## Facts

- On July 30, 2001, STI Holdings, Inc. and related Stoughton entities (collectively, Stoughton) prepared a thermal-performance report for Maritime-Ontario Freight Lines, Ltd. (Maritime) concerning Stoughton’s intermodal shipping containers.
- The report stated that the containers’ thermal performance was “presumed to be approximately 400 BTU/hr/°F,” a level Maritime alleged exceeded industry standards.
- On May 30, 2002, Maritime and Stoughton entered into a written agreement for Maritime to purchase 200 shipping containers.
- The agreement contained detailed design specifications and incorporated industry standards, but it did not include any thermal-performance term and did not reference the thermal-performance report.
- The agreement included a limited warranty focused on defects in materials and workmanship and included contract language stating that Stoughton’s suggestions about the use, application, or suitability of goods or services would not be treated as an express warranty unless Stoughton confirmed that warranty in writing.
- The agreement also contained a clear integration (merger) clause stating that the written agreement was the parties’ complete agreement.
- After delivery and use, Maritime experienced problems with the containers, including alleged structural defects and alleged thermal-performance problems.
- Stoughton declined to fix the containers, asserting that the reported problems stemmed from operational issues outside warranty coverage.
- Maritime sued for breach of warranty based on (1) thermal performance and (2) structural defects.
- Maritime conceded the containers complied with the written specifications in the purchase agreement, but relied on the pre-contract thermal-performance report to support its thermal-performance warranty claim.
- Stoughton moved for summary judgment arguing, among other things, that the integration clause barred Maritime’s thermal-performance warranty theory based on the pre-contract report.

## Issues

1. Whether the agreement’s integration clause and warranty language barred Maritime from using the pre-contract thermal-performance report to establish an express warranty about thermal performance not stated in the written contract.
2. Whether Maritime could pursue a structural-defect warranty claim based on alleged defects in materials or workmanship, or whether that claim failed as a matter of law at summary judgment.
3. Whether the contract’s limited remedy and consequential-damages limitation remained enforceable, including whether the limited remedy failed of its essential purpose under U.C.C. § 2-719.

## Decision

- The court granted summary judgment for Stoughton on Maritime’s thermal-performance breach-of-warranty claim, holding that the integrated written agreement did not include a thermal-performance warranty and the pre-contract report could not be used to add such a term.
- The court denied summary judgment on Maritime’s structural-defect warranty claim, concluding the record raised a triable dispute as to whether the containers suffered defects in materials or workmanship.
- The court granted summary judgment for Stoughton on Maritime’s claim for consequential damages, enforcing the contract’s limitations because the limited warranty remedy did not fail of its essential purpose.

## Legal Principles

- Under U.C.C. § 2-202 and related parol-evidence rules, when parties enter an unambiguous, fully integrated sales contract, prior communications generally cannot be used to add a new warranty term omitted from the writing.
- Where a contract states that seller recommendations or statements about use, application, or suitability are not express warranties unless confirmed in writing within the contract, pre-contract reports and similar communications are especially unlikely to qualify as enforceable express warranties.
- A “course of dealing” requires a prior sequence of transactions between the parties; a single set of pre-contract communications tied to one deal is not enough to establish a course of dealing that modifies an integrated contract.
- A warranty claim for defects in materials or workmanship can present a fact question when the buyer offers evidence of repeated failures and defect-related repair history; summary judgment is not required merely because the parties dispute the cause of the failures.
- Under U.C.C. § 2-719, a limited repair-or-replacement remedy fails of its essential purpose only when the remedy is effectively unavailable or cannot provide the relief the contract contemplates; when the remedy remains workable, contractual limits on consequential damages are generally enforced in a commercial sale.

## Conclusion

Maritime-Ontario Freight Lines, Ltd. v. STI Holdings, Inc. held that an integrated purchase agreement for shipping containers barred the buyer from using a pre-contract thermal-performance report to create an express warranty omitted from the written contract, while allowing a separate structural-defect warranty claim to proceed; the court also enforced the contract’s remedy and damages limitations because the limited remedy did not fail of its essential purpose.


Maritime-Ontario Freight Lines, Ltd. v. STI Holdings, Inc., 481 F. Supp. 2d 963 (2007)