## Facts

- Universal Drilling Company and related purchasers negotiated to buy two drilling rigs (“Rig 10” and the “Marthens Rig”) from Camay Drilling Company.
- The parties executed a written contract dated July 1, 1977, later amended in August 1977; the writing treated the deal as a complete agreement.
- The contract defined the goods exclusively by itemized lists of personal property in attached exhibits: Exhibit A for Rig 10, and Exhibits B and C for the Marthens Rig.
- The contract included provisions functioning as a merger clause and an as-is disclaimer, limiting warranties to those contained in the writing.
- After delivery, the buyers alleged the rigs were not operable and did not conform to precontract statements; the seller maintained it delivered all listed items.
- In a diversity action applying Colorado law, the district court excluded extrinsic evidence of alleged oral representations and rejected the buyers’ express-warranty-by-description theory, entering judgment for the seller.

## Issues

1. Whether, under Colo. Rev. Stat. § 4-2-202 (UCC § 2-202), the buyers could introduce extrinsic evidence of prior or contemporaneous oral warranties or representations to add to or vary an integrated written agreement, including under a fraud exception.
2. Whether the contract’s description of the goods (by itemized exhibits) created an express warranty by description under UCC § 2-313 that was breached by delivery of allegedly nonoperable rigs.

## Decision

- The Tenth Circuit affirmed the judgment for Camay Drilling Company.
- The district court properly excluded extrinsic evidence of alleged oral warranties or representations under the UCC parol evidence rule.
- The asserted fraud theory did not justify using extrinsic statements to alter or expand a complete, negotiated writing between sophisticated commercial parties.
- The district court properly rejected the claim that the contract created an express warranty that the rigs would be operable; the operative “description” was the itemized lists, and the seller delivered the listed property.

## Legal Principles

- Under UCC § 2-202 as adopted in Colorado, when a writing is intended as a final expression of the parties’ agreement, extrinsic evidence may not be used to contradict or vary its terms.
- A fraud-based attempt to introduce parol evidence is limited; it does not permit enforcement of alleged oral promises that conflict with or materially add to an integrated commercial contract, absent a showing of fraud independent of the omitted promises.
- Under UCC § 2-313, an express warranty by description is defined by the contract’s actual description; where the contract defines the goods solely through itemized exhibits, conformity is measured against those lists rather than unstated expectations about condition or operability.
- Merger and as-is provisions, particularly in arm’s-length transactions between sophisticated parties, support limiting enforceable warranties to those expressly stated in the written agreement.

## Conclusion

The court enforced the parties’ integrated, as-is sales contract and held that the buyer could not use extrinsic negotiations to add warranties of operability; because the seller delivered the property as itemized in the exhibits, there was no breach of express warranty by description.


Universal Drilling Co. v. Camay Drilling Co., 737 F.2d 869 (10th Cir. 1984)