Krack v. Metal-Matic

Facts

Krack Corp. (defendant) is a manufacturer of cooling units. The cooling units contain steel tubes which the defendant has bought from Metal-Matic, Inc. (third-party defendant) for about ten years. The defendant would send a blanket purchase order to the third-party defendant for the year, and then send release purchase orders throughout the year requesting shipping of the material. The third-party defendant would send an acknowledgement form and ship the tubing. The acknowledgement form contained a disclaimer of all liability for consequential damages from its tubing and contained a clause limiting the third-party defendant’s liability for defects in the tubing to a refund of the purchase price or repair or replacement of the tubing. The defendant objected to these terms at least once, but the third-party defendant refused to make changes and the business relationship continued as normal. In 1981, the defendant sold one of its cooling units to Diamond Growers, Inc. (plaintiff). The plaintiff sued the defendant after it discovered a hole in the steel tubing, causing an ammonia leak in the plaintiff’s warehouse. The defendant brought a third-party complaint against the third-party defendant for contribution or indemnification.