## Facts

- James River Equipment Co. agreed to purchase Beadle County Equipment, Inc.’s implement dealership and used inventory for about $1.8 million.
- The used equipment inventory (about $1,361,000) was listed on an attached schedule (Exhibit C) incorporated into the written purchase agreement.
- Exhibit C included specific hour-of-use figures for several used combines.
- The agreement stated seller representations and warranties in the agreement would be true at closing, while also providing an “AS IS” clause disclaiming representations about condition “except as specifically provided in this Agreement.”
- James River had an opportunity to inspect the used equipment before closing but did not conduct a meaningful inspection.
- After closing, James River discovered that the listed hours for five combines were materially lower than the machines’ actual hours and claimed diminished value.
- James River sued for breach of contract and breach of express warranty; after a bench trial, the court awarded James River $7,435.64 on smaller claims but rejected the express-warranty claim about the combines’ hours.
- James River appealed.

## Issues

1. Whether the combine hour statements in the incorporated inventory schedule constituted express warranties under UCC § 2-313.
2. Whether the contract’s general “AS IS” language and the buyer’s opportunity to inspect negated those express warranties under UCC § 2-316.

## Decision

- The South Dakota Supreme Court affirmed in part and reversed and remanded in part.
- The court held that the specific hour statements in Exhibit C were express warranties because they were factual affirmations incorporated into the written bargain.
- The court held the “AS IS” clause did not disclaim those express warranties, particularly where the clause preserved representations “specifically provided in this Agreement.”
- The court rejected the trial court’s conclusion that no actionable express warranty existed on the combine-hour issue and remanded for further proceedings on that claim.
- The court otherwise left intact the portions of the judgment not challenged on appeal.

## Legal Principles

- Under UCC § 2-313, specific factual affirmations about goods that become part of the basis of the bargain create express warranties.
- A general “AS IS” disclaimer under UCC § 2-316 typically excludes implied warranties, but it is construed with the rest of the contract and does not negate specific express warranties set out in the agreement.
- A buyer’s opportunity to inspect, and failure to do so, may limit implied-warranty claims for defects discoverable on reasonable inspection, but it does not automatically bar claims premised on false express factual representations made by the seller.

## Conclusion

The court held that detailed hour-of-use figures incorporated into the parties’ written agreement were enforceable express warranties and that a general “AS IS” clause and inspection opportunity did not nullify those warranties, requiring reversal and remand on the combine-hour warranty claim.


James River Equip. Co. v. Beadle Cnty. Equip. Co., 646 N.W.2d 265 (S.D. 2002)