## Facts

- Two Rivers Co., a commercial cattle breeder, purchased bull semen marketed by Curtiss Breeding Service through a feed supplier.
- The semen came from a Chianina bull (Farro AC-35) and was used for artificial insemination of Two Rivers’ cattle.
- Calves born from the inseminations exhibited syndactylism (a recessive genetic abnormality), and evidence indicated offspring sired by the semen were at least carriers of the gene.
- Two Rivers claimed the semen was defective and sought damages for harm to the herd’s reputation and loss of prospective market value, not for personal injury.
- Curtiss used written disclaimer language intended to exclude implied warranties, including merchantability.
- A jury found Curtiss strictly liable and in breach of the implied warranty of merchantability and awarded $52,900 for reputational/market-value loss; the district court entered judgment and denied Curtiss’s JNOV motion.

## Issues

1. Under Texas law, can a commercial buyer recover purely economic loss (reputational and market-value loss) in strict products liability for allegedly defective cattle semen?
2. Did Curtiss effectively disclaim implied warranties under the UCC, thereby barring recovery for breach of implied warranty of merchantability?

## Decision

- The Fifth Circuit reversed the judgment for Two Rivers.
- Strict products liability did not allow recovery for the purely economic losses awarded by the jury in this commercial transaction.
- The semen was not shown to be “unreasonably dangerous” for strict-liability purposes given the trade’s awareness of genetic risks in breeding.
- Curtiss’s disclaimer effectively excluded implied warranties, defeating the implied-warranty theory of recovery.

## Legal Principles

- Texas strict products liability generally does not provide a remedy for purely economic loss in a commercial setting; such loss is addressed through contract/UCC doctrines.
- Strict liability requires proof of a defect that renders the product unreasonably dangerous; known and inherent genetic risks in breeding do not, without more, satisfy that standard.
- Under the UCC, implied warranties may be disclaimed if the disclaimer is conspicuous and, for merchantability, specifically mentions “merchantability.”
- An effective disclaimer communicated in the transaction bars implied-warranty recovery absent a surviving express warranty basis.

## Conclusion

The Fifth Circuit held that the buyer’s claimed reputational and market-value losses were not recoverable in Texas strict products liability and that the seller’s conspicuous disclaimer barred implied-warranty claims, requiring reversal of the judgment for the cattle breeder.


Two Rivers Co. v. Curtiss Breeding Serv., 624 F.2d 1242 (5th Cir. 1980)