In a published Michigan Court of Appeals Opinion, Vanalstine v Land O’Lakes Purina Feeds, No. 340150 (December 2018), the Court held that an implied warranty, once disclaimed, cannot be revived by the inadequacy of an express warranty’s remedy.
The Plaintiff operates a dairy farm in Michigan. Plaintiff purchased animal feed and related products from Diversified Farms, a distributor of products manufactured by Defendant. Plaintiff sued Diversified and Defendant after its cows became sick. Diversified was ultimately dismissed from the lawsuit.
Diversified had a credit agreement with Defendant, which included a disclaimer of warranties provision. Plaintiff did not have any contract with Defendant, but had an oral agreement with Diversified. Plaintiff sued Defendant alleging that the Defendant breached the implied warranties of merchantability and fitness for a particular purpose under the Uniform Commercial Code (UCC). Defendant moved for summary disposition, arguing that Diversified had disclaimed the implied warranties by virtue of the credit agreement and, therefore, Plaintiff could not have acquired any warranties that Diversified did not possess. Under Michigan law, an indirct purchaser can acquire no greater implied-warranty rights from a manufacturer than those originally bargained for by the direct purchaser.
Plaintiff’s primary argument was that the limited remedy in the credit agreement (replacement of any products sold, or services provided) failed of its essential purpose and, as a result, the disclaimers of implied warranties were ineffective. Plaintiffs argued that the feed was not realistically subject to replacement because the products were consumed soon after delivery and the products damaged the herd upon consumption. Plaintiffs argued that this failure revived the otherwise disclaimed implied warranties.
The Court of Appeals disagreed with Plaintiffs’ argument by first pointing out that Plaintiffs did not make a breach of express warranty claim. The Court then reasoned that in order to succeed on an implied warranty claim, the Plaintiffs needed an implied warranty, of which they didn’t have because it had been properly disclaimed. The Court concluded that “once an implied warranty is effectively disclaimed, there can be no breach of that disclaimed warranty, regardless of whether the remedy for an express or other underclaimed implied warranty is arguably deficient,” citing MCL 440.2316 cmt 2. “Simply put, once an implied warranty is effectively disclaimed, it cannot be revived by the inadequacy of some other warranty’s remedy.” The appeals court affirmed summary judgement in favor of the defendants.
A link to the opinion can be found here: https://law.justia.com/cases/michigan/court-of-appeals-published/2018/340150.html
This article was written by Ryan Hansen, Law Clerk
