## Facts

- South Carolina Electric and Gas Company (SCE&G) owned and operated the Arthur Williams Station power plant.
- A fire occurred when a flexible metal hose ruptured and sprayed heated fuel oil across the surface of a steam-generating boiler.
- Combustion Engineering, Inc. (Combustion) manufactured and sold the boiler unit and related equipment to SCE&G under a 1970 sales contract.
- Daniel International Corporation (Daniel) constructed the plant and installed the boiler and the connected pipes and hoses.
- The contract between SCE&G and Combustion included a one-year express warranty against defects in material and workmanship and a clause disclaiming other warranties.
- The fire occurred after the one-year express warranty period had expired.
- SCE&G sought over $350,000 in damages, asserting implied-warranty and negligence claims against Combustion and negligent-installation and workmanship-warranty claims against Daniel.

## Issues

1. Whether the contract terms effectively excluded implied warranties of merchantability and fitness for a particular purpose in a negotiated commercial sale.
2. Whether contractual exculpatory/limitation provisions barred tort claims against Combustion, and whether the analysis differed for negligent manufacture versus negligent design.
3. Whether summary judgment was proper for Daniel on negligent-installation and warranty-of-workmanship claims where the alleged defects were latent.

## Decision

- The Court of Appeals affirmed in part, reversed in part, and remanded for trial.
- The court affirmed summary judgment for Combustion on SCE&G’s implied-warranty claims.
- The court held the exculpatory clause could bar negligence claims premised on negligent manufacture, including as asserted by a public utility, but did not bar a negligent-design claim relating to the fuel-piping configuration; summary judgment was reversed as to negligent design.
- The court reversed summary judgment for Daniel on the warranty-of-workmanship claim because latent-defect allegations created triable issues; related factual disputes required trial on remanded claims.

## Legal Principles

- Summary judgment is improper if material factual disputes exist; ambiguities and inferences are construed against the movant.
- In negotiated commercial transactions between sophisticated entities, contractual warranty limitations and disclaimers may foreclose implied-warranty remedies beyond an express warranty period.
- Exculpatory clauses between private parties can be enforceable even when asserted against a public utility, subject to limits tied to the type of negligence alleged.
- An exculpatory clause may be applied differently to negligent manufacture than to negligent design; design-defect allegations may remain actionable despite contractual limitations.
- Contractor liability for breach of a warranty of workmanship may survive summary judgment where alleged defects are latent and not reasonably discoverable by the owner.

## Conclusion

The court enforced negotiated contractual limits to defeat SCE&G’s implied-warranty claims against the boiler manufacturer and to bar negligence claims based on negligent manufacture, but it allowed a negligent-design theory to proceed and revived the contractor workmanship claim because alleged latent defects raised genuine issues for trial.


S.C. Elec. & Gas Co. v. Combustion Eng'g, Inc., 283 S.C. 182, 322 S.E.2d 453 (S.C. Ct. App. 1984)