## Facts

- Massey-Ferguson manufactured farm machinery and sold equipment wholesale to a Kentucky dealer that resold at retail.
- In October 1960, F. X. Utley bought a Massey-Ferguson No. 20 two-row cornhead combine attachment from the dealer.
- Utley paid $675 down and signed a retail installment contract for $1,603.56, payable in three equal annual installments due in 1961–1963.
- The dealer immediately assigned the installment contract to Massey-Ferguson.
- Utley defaulted on the first installment; Massey-Ferguson sued for the unpaid deferred payments.
- The contract form (supplied by Massey-Ferguson) included: (1) a back-page clause purporting to disclaim all implied warranties; and (2) a clause stating the buyer would not assert against an assignee any defenses he had against the seller.
- The disclaimer appeared on the back amid dense boilerplate, in the same type size and face as other terms; the trial court found it not conspicuous.
- Utley defended based on breach of implied warranties of merchantability and fitness.
- A jury returned a verdict for Utley, and the trial court dismissed Massey-Ferguson’s action.

## Issues

1. Whether the contract’s disclaimer of implied warranties was effective under KRS 355.2-316(2) given the statutory requirement that such exclusions be conspicuous.
2. Whether the contract’s waiver of defenses against an assignee was enforceable under KRS 355.9-206 to bar Utley’s implied-warranty defenses against Massey-Ferguson as assignee.

## Decision

- The Kentucky Court of Appeals affirmed the judgment for Utley.
- The implied-warranty disclaimer was ineffective because it was not conspicuous as required by KRS 355.2-316(2).
- The defenses-waiver (“cut-off”) clause did not preclude Utley from asserting implied-warranty defenses against Massey-Ferguson under the circumstances.
- Because the defenses were properly available, the jury’s verdict for Utley stood.

## Legal Principles

- A disclaimer of implied warranties under KRS 355.2-316(2) is ineffective unless it is in writing and conspicuous; placement under a bold heading does not suffice when the disclaimer text is visually indistinguishable from surrounding boilerplate.
- Under KRS 355.9-206, a contractual waiver of defenses against an assignee is not automatically enforced to eliminate Article 2 warranty defenses in a sale-of-goods financing arrangement where the assignee is closely connected to the underlying sale.
- When an implied-warranty disclaimer fails and defenses are not cut off as to the assignee, breach of implied warranties of merchantability and fitness may be asserted as defenses to an action for the contract balance.

## Conclusion

The court held that the attempted exclusion of implied warranties failed for lack of conspicuousness and that the buyer’s agreement not to assert defenses against an assignee did not bar implied-warranty defenses where the assignee-manufacturer was closely connected to the transaction, so the defense verdict for the buyer was affirmed.


Massey-Ferguson, Inc. v. Utley, 439 S.W.2d 57 (Ky. Ct. App. 1969)