a 10-ton machine for about $40,000.

The Kellers were worried that the 71/2-ton dehumidifier might be too small, so Inland’s president visited the club, accompanied by a representative of the machine’s manufacturer. The men assured the Kellers that the 71/2-ton dehumidifier would work. Inland’s president followed up with a letter to the Kellers, which said:

As in any indoor pool, the air needs to be treated with outdoor fresh air, dehumidifier, air conditioned in the summer, and heated in the winter. This ducted system will rid you of the sweating walls and eliminate those offensive odors, and overall “bad air.” This is not an uncommon problem, and all commercial pool owners face the same thing until they install one of these systems. Once you complete this installation, your air problems should be over, and your customers should be satisfied and happy.

The Kellers bought the system from Inland, but the dehumidifier did not improve the problem. The Kellers sued, and the trial court found that Inland had breached an express warranty. Inland appealed.

You Be the Judge: Did Inland make an express warranty? If so did the company breach it?

Argument for Inland: Inland never made an express warranty. The company never said, “We guarantee that this unit will resolve all of the problems described.” In its letter, the company described what it expected the dehumidifier to do and mentioned that customers “should be satisfied and happy” with the improved air. That is a far cry from promising to return the cost of the machine in the event that anyone claimed the machine was imperfect. Customers complain about many things, some legitimate, some not. Inland cannot prevent finicky clients from finding fault with a good dehumidifier. If Inland had intended its product to be guaranteed against any and all complaints, it would have said so-and charged much more.

Argument for Kellers: When Inland representatives visited the health club, they assured the Kellers that the dehumidifier would do the job. An express warranty can be created orally, and that is exactly what Inland did. That is all the Kellers need to win, but they have more. Inland’s follow-up letter repeated the reassurance: “This ducted system will rid you of the sweating walls and eliminate those offensive odors.” That is a clear affirmation that the machine will meet certain standards-in other words, it is an express warranty. Inland made an oral and written warranty and must be bound by its words.

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