## Facts

- Paul Lewis operated a sawmill in Arkansas and had long purchased petroleum products from Mobil through a local dealer, Frank Rowe.
- To remain competitive, Lewis converted mill equipment to a hydraulic system and installed a used hydraulic system that had been in good working order.
- Lewis asked Rowe to recommend the proper hydraulic fluid because Lewis wanted to continue using Mobil products; Lewis told Rowe only that the system used a gear-type pump.
- Rowe said he did not know the correct lubricant but would obtain an answer; he did not request additional specifications and supplied Mobil Ambrex 810, a straight mineral oil without additives.
- Shortly after use began, the oil changed color, foamed, and overheated; Lewis changed the oil multiple times without improvement.
- About six months later, the system broke down and a new system was installed; Lewis asked Rowe to confirm the oil choice, but Rowe continued supplying Ambrex 810.
- Over the next two years, Lewis experienced repeated pump failures (six replacement pumps) despite following maintenance steps tied to the Mobil-supplied oil.
- After another failure, Mobil and the pump manufacturer inspected the system; it was flushed and cleaned, a new pump installed, and a different hydraulic oil containing a defoaming additive was substituted.
- After the switch to the additive-containing oil, the equipment operated properly for approximately 2.5 years.

## Issues

1. Whether an implied warranty of fitness for a particular purpose arose when Mobil, through its dealer, undertook to recommend hydraulic oil for Lewis’s system and Lewis relied on that recommendation.
2. Whether evidence permitted a jury finding that Ambrex 810 was unfit for the intended hydraulic use and caused the equipment problems and failures.
3. Whether the verdict improperly awarded damages, including lost profits, for periods not proximately caused by use of Ambrex 810.

## Decision

- The court held that an implied warranty of fitness for a particular purpose existed under the U.C.C. and that the evidence supported a finding of breach.
- The court held that the evidence supported causation based on the onset of foaming/overheating with Ambrex 810 and the sustained proper operation after substitution with additive-containing oil.
- The court concluded the damages award was excessive because it included losses beyond the period during which Ambrex 810 was used.
- The judgment was reversed in part and remanded for a new trial limited to damages.

## Legal Principles

- An implied warranty of fitness for a particular purpose arises when (1) the seller has reason to know the buyer’s particular purpose and (2) the buyer relies on the seller’s skill or judgment to select suitable goods.
- When a seller undertakes to recommend a product for a technical application, the seller bears responsibility to obtain necessary information before giving a recommendation; the buyer’s lack of technical knowledge supports, rather than defeats, reliance.
- Causation in warranty cases may be proved by circumstantial evidence, including temporal connection between product use and failures and the elimination of problems after substitution with a suitable product.
- Consequential damages, including lost profits, are recoverable only to the extent proximately caused by the breach; recovery must be limited to the period and losses causally linked to the defective or unfit goods.

## Conclusion

The court affirmed liability for breach of an implied warranty of fitness where Mobil, through its dealer, recommended and supplied hydraulic oil lacking needed additives, leading to repeated failures; however, it vacated the damages award and remanded because the verdict included losses extending beyond the timeframe attributable to the unfit oil.


Lewis v. Mobil Oil Corp., 438 F.2d 500 (8th Cir. 1971)