AV - Preeminent Badge
Super Lawyers Badge
Tennessee Association for Justice Badge
Tennesee Bar Association Badge

Tennessee Law’s Requirement of ‘Conspicuous’ Disclaimer of Implied Warranty Rights Revives Small Business’ Breach Case

Law Office of David S. Hagy, PLC

A small business in Northwest Tennessee that purchased a piece of equipment, only to lose that equipment in a fire, got good news from a recent Tennessee Court of Appeals ruling in Smith v. Timberpro Inc., when that court gave the buyer a renewed chance to pursue legal action against the seller. The key to the ruling was Tennessee’s requirement that to create a valid disclaimer of the implied warranty of merchantability and fitness the disclaimer must be conspicuous, which the disclaimer in this case was not because it was not actually included in the sales contract but in a separate document.

The owner and operator of a Tennessee Ridge logging business inked a deal with a Michigan harvester dealer for the purchase of a $481,000 harvester with a harvesting head. The contract included a reference to the limited warranty for the harvester.

Three years later, the harvester was destroyed in a fire. The buyer sued the Michigan seller, as well as a Huntingdon, Tennessee entity that had helped familiarize the buyer with the harvester (and had referred the buyer to the Michigan seller). The complaint included multiple claims for breach of warranty as well as breach of contract, claiming that defective wiring had caused the fire.

The seller argued that the limited warranty — a warranty to which the buyer allegedly agreed when he signed the purchase contract –- had a duration of only one year. That one-year period expired before the fire, so the buyer had no case, the defendant seller contended, in asking the court to throw out the matter on summary judgment. The buyer claimed that he didn’t receive a copy of the warranty, so he wasn’t bound by its one-year time limit.

The trial judge sided with the defense, and the buyer appealed. The appeals court revived the buyer’s case against the seller from Michigan, reversing the grant of summary judgment. The seller argued unsuccessfully that the disclosure of the existence of the warranty on the sales order was sufficient notice to the buyer. Tennessee law, however, requires that the disclosure of the disclaimer of implied warranties – as the limited warranty purported to do in this case – must be conspicuous, and that conspicuousness requirement demands something more than “a contract’s mere reference to the disclaimer in another document, regardless of whether the disclaimer is conspicuously printed in the document in which it appears.” Without clear proof of satisfaction of the conspicuousness requirement, there was no proof that the buyer disclaimed the implied warranties of merchantability and fitness that exist in Tennessee.

As a small business, the contractual dispute cases involving your company may not be worth millions or hundreds of millions of dollars, but they are vitally important to your business. Here, the dispute was over a $481,000 machine, an amount that might be insignificant to a huge corporation but devastating to a small company. The dedicated Tennessee business litigation attorneys at the Law Office of David S. Hagy, PSC understand that. We have been helping small businesses with their breach of contract, breach of warranty, and other litigation needs for many years and are ready to help you with yours. We specialize in taking cases on a modified hourly or contingent fee basis so that the legal costs of pursuing litigation do not overwhelm the resources of your business.

Reach us online or call (615) 975-7882.

More Blog Posts

Client Reviews

I got into a car accident a couple months ago, and David made the whole insurance process easy to understand. He took away the stress of the situation and I felt comfortable knowing I had someone like him working for my...

Jennie E.

After getting rear ended in auto accident and in back pain David handled my personal injury claim against the at fault driver's insurance company when the large, high profile law firms in town turned me down because they...

Lakin S.

After getting into my first accident, David was a huge help in getting my lawsuit figured out in a timely manner. He was able to explain to me the details of the case so I felt like I was in control of how I wanted to...

Dana P.

While visiting Nashville, my husband and I were in a pretty bad auto accident with our Uber & a tractor trailer on the highway. David was great to work with. He was quite thorough, explaining everything we would come up...

Wendy N.

We have now used David twice. He is very personable, down to earth, hard working and gets to the bottom of your situation quickly. If we are ever in a situation where hes needed, we will use him again. Highly recommend...

Megan l.

This guy, he is the one you want in your corner going against insurance companies. Super nice, and super efficient. I would recommend this guy hands down... and have!

Hastings J.

Get in Touch

Fill out the contact form or call us at (615) 975-7882 to schedule your free initial consultation.
  • Group.svg Free Initial Consultation
  • Group-39.svg 25+ Years of Experience
  • Group-1.svg Millions Recovered

Leave Us a Message