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To determine whether a commercial buyer may recover economic loss, however, a court must reconsider the policies underlying the doctrine of strict liability and those underlying the Uniform Commercial Code. Those policy considerations include, among others, the relative bargaining power of the parties and the allocation of the loss to the better risk-bearer in a modern marketing system. As a general rule, the rights and duties of a buyer and seller are determined by the law of sales, which throughout this century has been expressed first in the Uniform Sales Act and more recently in the Uniform Commercial Code. However, strict liability evolved as a judicial response to inadequacies in sales law with respect to consumers who sustained physical injuries from defective goods made or distributed by remote parties in the marketing chain.
Plaintiff, Spring Motors Distributors, Inc. agreed to purchase from defendant Turnpike Ford Truck Sales, Inc. 14 model LN8000 trucks made by defendant Ford Motor Company at a purchase price of $ 265,029.80. In the agreement, plaintiff specified that the rucks should be equipped with model 390V transmissions made by Clark Equipment Company. At the time of the sale to plaintiff, Ford issued a form warranty with each truck. Plaintiff took delivery of the delivery of the trucks in November 1976, and leased them to Economic Laboratories, Inc. Plaintiff, which serviced the trucks during the period of the lease, began experiencing problems with the performance of the Clark transmissions as early as February 1977. Clark provided plaintiff with replacement parts, but the transmission failures continued. Thereafter, on November 1, 1979, plaintiff and Economic Laboratories terminated the truck lease and, as part of a settlement, Economic purchased the trucks for $ 247,580.97. Four years and one month after the delivery of the trucks, on December 23, 1980, plaintiff instituted the present action, seeking recovery for repair, towing, and replacement parts, as well as lost profits and a decrease in the trucks' value. The trial court perceived the matter as sounding in contract, and finding that plaintiff's action was barred by the four-year statute of limitations, granted summary judgment for defendants. The Appellate Division reversed finding that the action was one of strict liability in tort, not contract, and that the six-year period of limitations applicable for tort actions had not expired. Defendants appealed.
Was the plaintiff restricted to its cause of action under the Uniform Commercial Code (“UCC”)?
A commercial buyer seeking damages for economic loss resulting from purchasing defective goods could recover from an immediate seller and a remote supplier in a distributive chain for breach of warranty under the UCC, but not in strict liability or negligence. Hence, the four-year period of limitations was applicable. Accordingly, the judgment of the Appellate Division was reversed.