## Facts

- Vista St. Clair, Inc. (Vista) owned an apartment building and purchased wall-to-wall carpeting (including installation) for two floors from Landry’s Commercial Furnishings, Inc. (Landry’s) for about $8,500.
- Within roughly six months after installation, the carpet developed conspicuous dark spots and discolorations that looked like mud stains or liquid spills.
- The discoloration resulted from a manufacturing defect rather than ordinary soiling.
- Vista notified Landry’s and the parties discussed repair or replacement for about three and a half years, focusing on replacement as a solution.
- Before trial, Vista replaced the carpet at a cost of about $11,000.
- Vista sued Landry’s for breach of warranty.
- At trial, Vista’s president testified that once the discoloration appeared, the carpet’s value to Vista was “zero” because it was unsightly and inconsistent with the appearance expected in a first-class apartment building.
- The trial court ruled for Vista and awarded $2,500 in damages, without making a separate, express finding stating specific dollar values for the carpet “as warranted” and “as accepted.”
- Landry’s appealed, challenging the admission of replacement-cost evidence and arguing Vista failed to prove the required “difference in value” measure of damages.

## Issues

1. Under ORS 72.7140 (UCC § 2-714), may a buyer offer evidence of the cost to replace defective goods as a reasonable way to prove breach-of-warranty damages for accepted goods?
2. Did Vista present sufficient evidence of the difference between the carpet’s value as warranted and its value as accepted to support the damages award and defeat Landry’s motion to dismiss?

## Decision

- The Oregon Court of Appeals affirmed the judgment for Vista.
- The court held that ORS 72.7140(1) permits damages for accepted goods to be determined “in any manner which is reasonable,” and evidence of repair or replacement cost can be a useful objective way to estimate the difference between value “as is” and value as warranted.
- Even assuming replacement-cost proof under ORS 72.7140(2) requires “special circumstances,” the court held the parties’ long delay—caused by extended negotiations about replacing the carpet—qualified as such a circumstance, making replacement-cost evidence proper to admit.
- The court rejected Landry’s claim that replacement cost was categorically irrelevant under Oregon law, distinguishing pre-UCC authority that treated “replacement value” as beside the point in a pleading context.
- The court held Vista’s proof was sufficient on damages: the purchase price was evidence of the carpet’s value as warranted, and the president’s testimony that the carpet’s value to Vista was “zero” after discoloration was evidence of the value as accepted.
- Because the record supported a measurable difference in value and the trial court awarded $2,500 (far less than either the purchase price or the replacement cost), the court declined to disturb the award.

## Legal Principles

- Under ORS 72.7140(1), a buyer’s damages for breach of warranty as to accepted goods may be determined in any manner that is reasonable.
- ORS 72.7140(2) states the ordinary measure is the difference, at the time and place of acceptance, between the value of the goods accepted and the value they would have had if they had been as warranted; “special circumstances” may justify damages in a different amount.
- Cost of repair or replacement may be admitted as evidence and may serve as an objective way to estimate the value difference, particularly when timing or other case facts make direct market-value proof difficult.
- A long delay tied to negotiations over replacing defective goods can qualify as a “special circumstance” supporting the use of replacement-cost evidence.
- The contract price can be evidence of the goods’ value as warranted when better market evidence is not offered.
- Testimony from a property owner or corporate officer regarding the value of goods to the business—when supported by concrete observations about the defect and its effect—can be sufficient evidence of the goods’ value as accepted, including testimony that the value was effectively zero.

## Conclusion

The Court of Appeals affirmed Vista’s $2,500 warranty-damages award, holding that ORS 72.7140 allows reasonable methods of proving loss, including replacement-cost evidence under the circumstances created by years of replacement discussions, and that Vista’s evidence (purchase price plus testimony that the discolored carpet had no value to a first-class apartment building) was sufficient to show a difference in value and support the judgment.


Vista St. Clair, Inc. v. Landry's Commercial Furnishings, Inc., 643 P.2d 1378 (1982)