## Facts

- William A. Dorman, an earth-grading contractor, bought a new tractor and backhoe for business use from International Harvester Company and financed the purchase through its credit affiliate.
- The parties executed a retail installment conditional sales contract for $12,912.26 (including finance charges); Dorman paid $7,233.68 before suit.
- The contract contained language purporting to disclaim all express and implied warranties except International Harvester’s “standard printed warranty,” and it purported to exclude implied warranties of merchantability and fitness for a particular purpose.
- The disclaimer appeared near the signature line with limited typographical emphasis and without a prominent heading; the referenced “standard printed warranty” was not delivered to Dorman at the time of contracting.
- Dorman experienced repeated breakdowns starting immediately after delivery and continuing over several months, requiring multiple returns to International Harvester for repairs.
- Dorman alleged breach of express and implied warranties and sought recovery of amounts paid plus lost earnings and business; he initially pleaded rescission but dismissed that claim at trial.
- A jury awarded Dorman $19,500 and rejected defendants’ cross-complaint seeking recovery of the equipment.
- The trial court denied a new trial but granted judgment notwithstanding the verdict (JNOV), reducing damages to $7,233.68 and denying Dorman costs; Dorman appealed and defendants cross-appealed.

## Issues

1. Whether the contract’s disclaimer of implied warranties was effective under the UCC requirement that disclaimers be conspicuous and clear.
2. Whether an undelivered “standard printed warranty” could be enforced to limit remedies and exclude consequential damages such as lost profits.
3. Whether the trial court properly granted JNOV reducing the jury’s award to the amount Dorman had paid under the contract.

## Decision

- The Court of Appeal held the implied-warranty disclaimer was ineffective because it was not sufficiently conspicuous and did not clearly communicate an exclusion of implied warranties.
- The court held International Harvester could not enforce limitations contained in its “standard printed warranty” because it was not provided to Dorman at the time of contracting and therefore was not part of the bargain.
- The court reversed the JNOV to the extent it relied on the ineffective disclaimer and the undelivered warranty limitation and remanded to allow Dorman to pursue consequential damages.
- The court rejected defendants’ cross-appeal arguments insofar as they depended on enforcing the disclaimer and undelivered warranty limitations.

## Legal Principles

- Under UCC Article 2, a disclaimer of implied warranties must be conspicuous and must clearly inform the buyer that implied warranties (including merchantability and fitness) are excluded.
- A seller may not bind a buyer to remedial limitations or exclusions contained in a separate “standard” warranty document that was not delivered or otherwise made part of the parties’ agreement at the time of contracting.
- When implied warranties are not validly disclaimed, the buyer may seek UCC breach-of-warranty remedies, including consequential damages, if supported by proof and not otherwise effectively limited by an enforceable agreement.
- JNOV is improper where it rests on enforcing ineffective warranty disclaimers or non-assented-to limitations that remove consequential-damage questions from the jury.

## Conclusion

The court treated inconspicuous or unclear warranty disclaimers as unenforceable and refused to enforce remedy limits contained in an undelivered “standard printed warranty,” restoring the buyer’s ability to prove consequential damages for breach of implied warranties.


Dorman v. Int'l Harvester Co., 120 Cal. Rptr. 516 (Cal. Ct. App. 1975)