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Cate v. Dover Corp. - 790 S.W.2d 559 (Tex. 1990)

Rule:

An implied warranty of merchantability arises in a contract for the sale of goods unless expressly excluded or modified by conspicuous language. Tex. Bus. & Com. Code Ann. §§ 2.314(a)2.316(b) (1968). Whether a particular disclaimer is conspicuous is a question of law to be determined by the following definition: A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals (as: NON-NEGOTIABLE BILL OF LADING) is conspicuous. Language in a body of a form is conspicuous if it is larger or of other contrasting type or color. But in a telegram, any stated term is conspicuous. Tex. Bus. & Com. Code Ann. § 1.201(10)

Facts:

Edward Cate purchased equipment made by Dover Corporation, and the equipment came with a written warranty. Claiming that the equipment did not function properly, Cate filed a claim for breach of the implied warranty of merchantability. The trial court awarded Dover summary judgment on the basis that Cate's claim was barred by a disclaimer contained in Dover's written warranty. The appellate court affirmed.

Issue:

Did the lower court err in awarding summary judgment to Dover based upon the enforceability of a disclaimer of the implied warranty of merchantability?

Answer:

Yes

Conclusion:

On further appellate review, the Supreme Court of Texas reversed and remanded, holding that the disclaimer of the implied warranty of merchantability was enforceable only if the disclaimer would have been conspicuous to a reasonable person or if the buyer had actual knowledge of the disclaimer. The court determined that the disclaimer was not conspicuous because it was undistinguished in typeface, size, and color from the language purporting to grant the warranty. The court also ruled that Dover had failed to establish as a matter of law that Cate had actual knowledge of the disclaimer.

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