Dale R. Horning Co. v. Falconer Glass Industries, Inc

Plaintiff was a subcontractor on a construction project where time was of the essence. If Plaintiff failed to meet deadlines of the project, the result would be daily fines and possible termination. Plaintiff ordered a glass product from Defendant over the telephone. During the telephone conversation, no mention was made of limiting remedies or disclaiming warranties. Defendant had reason to know at the time the order was made of Plaintiff’s general or particular requirements. The day after the telephone conversation, Plaintiff sent Defendant a confirming order form. The form contained nothing about warranties or damages, but did include a handwritten notation that the shipment was on an “as needed” basis. Defendant also sent a form to Plaintiff at the same time. The form indicated that the product was due “3rd Qtr. 1986” and that four weeks was the manufacturing time. The reverse side of Defendant’s form also limited Plaintiff’s remedy for defective goods to replacement and d isclaimed liability for “special, direct, indirect, incidental or consequential damages.” The language on the reverse side was not in a larger print than the rest of the terms and was not in capital letters, underlined or bold-faced. Once Plaintiff informed Defendant of the specifications, Defendant delivered a defective product to Plaintiff. Plaintiff notified Defendant of the defects and attempted to correct the defects according to Defendant’s instructions. Plaintiff temporarily installed Defendant’s product to avoid incurring additional costs. Had this first shipment been without defect, Plaintiff would have completed the work on time and without any additional cost. An officer of Plaintiff informed Defendant’s manufacturing manager (Carmen) that Defendant would be liable for Plaintiff’s additional costs and Carmen did not object. Plaintiff’s office again informed Carmen that Defendant would be liable when Carmen came to inspect the replacement shipment. Later, Plaintiff’s manager informed Defendant’s regional sales representative that Plaintiff expected Defendant to pay the additional costs. The regional sales representative agreed that Defendant should be responsible but asked that Plaintiff “take it easy on us.” Defendant sent several corrective shipments. Plaintiff incurred the costs of preparing and installing the replacement shipments. Plaintiff was unaware of the terms and conditions on the reverse side of Defendant’s form. However, Plaintiff was aware that Defendant and other suppliers do place terms and conditions on the reverse side of their forms. In the commercial glass industry, restrictive warranties are common practice, but suppliers often cover some or all of additional costs resulting from a defective product.