## Facts

- Professional Lens Plan, Inc. (PLP), owned by Dr. Ronald E. Price and Ann M. Price, sought a computer system for business operations.
- A consultant recommended an Ohio Scientific computer system; Dr. Price selected the system.
- Impact Systems purchased the computer from Ohio Scientific, sold it to its wholly owned subsidiary Polaris Leasing Corp., and Polaris leased the equipment to PLP.
- The system was delivered in September 1979; Polaris never physically possessed the computer.
- The computer system malfunctioned almost immediately and continued to experience problems, including failures traced in part to a hard disk unit manufactured by Okidata Corporation.
- PLP sued Polaris and others for losses from the defective system and asserted claims for breach of implied warranties of merchantability and fitness against Okidata, despite no direct dealings or contractual privity.
- The district court permitted PLP’s implied-warranty claims against Okidata for economic loss to proceed and allowed certain amendments to pleadings challenged as time-barred.
- Okidata took interlocutory appeals under K.S.A. 60-2102(b), challenging (among other matters) the privity ruling and issues related to amendments/statute of limitations.

## Issues

1. Whether a commercial buyer may recover purely economic loss from a remote manufacturer for breach of implied warranties of merchantability and fitness when the buyer lacks contractual privity and the product is not inherently dangerous.
2. Whether K.S.A. 84-2-318 extends implied-warranty rights to permit a commercial economic-loss claim against a remote manufacturer absent privity.
3. Whether appellate jurisdiction on interlocutory appeal under K.S.A. 60-2102(b) extends to matters not determined by the district court.

## Decision

- The Kansas Supreme Court reversed the district court’s ruling allowing PLP to pursue implied-warranty claims against Okidata for purely economic loss absent privity.
- The court held implied warranties of merchantability and fitness do not extend to remote manufacturers for economic loss when the product is not inherently dangerous and the buyer is not in privity.
- The court construed K.S.A. 84-2-318 as not authorizing such economic-loss claims by a commercial buyer against a remote manufacturer without privity.
- The court held an interlocutory appeal under K.S.A. 60-2102(b) is limited to review of orders actually decided by the district court and cannot reach matters not determined below.
- The case was remanded for further proceedings consistent with these holdings.

## Legal Principles

- Privity of contract is generally required to maintain an action on a contract-based theory against a defendant.
- Implied warranty is imposed by law as a limited exception to privity, and whether it extends beyond privity depends materially on the nature of the product and the type of harm alleged.
- Implied warranties of merchantability and fitness do not extend to a remote seller or manufacturer of a non-inherently dangerous product for purely economic loss suffered by a nonprivity commercial buyer.
- K.S.A. 84-2-318 extends warranty protection to specified third-party beneficiaries in limited circumstances and does not eliminate privity to permit a commercial buyer’s purely economic-loss claim against a remote manufacturer.
- Interlocutory appellate review under K.S.A. 60-2102(b) may be taken only from an order of the district court on the issue presented; appellate courts lack jurisdiction to decide issues not ruled on by the district court.

## Conclusion

The court limited implied-warranty liability for commercial economic loss by holding that, absent privity, a buyer cannot sue a remote manufacturer for implied warranty breaches involving a non-inherently dangerous product, and it further confined interlocutory appeals to issues actually decided in the district court.


Professional Lens Plan, Inc. v. Polaris Leasing Corp., 234 Kan. 742, 675 P.2d 887 (Kan. 1984)