KANSAS COMMENT, 1996

1. This section defines, in terms of an "implied warranty of merchantability," the minimum standards of quality that apply to all sales by merchants. This warranty arises from the fact of the sale, and exists apart from the bargain aspects of the transaction. This section, perhaps more than any other in the Code, has been influenced by the courts and the legislature to such a degree that it is no longer sufficient to look to the Code alone.

2. Under subsection (1), a warranty of merchantability is implied in all contracts for sale when the seller is a merchant that deals in goods of the kind. If the seller is not a merchant, the implied warranty does not arise. Smith v. Stewart, 233 K. 904, 667 P.2d 358 (1983). In Kansas, a farmer is a merchant for this purpose, see Musil v. Hendrich, 6 K.A.2d 196, 627 P.2d 367 (1981), as is an auctioneer, see Powers v. Coffeyville Livestock Sales Co., 665 F.2d 311 (10th Cir. 1981). Manufacturers are merchants with respect to the products they manufacture, see International Petroleum Serv., Inc. v. S&N Well Serv., Inc., 230 K. 452, 639 P.2d 29 (1982), as are retail dealers as to the goods they sell. For further discussion of when sellers are merchants, see 1996 Kansas Comments 2 & 3 to 84-2-104.

3. Subsection (2) sets the minimum standards to which all goods sold by merchants must conform. In addition, when the buyer is a consumer under the Kansas Consumer Protection Act (KCPA), K.S.A. 50-623 et seq., the goods to be merchantable must conform in all material respects with applicable state and federal statutes and regulations establishing standards of quality or safety. K.S.A. 50-624(e). Also, under K.S.A. 34-284, a merchant who transfers a negotiable warehouse receipt covering stored grain warrants that the grain is merchantable.

4. Most cases under this section arise under paragraph (2)(c), which requires that goods be fit for the ordinary purposes for which they are used. To make out a breach under this paragraph, a buyer must show that the goods were defective and that the defect was present when the goods left the seller's control. See Black v. Don Schmid Motor, Inc., 232 K. 458, 657 P.2d 517 (1983); Querry v. Montgomery Ward & Co., 217 K. 104, 535 P.2d 928 (1975). Kansas courts have equated this concept with the concept of "defect" used in tort law. See Miller v. Lee Apparel Co., 19 K.A.2d 1015, 881 P.2d 576 (quoting 1983 Kansas Comments to this section), rev. denied, 256 K. 995 (1994). Indeed, the case law treats the standard of liability under this section as virtually identical with liability based on strict tort under § 402A of the Restatement (Second) of Torts, which was adopted in Kansas in Brooks v. Dietz, 218 K. 698, 545 P.2d 1104 (1976). For example, an obvious danger does not make a product "dangerous to an extent beyond that which would be contemplated by the ordinary consumer," and so is not a basis for strict liability in tort. Restatement (Second) of Torts § 402A, comment i; see Lester v. Magic Chef, Inc., 230 K. 643, 641 P.2d 353 (1982) (adopting consumer expectations test of defectiveness). But see Siruta v. Hesston Corp., 232 K. 654, 659 P.2d 799 (1983) (holding manufacturer liable for obvious danger of lack of safety guard over front of large round hay baler). Likewise, an obvious danger is not a breach of the implied warranty of merchantability. See, e.g., First Nat'l Bank of Dwight v. Regents Sports Corp., 803 F.2d 1431 (7th Cir. 1986) (obvious danger of lawn dart). The parallel development of these two closely related areas of the law has caused some confusion, such as in determining what statute of limitations should be applied to the causes of action. See 1996 Kansas Comment 4 to 84-2-725.

5. The Kansas Product Liability Act (KPLA), K.S.A. 60-3301 et seq., applies to actions for breach of the implied warranty of merchantability, when the damage involved is personal injury, related mental or emotional harm, or property damage. K.S.A. 60-3302(c) & (d). The KPLA does not apply to warranty cases involving only economic loss. Id.; see Elite Professionals, Inc. v. Carrier Corp., 16 K.A.2d 625, 827 P.2d 1195 (1992) (economic loss includes loss of use of defective product, cost of replacing product, loss of profits to business, and damage to party's business reputation from using product). Indeed, damages for economic loss generally cannot be recovered under a theory of strict tort liability, and so buyers seeking recovery for such losses will rely principally on warranty theories. See Professional Lens Plan, Inc. v. Polaris Leasing Corp., 234 K. 742, 675 P.2d 887 (1984); Daitom, Inc. v. Pennwalt Corp., 741 F.2d 1569 (10th Cir. 1984) (applying Kansas law). With the possible exception of the statute of limitations, causes of action for breach of the implied warranty of merchantability and strict tort liability are very similar in practice, if not in concept. See K.S.A. 50-639(a) & (e) (invalidating disclaimers of implied warranties in consumer cases); K.S.A. 50-639(b) (eliminating privity requirement for breach of warranty actions in consumer cases); Carson v. Chevron Chem. Co., 6 K.A.2d 776, 635 P.2d 1248 (1981) (notice to upstream seller not ordinarily required in breach of warranty action) (dicta); Smith v. Stewart, supra (applying notice requirement more leniently in consumer case). See generally Barkley Clark & Christopher Smith, The Law of Product Warranties § 12.03 (1984 & Supp. 1996).

Law Review and Bar Journal References:

"Caveat Venditor—Strict Products Liability Under the Uniform Commercial Code," Norman E. Beal, 16 K.L.R. 285, 294, 298 (1968).

Survey of Kansas commercial law (1965-1969), 18 K.L.R. 388, 390 (1970).

"URLTA, Kansas, and the Common Law," Michael J. Davis, 21 K.L.R. 387, 405 (1973).

Effect on KCPA on disclaimer of warranty discussed in "The New Kansas Consumer Legislation," Barkley Clark, 42 J.B.A.K. 147, 191 (1973).

"Implied Warranty in Real Estate Sales," A. James Gilmore, 43 J.B.A.K. 163, 169 (1974).

"A New Kansas Approach to an Old Fraud," consumer protection, Polly Higdon Wilhardt, 14 W.L.J. 623, 624 (1975).

"Beefing Up Product Warranties: A New Dimension In Consumer Protection," Barkley Clark, Michael J. Davis, 23 K.L.R. 567, 573, 585, 590, 597, 598, 599, 600, 601, 603, 606, 610, 615, 616 (1975).

"U.C.C.: The Farmer is Not a Merchant Under the U.C.C.—Promissory Estoppel to Avoid the Operation of the Statute of Frauds," Mark A. Buck, 16 W.L.J. 230, 231, 236 (1976).

The uniform commercial code, the statute of frauds, and the farmer, 25 K.L.R. 318, 322 (1977).

Strict liability in tort as adopted in Kansas, 25 K.L.R. 462, 467, 468, 470 (1977).

"Torts: Strict Liability in Tort and Assumption of Risk," William T. Kilroy, 15 W.L.J. 503, 504 (1976).

U.C.C. section discussed in article on "Enhanced Injury: Problems of Proof in 'Second Collision' and 'Crashworthy' Cases," W. James Foland, 16 W.L.J. 600, 604 (1977).

Warranty violations in tripartite finance lease agreements, Winton A. Winter, Jr., 25 K.L.R. 573, 580 (1977).

"Survey of Kansas Law: Torts," William Edward Westerbeke, 27 K.L.R. 321, 342 (1979).

"Comparative Fault and Strict Products Liability in Kansas: Reflections on the Distinction Between Initial Liability and Ultimate Loss Allocation," William Edward Westerbeke and Hal D. Meltzer, 28 K.L.R. 25 (1979).

"Farmers and the Law: Exemptions and Exceptions," J. W. Looney, 50 J.B.A.K. 7, 19 (1981).

"Housing Defects: Homeowner's Remedies—A Time for Legislative Action," William J. Fields, 21 W.L.J. 72, 77, 87, 88 (1981).

"History of Warranties of Quality in Sale of Goods," Paul B. Rasor, 21 W.L.J. 175, 199, 210 (1982).

"Some Observations on the Kansas Product Liability Act (Part I)," William Edward Westerbeke, 53 J.K.B.A. 296 (1984).

"Strict Products Liability for Misrepresentation," William E. Westerbeke, J.K.T.L.A. Vol. XX, No. 6, 20 (1997).

"Electronic Commerce in Kansas: Contract Formation and Formalities Under Article 2," Christopher R. Drahozal, 68 J.K.B.A. No. 5, 22 (1999).

"A Primer for Handling a Defective Tire Case: The Plaintiff's View," Stephen N. Six, J.K.T.L.A. Vol. XXVII, No. 5, 10 (2004).

"The Immunity Provisions in the Kansas Tort Claims Act: The First Twenty-Five Years," William E. Westerbeke, 52 K.L.R. 939 (2004).

"Kansas Product Liability Law," Patrick A. Hamilton, J.K.T.L.A. Vol. 30, No. 6, 8 (2007).

Attorney General's Opinions:

Sales; implied warranty of merchantability. 86-25.

CASE ANNOTATIONS

1. Cited; implied warranty of fitness includes animal vaccine. Chandler v. Anchor Serum Co., 198 Kan. 571, 582, 426 P.2d 82.

2. Subsection (2) (c) noted in reference to appellant's argument in bursting bottle case. Butterfield v. Pepsi-Cola Bottling Co., 210 Kan. 123, 128, 499 P.2d 539.

3. Products liability case, allergic reaction to cosmetic product; mentioned in regard to subject of implied warranty. Robbins v. Alberto-Culver Co., 210 Kan. 147, 150, 499 P.2d 1080.

4. Applied; action to recover on implied warranty; disclaimer inadmissible. Christopher and Son v. Kansas Paint and Color Co., 215 Kan. 185, 194, 523 P.2d 709. Modified: 215 Kan. 510, 525 P.2d 626.

5. Agent contracting for disclosed principal not liable for breach of implied warranty. Service Iron Foundry, Inc. v. M. A. Bell Co., 2 Kan. App. 2d 662, 671, 672, 588 P.2d 463.

6. Action for damages resulting from sale of animals under quarantine; alleged violation of act; award of punitive damages upheld. Kiser v. Gilmore, 2 Kan. App. 2d 683, 687, 587 P.2d 911.

7. Judgment for defendant in damage action for breach of implied warranties reversed and remanded; acceptance of goods; remedy proper. Linscott v. Smith, 3 Kan. App. 2d 1, 587 P.2d 1271.

8. Trial court erroneously stated that it based its judgment on the warranty of merchantability in this section, instead of the warranty of fitness for a particular purpose; appellate court corrected the error. Addis v. Bernardin, Inc., 226 Kan. 241, 245, 246, 597 P.2d 250.

9. Where lease agreements were intended to create security interests under 84-1-201(37)(b), provisions of Article 9 of UCC applicable. CIT Financial Services, Inc. v. Gott, 5 Kan. App. 2d 224, 229, 231, 615 P.2d 774.

10. Disclaimer of implied warranty of merchantability held sufficiently conspicuous; factors to be considered discussed. J & W Equipment, Inc. v. Weingartner, 5 Kan. App. 2d 466, 618 P.2d 862.

11. The selling of feeder pigs was under the UCC, but plaintiff failed to produce sufficient evidence to support his claim. Musil v. Hendrich, 6 Kan. App. 2d 196, 201, 202, 627 P.2d 367.

12. Implied warranties apply to the sale of used goods. International Petroleum Services, Inc. v. S & N Well Service, Inc., 230 Kan. 452, 453, 454, 455, 456, 459, 639 P.2d 29 (1982).

13. Trencher was not merchantable and plaintiff awarded actual damages; punitive damages were reduced by court of appeals. Slough v. J. I. Case Co., 8 Kan. App. 2d 104, 107, 650 P.2d 729 (1982).

14. Breach of implied warranty of merchantability; jury could infer plaintiff's reasonable expectations as to use and could find defect existed when car left defendant's control. Black v. Don Schmid Motor, Inc., 232 Kan. 458, 466, 467, 657 P.2d 517 (1983).

15. Seller of irrigation system with defective hose manufactured elsewhere liable under implied warranty of merchantability. Stair v. Gaylord, 232 Kan. 765, 771, 772, 774, 776, 659 P.2d 178 (1983).

16. Cited; error to grant summary judgment until discovery completed on equitable estoppel and nature of part payments. Hustead v. Bendix Corp., 233 Kan. 870, 871, 877, 666 P.2d 1175 (1983).

17. Owner of pleasure craft making casual sale is not merchant and no warranty of merchantability applies. Smith v. Stewart, 233 Kan. 904, 906, 907, 667 P.2d 358 (1983).

18. Cited; implied warranties not extended to remote seller or manufacturer of product not inherently dangerous for economic loss without privity. Professional Lens Plan, Inc. v. Polaris Leasing Corp., 234 Kan. 742, 748, 755, 675 P.2d 887 (1984).

19. Used car dealer cannot limit implied warranty of merchantability and fitness by extending narrow express warranty. Duke v. King Lincoln-Mercury, Inc., 234 Kan. 840, 842, 676 P.2d 744 (1984).

20. Cited; term merchant does not include finance lessor; nonliability for implied warranty of merchantability examined. Agristor Leasing v. Meuli, 634 F. Supp. 1208, 1220 (1986).

21. Cited; manufacturer selling assets (machinery) used in manufacturing "as is" not a merchant; no implied warranty. Olson v. U.S. Industries, Inc., 649 F. Supp. 1511, 1514 (1986).

22. Cited; farm equipment leasing company not merchant; not liable for implied warranty of merchantability. Wight v. Agristor Leasing, 652 F. Supp. 1000, 1010 (1987).

23. Goods must at least pass without objection in trade and be fit for ordinary purposes for which used. Hemmert Agr. Aviation v. Mid-Continent Aircraft, 663 F. Supp. 1546, 1553 (1987).

24. Foreign manufacturers' designation of American corporation to market products nationwide sufficient for jurisdiction under long arm statute (60-308(b)(7)). Bohannon v. Honda Motor Co., Ltd., 682 F. Supp. 42, 43 (1988).

25. Summary judgment precluded where genuine issue exists as to whether secondary packaging operation was "seller" or "merchant." Nature's Share, Inc. v. Kutter Products, Inc., 752 F. Supp. 371, 378 (1990).

26. Limitations on implied warranties examined where Kansas consumer protection act (50-623 et seq.) comes into play. Farrell v. General Motors Corp., 249 Kan. 231, 238, 815 P.2d 538 (1991).

27. Whether plaintiff's evidence proved clothing was unfit for ordinary purposes examined. Miller v. Lee Apparel Co., 19 Kan. App. 2d 1015, 1031, 881 P.2d 576 (1994).

28. Whether buyer stated implied warranty of merchantability claim premised on furnace's inability to pass federal environmental standards examined. Kelley Metal Trading Co. v. Al-Jon/United, Inc., 877 F. Supp. 1478, 1483 (1995).

29. Car owner was not seller for breach of warranty claim purposes. Steele v. Ellis, 961 F. Supp. 1458, 1466 (1997).

30. Hot drink from vending machine which burned plaintiff did not cause breach of implied warranty of merchantability. McCroy ex rel. McCroy v. Coastal Mart, Inc., 207 F. Supp. 2d 1265, 1279 (2002).

31. No abuse of discretion in admitting expert testimony of plaintiff. Dieker v. Case Corp., 276 Kan. 141, 73 P.3d 133 (2003).

32. Plaintiff was not required to allege how drugs were defective to state implied warranty of merchantability claim. Vanderwerf v. SmithKline Beechum Corp., 414 F. Supp. 2d 1023, 1026 (2006).

33. Fact issue whether product was defective precluded summary judgment on breach of implied warranty of merchantability claim. Scotwood Industries v. Frank, Miller & Sons, Inc., 435 F. Supp. 2d 1160, 1170 (2006).

34. Sufficient evidence existed to deny motion for summary judgment on breach of implied warranty of merchantability claim. Lohmann & Rauscher, Inc. v. YKK (U.S.A.) Inc., 477 F. Supp. 2d 1147, 1154 (2007).

35. Kansas Product Liability Act did not subsume implied breach of warranty claims for economic loss under UCC. Gonzalez v. Pepsico, Inc., 489 F. Supp. 2d 1233, 1241, 1242 (2007).

36. Cited in bankruptcy proceeding relating to debtor's claim involving mobile home purchase and homestead. In re Murphy, 367 B.R. 711, 715 (2007).

37. Implied warranty of merchantability discussed for vehicles; major components covered and an air conditioner and other incidental components not covered. Hodges v. Johnson, 39 Kan. App. 2d 220, 223, 228, 178 P.3d 59 (2008).

38. Claims for breech of implied warranty of merchantability discussed; motion to dismiss for defendants denied. In re Motor Fuel Temperature Sales Practices Litigation, 534 F. Supp. 2d 1214, 1215, 1233 (2008).

39. Implied warranty of merchantability discussed and applied to vehicle's defective air conditioner, court of appeals reversed. Hodges v. Johnson, 288 Kan. 56, 199 P.3d 1251 (2009).

40. Repair of aircraft engine not "sale," and repairer not subject to strict product liability or implied warranty of merchantability. Stephenson v. Honeywell Intern., Inc., 703 F. Supp. 2d 1250 (D. Kan. 2010).

41. Warranty and limitation-of-liability agreements for leased tractors do not apply to individual members of a crop harvesting company and cannot be used to preclude members from pursuing claims for breach of implied warranty of merchantability against tractors' manufacturers, but members are barred from relying on the agreements to pursue claims for breach of express warranty against manufacturer. Griffitts & Coder Custom Chopping v. CNH Ind. Am., 438 F. Supp. 3d 1206, 1237 (D. Kan. 2020).