The Hawaii Supreme Court has made it clear that warranty claims
may be made against manufacturers along with claims for strict
product liability and negligence. Indeed, this has been
specifically recognized by the Hawaii Supreme Court in the case
of Ontai v. Straub Clinic and Hospital, Inc., 66 Haw. 237, 249,
659 P.2d 734, 740-41 (1983).
As stated in Ontai:
"The implied warranty of merchantability is perhaps the
broadest warranty in the Uniform Commercial Code. Schenck
v. Pelkey, 176 Conn. 245, 405 A.2d 665 (1978). This
warranty is implied by operation of law into every sale of
goods by a merchant seller. Id, Hauter v. Zogarts, 14 Cal.
3d 104, 534 P.2d 377 (1975). Merchantability, as provided
in Hawaii's statute, means, inter alia, that goods 'are fit
for the ordinary purpose for which such goods are used.' HRS
§ 490:2-314(2)(c). In contrast, the implied warranty of
fitness for a particular purpose is narrower and more
specific. Schenck v. Pelkey, supra; see HRS § 490:2-315.
As provided in 490:2-315, the essential components of an
implied warranty of fitness are that the seller has reason
to know of the particular purpose for which the goods are
required, and that the buyer relies on the seller's
expertise in supplying a suitable product. And as stated in
comment 1 to HRS § 490:2-315:
"Whether or not this warranty arises in any individual case
is basically a question of fact to be determined by the
circumstances of the contracting. Under this section the
buyer need not bring home to the seller actual knowledge of
the particular purpose for which the goods are intended or
of his reliance on the seller's skill and judgment, if the
circumstances are such that the seller has reason to realize
the purpose intended or that the reliance exists. The
buyer, of course, must actually be relying on the seller."
[emphasis in the original] 66 Haw. at 249-251, 659 P.2d
740-741.
The law of warranties applicable to sales is set forth in Chapter
2 of the Uniform Commercial Code. HRS Chapter 490:2 "The Uniform
Commercial Code - Sales".
HRS Chapter 490 defines various terms related to sales contracts.
Some of those definitions include:
HRS § 490:2-106(1): "A 'sale' consists in the passing of title
from seller to buyer for a price."
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HRS § 490:2-103(a): "'Buyer' means a person who buys or
contracts to buy goods."
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HRS § 490:2-103(d): "'Seller' means a person who sells or
contracts to sell goods."
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HRS § 490:2-104(1): "'Merchant' means a person who deals in
goods of the kind or otherwise by his occupation holds himself
out as having knowledge or skill peculiar to the practices or
goods involved in the transaction or to whom such knowledge or
skill may be attributed by his employment of an agent or broker
or other intermediary who by his occupation holds himself out as
having such knowledge or skill."
Sale Creates Implied Warranties of Merchantability and Fitness
and Express Warranties.
Hawaii's Uniform Commercial Code, HRS § 490:2-314 states:
"Implied warranty: merchantability; usage of trade.
(1) Unless excluded or modified (section 490:2-316), a
warranty that the goods shall be merchantable is implied in
a contract for their sale if the seller is a merchant with
respect to goods of that kind...
"(2) Goods to be merchantable must be at least such as
(a) Pass without objection in the trade under the
contract description; and
(b) In the case of fungible goods, are of fair average
quality within the description; and
(c) Are fit for the ordinary purposes for which such
goods are used; and
(d) Run, within the variations permitted by the
agreement, of even kind, quality and quantity within
each unit and among all units involved;
(e) Are adequately contained, packaged, and labeled as
the agreement may require; and
(f) Conform to the promises or affirmations of fact
made on the container or label if any..."
Hence, a manufacturer gives all of these implied warranties of
merchantability at the time of the sale.
A manufacturer also gives an implied warranty of fitness for a
particular purpose. HRS § 490:2-315 provides:
"Implied warranty: fitness for particular purpose. Where
the seller at the time of contracting has reason to know any
particular purpose for which the goods are required and that
the buyer is relying on the seller's skill or judgment to
select or furnish suitable goods, there is unless excluded
or modified under the next section an implied warranty that
the goods shall be fit for such purpose."
Express warranties may also be created by a manufacturer. HRS §
490:2-313 provides:
"§490:2-313 Express warranties by affirmation, promise,
description, sample. (1) Express warranties by the seller
are created as follows:
(a) Any affirmation of fact or promise made by the
seller to the buyer which relates to the goods and
becomes part of the basis of the bargain creates an
express warranty that the goods shall conform to the
affirmation or promise.
(b) Any description of the goods which is made part of
the basis of the bargain creates an express warranty
that the goods shall conform to the description.
(c) Any sample or model which is made part of the basis
of the bargain creates an express warranty that the
whole of the goods shall conform to the sample or
model.
"(2) It is not necessary to the creation of an express
warranty that the seller use formal words such as 'warrant'
or 'guarantee' or that he have a specific intention to make
a warranty, but an affirmation merely of the value of the
goods or a statement purporting to be merely the seller's
opinion or commendation of the goods does not create a
warranty."
Remedies for Breach of Warranty
The remedies to which a purchaser is entitled are set forth in
the U.C.C. HRS § 490:2-714 provides that a buyer can recover
damages for breach of contract in regards to accepted goods,
including breach of warranty, whether express or implied. HRS §
490:2-714(3) allows a buyer to recover incidental and
consequential damages for breach of warranty. The buyer's
incidental and consequential damages are defined in the following
section - HRS § 490:2-715. That section includes subsection
(b)(2) which provides:
"(b) Consequential damages resulting from the seller's
breach include...
(2) Injury to person or property proximately resulting
from any breach of warranty."
Hence, in summary, a purchaser is entitled to rely upon the
implied warranties of merchantability and fitness for a
particular purpose, as well as the express warranties which were
created, to recover their incidental and consequential damages
for breach of such warranties.
Proving Ability to Discovery Breach of Warranty is NOT Required
A buyer need not prove that a manufacturer could have or should
have discovered the defects before sale in order to assert his
claims for breach of warranty. The case of Ontai v. Straub
Clinic, supra, addressed this issue. The Hawaii Supreme Court
stated:
"Moreover, as discussed supra, the jury could have found
that the footrest was defective. And it has been held that
where a product is defective, even when the defect is not
detectable by the seller, the seller is liable under both
the implied warranty of merchantability and the implied
warranty of fitness for a particular purpose. Vlases v.
Montgomery Ward & Co., 377 F.2d 846 (3rd Cir.1967) (sale of
diseased chicks). In Vlases, the court explained: 'The
entire purpose behind the implied warranty sections of the
Code is to hold the seller responsible when inferior goods
are passed along to the unsuspecting buyer. What the Code
requires is not evidence that the defects should or could
have been uncovered by the seller but only that the goods
upon delivery were not of a merchantable quality or fit for
their particular purpose. If those requisite proofs are
established the only exculpatory relief afforded by the Code
is a showing that the implied warranties were modified or
excluded by specific language under Section 2-316. Lack of
skill or foresight on the part of the seller in discovering
the product's flaw was never meant to bar liability. The
gravamen here is not so much with what precautions were
taken by the seller but rather with the quality of the goods
contracted for by the buyer.' 377 F.2d 846, 850. (Footnote
omitted) See Fredrick v. Dreyer, 257 N.W.2d 835 (S.D.1977)
(sale of mobile home with defective doors, wiring and
plumbing); see also Sam's Etc. v. Admar Bar & Kitchen, 103
Misc.2d 276, 425 N.Y.S.2d 743 (1980) (sale of pushcarts
which lacked mobility)." 66 Haw. 251-252, 659 P.2d 744-745
[Emphasis added]
Notification of Breach
A buyer who wishes to assert a breach of warranty claim may be
required to give notice of the breach to the seller and/or the
manufacturer. The comments to HRS §490:2-607 provide "the time
of notification is determined by applying commercial standards to
a merchant buyer [emphasis added]. 'A reasonable time' for
notification from a retail consumer [emphasis added] is to be
judged by different standards so that in his case it will be
extended, for the rule of requiring notification is designed to
defeat commercial bad faith, not to deprive a good faith consumer
of his remedy. [emphasis added]" The comments to the official
text elaborate further on this point in Section 5: "Under this
article various beneficiaries are given rights for injuries
sustained by them because of the seller's breach of warranty.
Such a beneficiary does not fall within the reason of the present
section in regard to the discovery of defects and the giving of
notice within a reasonable time after acceptance, since he has
nothing to do with acceptance. However, the reason of this
section does not extend to requiring the beneficiary to notify
the seller that an injury has occurred. What is said above, with
regard to the extended time for reasonable notification from the
lay consumer after the injury is also applicable here; but even a
beneficiary can be properly held to the use of good faith in
notifying, once he has had time to become aware of the legal
situation."
The leading case on the issue of notice in Hawaii is a Federal
Court case interpreting Hawaii law - Chapman v. Brown, 198
F.Supp. 78 (D.Haw. 1961), aff'd. Brown v. Chapman, 304 F.2d 149
hula skirt on March 10, 1956, an accident and injuries which took
place on November 2, 1957 and notice which occurred to the
defendant shop which sold the hula skirt in approximately
December of 1958 or January of 1959. The jury found that
reasonable notice had been given by the plaintiffs of the breach
of warranty. The District Court and the Ninth Circuit Court of
Appeals upheld that finding. In so doing, the Court stated "It
should be remembered that the defect (as found by the jury) –
dangerous flammability – was a latent one which would not from
its nature be known to plaintiff or the buyer until the happening
of the fire which caused the injury... On the whole, assuming
that the statutory notice requirement is applicable, the rule
here adopted appears to be the more reasonable one, the one more
likely to be followed by the Hawaii courts. However, an even
better view would be that 'The notice provision of the Act is
inapplicable, at least where personal injuries are sustained.'
And where there is no privity." 198 F.Supp. at 85; Accord,
Tomczuk v. Chesire, 26 Conn. Supp. 219, 217 A.2d 71 (1965);
Fisher v. Mead Johnson Labs, 41 App. Div 737, 341 NYS 2d 257
(1973); Hill v. Joseph T. Ryeson & Son, 165 W.Va. 22, 268 S.E. 2d
296 (1980); Comment 4 to HRS § 490:2-607(3)(a). [Footnote 7
reads: Frumer & Friedman, supra, 19.05(1), pp. 537-538. In La
Hue v. Coca-Cola Bottling, Inc., 1957, 50 Wash.2d 645, 314 P.2d
421 the court held that the provision of their Uniform Sales Act
as to notice did not apply because this was not an action by a
buyer against a seller. See, also, Harper & James, Law of Torts,
1575, 28.17, criticizing notice requirement as to accident
victims not 'steeped in the 'business practice' which justifies
the rule.']
The District Court's decision in Chapman v. Brown was affirmed on
appeal in Brown v. Chapman, 304 F.2d 149 (9th Cir. Haw. 1962).
The Appellate Court also found "it cannot be said that, as a
matter of law, proper notice was not given within a reasonable
time, but... it was a question for the jury to decide under all
of the circumstances." 304 F.2d at 152.
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