## Facts

- Edward Cate, Jr., operating an automotive repair shop, purchased three Dover-manufactured Rotary-brand vehicle lifts from a dealer for use in his business (1984).
- The lifts repeatedly malfunctioned; vehicles fell from the lifts on at least three occasions despite inspections and repair efforts by the dealer and Dover.
- Cate received a written five-year express warranty from Dover; the document contained prominent promotional headings and marketing language emphasizing warranty protection.
- Within the warranty text, Dover included a paragraph purporting to disclaim implied warranties (including merchantability and fitness), but the disclaimer used the same typeface, size, and color as surrounding warranty text and was not otherwise visually highlighted.
- Cate did not return the lifts under the express warranty process and later sued Dover for breach of the implied warranty of merchantability, alleging the lifts were defective and unfit for ordinary use.

## Issues

1. Whether Dover’s written disclaimer of the implied warranty of merchantability satisfied the “conspicuous” requirement under Texas UCC provisions governing warranty disclaimers.
2. If the disclaimer was not conspicuous, whether it was nevertheless enforceable based on the buyer’s actual knowledge of the disclaimer.
3. Whether Dover was entitled to summary judgment barring the implied warranty claim on the basis of the disclaimer in its express warranty.

## Decision

- The Supreme Court of Texas reversed the court of appeals’ judgment affirming summary judgment for Dover and remanded for further proceedings.
- The Court held the disclaimer was not conspicuous as a matter of law and therefore did not effectively exclude the implied warranty of merchantability.
- The Court further held an inconspicuous disclaimer is unenforceable unless the seller proves the buyer had actual knowledge of it.
- The summary-judgment record did not establish Cate’s actual knowledge of the disclaimer, so Dover was not entitled to judgment as a matter of law.

## Legal Principles

- An implied warranty of merchantability arises by default in a sale of goods unless properly excluded or modified.
- To exclude or modify the implied warranty of merchantability in a writing, the disclaimer must mention “merchantability” and must be conspicuous.
- Conspicuousness is an objective question of law for the court: the clause must be written so a reasonable person against whom it operates ought to have noticed it.
- A document’s general attention-getting design does not make a disclaimer conspicuous; the disclaimer clause itself must be attention-calling (e.g., by contrasting type, color, size, or headings).
- A disclaimer that fails the conspicuousness requirement may still be effective if the buyer had actual knowledge of the disclaimer, but actual knowledge is not shown merely by providing the document.

## Conclusion

Because Dover’s disclaimer was not conspicuous and Dover did not establish Cate’s actual knowledge of the disclaimer, the implied warranty of merchantability claim was not barred at the summary-judgment stage, and the case was remanded for further proceedings.


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