The fact that the written agreement contains a disclaimer of warranties does not preclude evidence of an oral warranty. Where the express representations made by seller are claimed to be inconsistent with the form language of the contract, parol evidence may be admitted to determine whether the written contract is a final expression of the parties' agreement and whether the warranty, or disclaimer thereof, was part of the bargain explicitly negotiated between the parties. N.D. Cent. Code § 41-02-09, UCC § 2-202. Under North Dakota law, the essential inquiry, i.e. whether the disclaimer was explicitly negotiated between the parties, requires that extrinsic evidence be admitted to determine the validity of an attempted disclaimer of warranties under N.D. Cent. Code § 41-02-33, UCC § 2-316.
There was conflicting evidence concerning warranties of airplanes sold to plaintiff, either in the contract, or in the conversations between the seller's corporate president and the buyer's pilots. After the sale, the plane's crop spraying equipment would not work, and the mechanic came to the buyer's location and repaired the magnetos. One of the engines then failed, and the buyer filed suit against the seller corporation, its president, and a mechanic, for damages for breach of express warranty and prejudgment interest. The trial court determined that the corporation's president made express warranties and entered judgment against him individually for the loss of a crop spraying job. The judgment was also against the corporation and included prejudgment interest. Defendants appealed to the Supreme Court of South Dakota, and the buyer appealed the denial of his implied warranty claim.
Was the airplane buyer entitled to damages for a lost crop spraying job based on warranties either in the airplane purchase agreement or admissible as parol evidence.
The court affirmed the trial court finding that there was an express warranty and the damages based on the lost spraying job. The evidence was sufficient that the engine failure was not covered by implied warranty. The court reversed the liability of the president because the corporation protected him from a contract dispute, and there was no finding that he was negligent. The prejudgment interest was appropriate as the amount was reasonably ascertainable.