Under the Uniform Commercial Code a seller is obligated to deliver products he sells in 'good' condition, without defects and fit for the use intended. In this case, the buyer attempted to increase this obligation, adding the following words to the agreement: "delivered in perfect condition or withdraw from agreement to buy without penalty."

Immediately after the goods were delivered and installed, the buyer noticed some minor defects, some of which were easily repaired by the seller. One, however, required the dealer return one piece to the mill for replacement. When the replacement piece was delivered, the buyers again found defects, and refused to let the dealer complete the job. They then demanded all of their money back. When the dealer refused, they sued both him and the mill.

The court first addressed the action against the mill. The buyers claimed the mill breached the implied warranty of merchantability in that the goods were damaged. The language added into the contract applied only to the dealer, since the mill was unaware of it and did not agree to it.

The court stated, "There is no implied warranty of merchantability from a manufacturer to a remote purchase not in privity with that manufacturer when only property damage, and not personal injury is alleged." Basically, since the mill did not directly contract with the consumer, it cannot be directly held liable by that consumer for defects in the goods.

Sometimes, however, under both federal and state law, a manufacturer, even without a contract, can be held liable for defects. These situations usually occur when the mill has made various warranties expressly guaranteeing its goods would perform in a certain manner. The buyers in this case, however, according to the judge, "neither alleged nor proved" such an express warranty by the manufacturer. The case against the manufacturer was therefore dismissed, and the judge turned his attention to the case against the dealer.

The jury was told the burden of proving the dealer had breached either the implied warranty or merchantability or the express warranty was upon the buyer. The jury found the buyer failed to prove such defects. The buyers appealed.

The appeals court upheld the verdict. It said the jury did not have to find the goods were in fact 'perfect' for the buyers to lose, but instead, merely that the goods were fit for use and any defects could be easily remedied by the seller.

The questions hinged on the word 'delivered,' which the buyer had placed in front of 'perfect condition.' The trial judge told the jury they had to decide whether 'delivered' meant the time of actual delivery or after full and final installation. The dealer had claimed the 'defects' would disappear or be corrected if he was allowed to complete the installation.

The court found the meaning in the contract as to the exact time delivery was complete, so as to trigger, the claim put in by the buyer was ambiguous. Thus, it also was a question for the jury to decide.

Were the goods delivered with defects and not in perfect condition, or had the seller not yet in fact made 'delivery' when the buyer refused to allow him to complete the job? The jury agreed with the dealer�s claim. The appeals court upheld this verdict.

The question of the right to repair alleged defects comes up often. The best advice to a dealer with regard to this problem is to place something in his sales order form, specifically giving him that right. The clause should state something to the effect of, "The dealer's sole obligation with regard to any defect is to repair, or replace, and under no circumstances will the customer be entitled to a refund of his money." Courts will often uphold a clause such as this.