KANSAS COMMENT, 1996

1. Subsection (1) deals with attempted disclaimers of express warranties. Once made, express warranties rarely can be disclaimed. Under subsection (1), language creating warranties and language apparently creating disclaimers are to be construed as consistent with each other whenever reasonable, but if such a construction is unreasonable, the disclaimer is ineffective. Courts virtually always resolve the conflict in favor of the express warranty and find the disclaimer ineffective. However, the fact of the purported disclaimer may be relevant to whether an express warranty was made at all or the scope of the express warranty. The subsection makes clear that it is subject to the parol evidence rule. See 84-2-202. If the parol evidence rule applies, an integrated writing containing a disclaimer of express warranties may well exclude proof of a prior or contemporaneous oral warranty. See Jordan v. Doonan Truck & Equip., Inc., 220 K. 431, 552 P.2d 881 (1976); Transamerica Oil Corp. v. Lynes, Inc., 723 F.2d 758 (10 th Cir. 1983) (quoting Kansas Comment 1983 to this section) (finding no integrated writing). Under the Kansas Consumer Protection Act (KCPA), K.S.A. 50-623 et seq., giving an express oral warranty that is then disclaimed by a written disclaimer may be a deceptive practice. See K.S.A. 50-626(b)(2).

2. Subsection (2) states formal requirements for explicit disclaimers of implied warranties. A disclaimer of the implied warranty of merchantability (see 84-2-314) may be oral or written, and if written must be conspicuous. In addition, in either case it must mention "merchantability." A disclaimer of the implied warranty of fitness for a particular purpose (see 84-2-315) may be disclaimed only in writing and the disclaimer must be conspicuous. The language suggested by this subsection, that "[t]here are no warranties which extend beyond the description on the face hereof," will operate to disclaim only the implied warranty of fitness, not the implied warranty of merchantability. A disclaimer is conspicuous when "it is so written that a reasonable person against whom it is to operate ought to have noticed it." See 84-1-201(10) (also stating when certain language is conspicuous). Cases in which an attempted disclaimer was held ineffective because it was not conspicuous include Kelley Metal Trading Co. v. Al-Jon/United, Inc., 812 F. Supp. 185 (D. Kan. 1993); Atlas Indus., Inc. v. National Cash Register Co., 216 K. 213, 531 P.2d 41 (1975); Geo. C. Christopher & Son, Inc. v. Kansas Paint & Color Co., 215 K. 185, 523 P.2d 709, modified on rehearing 215 K. 510, 525 P.2d 626 (1974). Cases in which a disclaimer was upheld include Ray Martin Painting, Inc. v. Ameron, Inc., 638 F. Supp. 768 (D. Kan. 1986); J&W Equip., Inc. v. Weingartner, 5 K.A.2d 466, 618 P.2d 862 (1980); Delhomme Indus., Inc. v. Houston Beechcraft, Inc., 669 F.2d 1049 (5 th Cir. 1982) (applying Kansas law). Kansas courts have not addressed whether a warranty disclaimer that is conspicuous under this section might nevertheless be found unconscionable under section 84-2-302. Given the enactment of the KCPA, the issue is relevant in Kansas principally for businesses and organizations, which will find it difficult, if not impossible, to establish that a conspicuous disclaimer is unconscionable. For a general discussion of the issue, see Barkley Clark & Christopher Smith, The Law of Product Warranties § 8.03[5] (1984 & Supp. 1996).

3. Subsection (3) identifies circumstances surrounding a transaction that are in themselves sufficient to exclude implied warranties. Each paragraph in subsection (3) lists an alternative means of disclaiming warranties that is in addition to the explicit disclaimer described in subsection (2).

4. Paragraph (3)(a) states the common understanding of expressions such as "as is" and "with all faults." These and like phrases normally operate to exclude all implied warranties, unless the circumstances indicate otherwise. Many courts have required that these phrases be conspicuous, see Kansas Comment 1983 to this section, although the language of the subsection imposes no such requirement. Indeed, subsection (3) expressly states that it applies "[n]otwithstanding subsection (2)," implying that the conspicuousness and other requirements of subsection (2) do not apply to it. See Barkley Clark & Christopher Smith, supra, § 8.03[4][b]. Presumably, even if an "as is" disclaimer need not be conspicuous, it still is invalid if it is unconscionable under section 84-2-302.

5. Under paragraph (3)(b), all implied warranties are excluded if the buyer before contracting has examined the goods to its own satisfaction or has refused to do so after the seller's demand. The circumstances must indicate that the buyer is taking on himself the responsibility for quality; average inspection by a buyer will not relieve the seller from responsibility for implied warranties. See Young & Cooper, Inc. v. Vestring, 214 K. 311, 521 P.2d 281 (1974). For a detailed discussion of this paragraph, see Official Comment 8 to this section.

6. Paragraph (3)(c) recognizes that implied warranties may be excluded by course of performance, course of dealing, or usage of trade. See Holcomb v. Cessna Aircraft Co., 439 F.2d 1150 (5 th Cir.) (applying Kansas law), cert. denied, 404 U.S. 827 (1971). Course of performance is defined in section 84-2-208(1); course of dealing and usage of trade are defined in section 84-1-205(1) & (2).

7. Under paragraph (3)(d), sellers of livestock make no implied warranties unless the sale is for immediate slaughter or the seller knows the livestock is diseased. This paragraph does not appear in the 1972 official text. It was adopted in Kansas in 1981 to overrule Musil v. Hendrich, 6 K.A.2d 196, 627 P.2d 367 (1981) (holding hog farmer was merchant and made implied warranty of merchantability in sale to another farmer). The decision in Powers v. Coffeyville Livestock Sales Co., 665 F.2d 311 (10 th Cir. 1981) (applying Kansas law) likely also is overruled, unless the seller knew the cattle were diseased.

8. The scope of subsections (2) and (3) of this section is severely limited by the KCPA, which declares that no implied warranties may be excluded in any consumer case, K.S.A. 50-639(a), and provides that any such attempted disclaimer is void, K.S.A. 50-639(e). See Dale v. King Lincoln-Mercury, Inc., 234 K.840, 676 P.2d 744 (1984). Exceptions include a disclaimer of certain, specific defects of which the buyer knows and that become part of the basis of the bargain, see K.S.A. 50-639(c), seed for planting, see K.S.A. 50-639(g), and the automatic disclaimer contained in paragraph (3)(d) of this section for sales of livestock for agricultural purposes, see K.S.A. 50-639(h). Because of the broad definition of "consumer" in the KCPA, see 1996 Kansas Comment 1 to 84-2-318, and subject to these limited exceptions, warranty disclaimers will have effect only in cases involving two corporations or other organizations.

Law Review and Bar Journal References:

"Caveat Venditor—Strict Products Liability Under the Uniform Commercial Code," Norman E. Beal, 16 K.L.R. 285, 298 (1968).

Subsection (1) mentioned with reference to the limitation of express warranties, Fred N. Six, 16 K.L.R. 137, 145 (1967).

Survey of Kansas commercial law (1965-1969), 18 K.L.R. 388, 391 (1970).

"Manufacturer's Strict Liability in Kansas—Coming or Already Here?" Thad E. Nugent, 39 J.B.A.K. 219, 220 (1970).

Effect of KCPA on disclaimer of warranty discussed in "The New Kansas Consumer Legislation," Barkley Clark, 42 J.B.A.K. 147, 191 (1973).

Landlord-tenant implied warranty of habitability, 22 K.L.R. 666, 681 (1974).

"Beefing Up Product Warranties: A New Dimension In Consumer Protection," Barkley Clark, Michael J. Davis, 23 K.L.R. 567, 577, 578, 579, 583, 584, 585, 586, 587, 588, 589, 593, 594, 611 (1975).

Survey of contracts, UCCC and UCC, Franklin E. Lynch and Larry Schneider, 15 W.L.J. 324, 326 (1976).

"Survey of Kansas Law: Consumer Law," John C. Maloney, 27 K.L.R. 197, 206 (1979).

"Survey of Kansas Law: Contracts," Mary Kathleen Babcock, 27 K.L.R. 215, 218 (1979).

"Survey of Kansas Law: Torts," William Edward Westerbeke, 27 K.L.R. 321, 351 (1979).

"Comparative Fault and Strict Products Liability in Kansas: Reflections on the Distinction Between Initial Liability and Ultimate Loss Allocation," William Edward Westerbeke and Hal D. Meltzer, 28 K.L.R. 25, 97 (1979).

"Housing Defects: Homeowner's Remedies—A Time for Legislative Action," William J. Fields, 21 W.L.J. 72, 77, 87, 88 (1981).

"Privity of Contract and Economic Losses: 'Watchman, What of the Night?'" Alan T. Blinzler and Stephen M. Fitzgerald, 11 J.K.T.L.A. No. 1, 13 (1987).

"Statutes of Limitation, Statutes of Repose and Continuing Duties under the Kansas Product Liability Act," Steve R. Fabert, 36 W.L.J. 367 (1997).

"The Immunity Provisions in the Kansas Tort Claims Act: The First Twenty-Five Years," William E. Westerbeke, 52 K.L.R. 939 (2004).

Attorney General's Opinions:

Sales; implied warranty of merchantability. 86-25.

CASE ANNOTATIONS

1. Express warranties are not subject to exclusion or modification in the same manner as implied warranties. Young & Cooper, Inc. v. Vestring, 214 Kan. 311, 319, 322, 323, 324, 521 P.2d 281.

2. Subsections (2), (3) applied; recovery allowed on implied warranty to furnish suitable paint to prime steel; disclaimer inadmissible. Christopher and Son v. Kansas Paint and Color Co., 215 Kan. 185, 190, 191, 194, 195, 523 P.2d 709. Modified: 215 Kan. 510, 511, 525 P.2d 626.

3. Implied warranty that equipment sold be fit for particular purposes; disclaimer provisions not conspicuous. Atlas Industries, Inc. v. National Cash Register Co., 216 Kan. 213, 217, 221, 531 P.2d 41.

4. Failure to instruct on disclaimer not reversible error when evidence of oral express warranties inadmissible. Jordan v. Doonan Truck & Equipment, Inc., 220 Kan. 431, 433, 434, 435, 552 P.2d 881.

5. Subsection (2) cited; exculpatory clauses transferring employees from one employer to another strictly construed against transferring employer. Belger Cartage Serv., Inc. v. Holland Construction Company, 224 Kan. 320, 330, 582 P.2d 1111.

6. Disclaimer of implied warranty of merchantability held sufficiently conspicuous; factors to be considered discussed. J & W Equipment, Inc. v. Weingartner, 5 Kan. App. 2d 466, 618 P.2d 862.

7. Limitations on buyer's remedies discussed; nine factors relevant to unconscionability outlined and applied; before admitting parol or extrinsic evidence, trial court required to determine if parties intended some document to be agreement. Transamerica Oil Corp. v. Lynes, Inc., 723 F.2d 758, 763, 764 (1983).

8. Cited; implied warranties not extended to remote seller or manufacturer of product not inherently dangerous for economic loss without privity. Professional Lens Plan, Inc. v. Polaris Leasing Corp., 234 Kan. 742, 754, 755, 675 P.2d 887 (1984).

9. Cited; ineffectiveness of prior oral warranty where modification or exclusion of express warranty contained in final written agreement examined. Agristor Leasing v. Meuli, 634 F. Supp. 1208, 1219 (1986).

10. Cited; in sale of industrial paint, alleged breach of express warranties, warranties of fitness for particular purpose examined. Ray Martin Painting, Inc., v. Ameron, Inc., 638 F. Supp. 768 (1986).

11. Cited; manufacturer selling assets (machinery) used in manufacturing "as is" not a merchant; no implied warranty. Olson v. U.S. Industries, Inc., 649 F. Supp. 1511, 1514 (1986).

12. Lessor not liable for breach of implied warranty where disclaimer in lease agreement excludes warranties for merchantability and fitness. Wight v. Agristor Leasing, 652 F. Supp. 1000, 1018 (1987).

13. Unexpected and unbargained for disclaimers on back of printed purchase order form ineffective in disclaiming express warranties. Hemmert Agr. Aviation v. Mid-Continent Aircraft, 663 F. Supp. 1546, 1553 (1987).

14. Summary judgment precluded where genuine issue exists as to whether secondary packaging operation was "seller" or "merchant." Nature's Share, Inc. v. Kutter Products, Inc., 752 F. Supp. 371, 378 (1990).

15. Limitations of implied warranties examined where Kansas consumer protection act (K.S.A. 50-623 et seq.) comes into play. Farrell v. General Motors Corp., 249 Kan. 231, 239, 815 P.2d 538 (1991).

16. Disclaimer of implied warranties in contract not conspicuous; cause of action stated. Kelley Metal Trading Co. v. Al-Jon/United, Inc., 812 F. Supp. 185, 186, 188 (1992).

17. Whether remedy was expressly designated as exclusive precluding all other UCC remedies examined. Kelley Metal Trading Co. v. Al-Jon/United, Inc., 835 F. Supp. 1339, 1345 (1993).

18. Whether plaintiff is precluded from attempting to establish express warranty outside fully integrated contract examined. Betaco, Inc. v. Cessna Aircraft Co., 32 F.3d 1126, 1133 (1994).

19. Express warranty limitation of repair and replacement on sale of goods did not apply to buyer. Olathe Mfg., Inc. v. Browning Mfg., 259 Kan. 735, 745, 915 P.2d 86 (1996).

20. Breeder's disclaimer of implied warranties in sale of diseased hogs not unconscionable. Schweizer v. DeKalb Swine Breeders, Inc., 954 F. Supp. 1495, 1504 (1997).

21. Limitation of damages clause in software license did not render agreement's express warranty unenforceable. Evolution, Inc. v. Suntrust Bank, 342 F. Supp. 2d 943, 971 (2004).

22. The receipt of the portion of a sales contract that excluded all implied warranties of merchantability was proper even if purchaser did not receive the express warranty which would also have excluded all implied warranties. Scottsdale Ins. Co. v. Deere & Co., 115 F. Supp. 3d 1298, 1306 (D. Kan. 2015).

23. Warranty and limitation-of-liability agreements for leased tractors do not apply to individual members of a crop harvesting company and cannot be used to preclude members from pursuing claims for breach of implied warranty of merchantability against tractors' manufacturers, but members are barred from relying on the agreements to pursue claims for breach of express warranty against manufacturer. Griffitts & Coder Custom Chopping v. CNH Ind. Am., 438 F. Supp. 3d 1206, 1237 (D. Kan. 2020).

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