Office Supply Co., Inc. v. Basic/Four Corporation Case Brief

Summary of Office Supply Co., Inc. v. Basic/Four Corporation (1982)

Facts: P signed a contract for the purchase of computer hardware and software from the D corporation; the express warranty in the contract stated that the equipment was under warranty to be free from defects for 90 days after the it was installed; this 90 day period began after Oct. 6, 1975; the contract included a warranty disclaimer that said the D was not liable for any damages arising out of the operation of the programs provided; P claims that the system was defective and it caused it to suffer substantial losses; D claims that the warranty disclaimer in the contract is valid and binding

Issue: Whether the disclaimer in the contract was conspicuous.

Holding: Although the D disclaimed the implied warranties twice and they were in italicized print, the disclaimers were not conspicuous.

Rationale: An attempted disclaimer written in only slightly contrasting print and without a heading adequate to call the buyer's attention to the disclaimer clause was not effective. The court relied on the ruling in Dorman v. International Harvester. In this case, the two disclaimers in the contract are on the reverse sides of the first two pages of the contract. They are not positioned close to the buyer's signature line. The contracts are printed on pale green paper and the disclaimers are set forth in print which, although italicized, is only slightly contrasting with the remainder of the contract. There are no headings noting the disclaimers of warranty. Since there is only “'some slight contrasting set-off'” and there is “'only a slight contrast with the balance of the instrument, therefore, the disclaimers are not conspicuous.

Issue: Whether the disclaimer of the warranty is valid even thought it was not conspicuous in the contract.

Holding: If a buyer is actually aware of a warranty disclaimer, then the disclaimer is effective even if not conspicuous.

Rationale: P’s testimony establishes that the warranty disclaimers were neither unexpected nor unbargained for, and that, consequently, under Dorman, they should be enforced. The Official Comment to UCC § 2-316 states that the section is designed “to protect a buyer from unexpected and unbargained language of disclaimer."

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