An implied warranty of merchantability chargeable to either an automobile manufacturer or a dealer extends to the purchaser of the car, members of his family, and to other persons occupying or using it with his consent. It would be wholly opposed to reality to say that use by such persons is not within the anticipation of parties to such a warranty of reasonable suitability of an automobile for ordinary highway operation. Those persons must be considered within the distributive chain.
Plaintiffs were injured when a car they had recently purchased from dealer, made by manufacturer, veered into a highway sign because of its defective manufacture. The plaintiffs filed a case for breach of implied warranty of merchantability. The trial court found defendants liable for a breach of the implied warranty of merchantability and dismissed the negligence claim. The case was appealed to the Supreme Court of New Jersey.
Were the defendants liable for a breach of the implied warranty of merchantability?
It is considered a disclaimer of implied warranties where the original date of purchase must be brought to the attention of the buyer. Even if the parties are free to contract, there is still the obligation to inform the buyer of such. On appeal, the court found that the express warranty, which was limited to replacement of parts sent to the factory, did not negate the implied warranty of fitness, given the inequality of bargaining power between manufacturers and purchasers of consumer goods.