## Facts

- Alfred and Martha Keller, Colorado dairy farmers, bought two Harvestore grain storage systems in July 1980 from an independent dealer.
- A.O. Smith Harvestore Products, Inc. manufactured the systems and supplied dealers with promotional materials (e.g., videos, brochures, and literature) used to market the product.
- The marketing represented that the oxygen-limiting design would prevent spoilage, reduce feed losses, and reduce or eliminate protein supplements for dairy herds.
- The Kellers alleged they relied on these representations in deciding to purchase the systems.
- The purchase orders included an integration (merger) clause stating the order form was the entire agreement and that unconfirmed oral statements were not binding.
- The orders also included language disclaiming that promotional materials created guarantees or that the buyers were relying on them as representations.
- After installation and use, the Kellers alleged herd health and production losses caused by problems with the systems and by the inaccuracy of the marketing claims.
- In federal court, a jury found for the Kellers on a negligent misrepresentation claim against the manufacturer; on appeal, the Tenth Circuit certified questions of Colorado law to the Colorado Supreme Court.

## Issues

1. Whether Colorado law permits a negligent misrepresentation claim against a product manufacturer for pre-contract sales representations despite a fully integrated written sales agreement.
2. Whether a contractual clause disclaiming reliance on pre-contract representations legally precludes, as a matter of law, a finding of actual reliance for negligent misrepresentation.

## Decision

- The court answered the first certified question yes: a negligent misrepresentation claim may lie against a manufacturer for sales-related representations even when the parties executed a fully integrated sales agreement.
- The court answered the second certified question no: a non-reliance/disclaimer clause does not, as a matter of law, bar a finding that the buyer actually relied on pre-contract representations.
- The court treated integration and non-reliance language as relevant to proof and admissibility, but not conclusive on the tort elements.

## Legal Principles

- Under Restatement (Second) of Torts § 552, a party in business who supplies information for others’ guidance in transactions may be liable for negligent misrepresentation when the recipient justifiably relies and suffers pecuniary loss.
- A product manufacturer that distributes promotional information to induce purchases can fall within § 552’s scope when it supplies information for use in buyers’ business decisions.
- The parol evidence rule and merger clauses generally limit using extrinsic evidence to vary contract terms, but they do not bar evidence offered to prove an independent tort arising from pre-contract misstatements.
- A clause disclaiming reliance on prior representations is evidence bearing on actual reliance and reasonableness, but it is not dispositive and does not remove the reliance question from the factfinder.
- Contractual allocation of warranty and performance risk does not automatically eliminate tort responsibility for negligent pre-contract misinformation absent enforceable, policy-compliant exculpatory language.

## Conclusion

Colorado law allows buyers to pursue negligent misrepresentation claims against manufacturers based on pre-contract marketing statements even where the sales agreement is fully integrated, and non-reliance clauses do not automatically defeat the reliance element but instead serve as evidence for the factfinder.


Keller v. A.O. Smith Harvestore Prods., Inc., 819 P.2d 69 (Colo. 1991)