Law Talk - Action On Breach Of Warranty Looses (The Importance Of Documentation)

By Sam K. Abdulaziz
Attorney at Law

Lawyers have a saying that the three D’s are very important in a contract. Namely, Document, Document, Document. This is highlighted by the case we are going to discuss. The major issue in the case was about what made up the contract.

In early 1997, Craig Podesta (Podesta) contacted a nursery about purchasing Howard trees. Stuke Nursery Co. Inc. (Stuke) sent a written purchase proposal to Brittalia Ventures (Brittalia, who was Podesta’s farming company), which was dated February 19, 1998. The proposal required each of the categories of 14,000 Howard trees to be sold, and it listed the sale conditions. Brittalia submitted a check to Stuke for over $175,000, with a note indicating that February 19, 1998, invoice was paid in full. Stuke delivered 14,000 trees to Brittalia in April along with delivery receipts that were signed by Brittalia’s orchard foreman.

Later, it turned out that approximately 5,000 of the 14,000 trees that were delivered, were not Howard trees. Not surprisingly, a lawsuit came about.

The parties argued back and forth over discussions and papers and whether all or any part were part of the contract, and more specifically which papers were part of the contract. The parties also argued as to whether the course of conduct between the parties themselves were part of the contract.

The jury found for Brittalia based on the agreement of the parties. The jury found that there was an agreement between the parties as well as an implied warranty. Brittalia was awarded a substantial reward.

The court was required to determine the “meaning” of the contract. Or at least what made up the contract.

Stuke claimed it was not responsible for any harm because it limited its representations regarding the trees and it eliminated any implied representations for any particular purpose. Stuke stated that the sale of the trees was “as is.”

The Appellate Court agreed that some of the Stuke documents did encompass “other” documents and did contain certain warranty disclaimers and “as is” provisions. However, the court also stated that the jury could reasonably find that those were not the actual contract documents. More importantly, the court held that there was evidence that Stuke had assured Podesta it had corrected its problems at its Nursery and Stuke had acknowledged its responsibility for delivering trees of the correct type.

The court found that there was substantial evidence to support the jury’s findings. This included the back and forth discussion of things that were and were not in writing during the course of the parties conduct.

The important lesson of this case is to let people know that if something is important to you, put it in writing. It will then be very hard for the other side to argue differently. It is hard to have a judge or jury determine that if a contract specifically calls out “red,” that what the parties really meant to say was that it should have been “green.”