## Facts

- New Jersey Transit Corporation solicited bids for a Track Geometry Inspection Vehicle (TGIV) using detailed technical specifications it prepared.
- Harsco Corporation won the bid and contracted to manufacture the TGIV for about $2.3 million.
- The contract included an express “repair or replace” warranty for one year after delivery, covering parts and labor.
- The TGIV was delivered in 2000; about two years later it caught fire during use and was destroyed.
- NJ Transit sued Harsco for breach of the express warranty, breach of implied warranties of merchantability and fitness under the U.C.C., and negligence and strict products liability for destruction of the TGIV.
- Harsco did not use U.C.C. § 2-316 disclaimer language (e.g., “merchantability,” “as is”) to disclaim implied warranties.
- The district court granted summary judgment to Harsco, and NJ Transit appealed.

## Issues

1. Whether a contract’s one-year “repair or replace” warranty term unlawfully shortens U.C.C. § 2-725’s four-year limitations period, or instead permissibly limits the duration of warranty obligations.
2. Whether implied warranties can be limited in duration to the express warranty term even without a valid § 2-316 disclaimer.
3. Whether New Jersey’s economic loss doctrine bars negligence and strict products liability claims when the only alleged damage is to the purchased product itself in a commercial sale of goods.

## Decision

- The Third Circuit affirmed summary judgment for Harsco.
- The court held the contract limited the duration of all warranties to one year, so no express or implied warranty remained in force when the fire occurred two years after delivery.
- The court held U.C.C. § 2-725 governs when suit must be filed after accrual, but it does not create a minimum warranty duration that overrides a valid contractual time limit on warranties.
- The court held New Jersey’s economic loss doctrine barred NJ Transit’s negligence and strict liability claims because the alleged loss was solely destruction of the TGIV itself, with no personal injury or damage to other property.

## Legal Principles

- U.C.C. § 2-725 sets a statute of limitations for filing warranty actions; it does not establish the duration of warranty coverage.
- Contracting parties may limit the duration of warranty obligations, including implied warranties, to a stated period (such as one year) if the limitation is clear and not unconscionable.
- A failure to disclaim implied warranties under U.C.C. § 2-316 may leave implied warranties initially in place, but does not prevent a separate contractual limitation on their duration.
- Under New Jersey’s economic loss doctrine in commercial sales governed by the U.C.C., tort remedies (negligence and strict products liability) are unavailable for purely economic loss consisting only of damage to the product itself.

## Conclusion

The court enforced a one-year contractual limit on warranty duration—treating it as ending warranty obligations rather than shortening § 2-725’s filing period—and held that, because the loss was limited to destruction of the purchased product, New Jersey’s economic loss doctrine confined the buyer to contract remedies and barred tort claims.


N.J. Transit Corp. v. Harsco Corp., 497 F.3d 323 (3d Cir. 2007)