Citation. 161 A.2d 69 (N.J. 1960)
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Brief Fact Summary.
Plaintiffs were injured due to a car defect. The car was manufactured by defendant Chrysler Corporation. Plaintiffs sued for negligence and breach of implied warranty.
Synopsis of Rule of Law.
- The old rule of privity requirement could not be applied strictly in the context of modern commerce.
- Car manufacturer was bound by the implied warranties to the same extent as the car dealer
Plaintiff Claus H. Henningsen purchased a Plymouth automobile from defendant Bloomfield Motors. The car was manufactured by defendant Chrysler Corporation. The two plaintiffs were injured when the car suddenly veered s and crashed into a highway sign and a brick wall on a smooth highway. The trial court felt that the proof was insufficient to constitute a negligence claim of either the manufacturer or the dealer. Therefore, the case was given to the jury solely on the warranty theory.
- Is there an implied warranty given by Chrysler to plaintiffs?
- Is the limited liability clause of the purchase contract valid and enforceable?
Yes. Trial court judgment was affirmed. Defendants were both bound by the implied warranties of merchantability.
- Issue 1: The first issue the Court addressed was whether Chrysler gave animplied warranty to plaintiffs. Chrysler claimed that an implied warranty of merchantability was an incident of a contract of sale. Chrysler agreed that the making of the original sale to Bloomfield Motors contained an implied warranty, but it did not gave warranty to plaintiffs. The Court disagreed. The Court reasoned that dealer and the ordinary buyer do not, and are not expected to, buy goods, whether they be foodstuffs or automobiles, exclusively for their own consumption or use. The limitations of privity in contracts was not applicable here. Thus, the burden of losses consequent upon use of defective articles is borne by those who are in a position to either control the danger or make an equitable distribution of the losses when they do occur.
- Issue 2: The general contract principle is that in the absence of fraud, one who does not choose to read a contract before signing it, cannot later relieve himself of its burdens. But such rules cannot be applied strictly in the modern commercial life and business practices without considering social justices and policies. In the present case, there was no bargaining engaged. The warranty was a standardized form designed for mass use and was imposed upon the automobile consumer. Plaintiff car buyer had to either take it or leave it. The gross inequality in bargaining positions occupied by an automobile dealer and a consumer thus made the disclaimer of liability not enforceable if it was not brought to the purchaser’s attention or not made clear and explicit. Here, defendant did not make plaintiffs aware of the language on the back of the purchase contract and never made the disclaimer explicit. The Court explained that ruling Chrysler’s disclaimer invalid was consistent with the public good.