## Facts

- A railroad purchased switchlocks from a lock manufacturer after receiving promotional materials describing the locks’ security and resistance to picking, including claims tied to industry standards and minimum time-to-pick.
- The railroad issued a purchase order; the manufacturer later sent an acknowledgment and invoice stating acceptance was subject to terms on the reverse side.
- The reverse-side terms included: (1) a one-year limited warranty against defects in materials and workmanship, (2) a disclaimer of all other express and implied warranties (including merchantability and fitness), and (3) an integration clause.
- The disclaimer and related terms were in ordinary type on the back of the forms and were not specially highlighted.
- After installation, a vandal allegedly picked a lock in under two minutes, altered a switch, and a train derailed, causing nearly $1,000,000 in damage.
- The railroad sued in diversity for, among other claims, breach of express warranties (based on advertising) and breach of implied warranties; the manufacturer moved for summary judgment, relying on the disclaimer/integration terms, a repair-or-replace remedy limitation, and a UCC limitations defense.

## Issues

1. Whether specific performance statements in pre-sale advertising and promotional materials could create express warranties under UCC § 2-313.
2. Whether reverse-side disclaimer and integration terms in the seller’s acknowledgment/invoice, sent after the buyer’s purchase order, became part of the contract and effectively negated express and implied warranty claims under UCC §§ 2-207 and 2-316.
3. Whether a repair-or-replacement limitation (and consequential-damages exclusion) barred derailment damages, or was unenforceable under UCC § 2-719, including because it failed of its essential purpose.
4. Whether the warranty claims were time-barred under UCC § 2-725 (and any purported contractual shortening of the limitations period).

## Decision

- The court denied the manufacturer’s motion for summary judgment on the key warranty issues.
- The court held there was sufficient evidence that the advertising statements could constitute express warranties and were not necessarily mere puffery.
- The court held the disclaimer and integration language on the reverse side of the seller’s forms did not, as a matter of law, eliminate the asserted express warranties or bar implied warranty claims, given questions of incorporation, conspicuousness, and assent.
- The court declined to enforce the repair-or-replacement limitation at the summary-judgment stage to bar consequential damages, because factual questions existed as to enforceability and essential purpose.
- The court declined to grant summary judgment on statute-of-limitations grounds on the existing record.

## Legal Principles

- Express warranties may arise from a seller’s affirmations of fact, promises, or descriptions—including in advertising or promotional materials—if they form part of the basis of the bargain (UCC § 2-313).
- Boilerplate “no other warranties” language cannot automatically negate specific express warranties; inconsistencies are generally resolved in favor of the express warranty (UCC § 2-316).
- Disclaimers of implied warranties must be conspicuous and sufficiently brought to the buyer’s attention; ordinary-type, reverse-side terms may present fact questions on conspicuousness and assent (UCC § 2-316).
- When seller forms follow a buyer’s purchase order, additional or different terms may raise contract-formation and incorporation questions under UCC § 2-207.
- Remedy limitations are generally permitted, but may be ineffective if they fail of their essential purpose; consequential-damages exclusions may be rejected if unreasonable or otherwise unenforceable under the circumstances (UCC § 2-719).
- Warranty claims generally accrue at tender of delivery under UCC § 2-725, but summary judgment may be inappropriate where the record does not conclusively establish accrual, filing dates, or enforceable contractual modification.

## Conclusion

The court allowed the railroad’s warranty-based claims to proceed because a factfinder could conclude that specific pre-sale security claims created express warranties, and because the enforceability and incorporation of reverse-side disclaimers, integration language, remedy limitations, and limitations defenses could not be resolved as a matter of law on summary judgment.


Providence & Worcester R.R. Co. v. Sargent & Greenleaf, Inc., 802 F. Supp. 680 (D.R.I. 1992)