PRODUCTS LIABILITY (PRIVITY): COMPEX INTERNATIONAL CO., LTD V. TAYLOR (SCOKY 1/25/2007)

COMPEX INTERNATIONAL CO., LTD V. TAYLOR
TORTS:  PRODUCTS LIABILITY; Implied warranties; privity and exception for family members
2005-SC-000228-DG.pdf
PUBLISHED: 625
DATE MODIFIED:   1/22/2007; PUBLISHED 10/19/06

T his appeal involves a products liability claim for the alleged breach of an implied warranty of merchantability .

The circuit court granted a motion to dismiss the implied warranty claim against Appellant, Compex International Company, Ltd ., after concluding that the parties lacked privity of contract. That portion of the circuit court’s judgment was reversed by the Court of Appeals, which held that the implied warranty claim was permissible under KRS 355.2-318, a statute in Kentucky’s version of the Uniform Commercial Code (U .C.C .) which extends liability under an implied warranty to
the family members and household guests of a product’s buyers.

Appellees, Stephen and Laura Taylor, contend that the Court of Appeals was correct to remand the case and argue that their implied warranty claim against Compex is viable, despite a lack of contractual privity . SCOKY disagreed and reversed the decision of the Court of Appeals.

The COA below had reasoned that despite the parties’ lack of privity, Appellees’ warranty claim was valid pursuant to KRS 355.2-318, a provision of the UCC which provides an exception to the privity requirement for warranty liability to the family members and household guests of a buyer of goods.

The sole issue presented in this case is whether Appellees’ implied warranty claim was properly dismissed by the trial court.

Justice Leibson, in an earlier opinion had left no doubt that privity remains a prerequisite for products liability claims based on warranty, concluding forcefully there was no precedent for abolishing privity where liability is based on the sales contract and if liability is based on sale of the product, it can be extended beyond those persons in privity of contract only by some provision of the U .C.C. as adopted in Kentucky.

The only provision of the U.C .C. extending breach of warranty in injury cases is KRS 355.2-318. A seller’s warranty protections are only afforded to one with whom there is privity of contract, or, to use the terms of the statute, a "seller’s" warranty protections are only afforded to "his buyer."

Although the statute provides an exception to the privity requirement, that exception is limited to its clear terms and includes only those individuals who enjoy the specified relationship with the buyer.

While the Court of Appeals correctly acknowledged that Stephen Taylor’s parents were "buyers" under the broad definition of that term in the U.C.C.,5 it failed to acknowledge that they had no buyer-seller relationship with Compex.

The exception set forth in KRS 355.2-318 is simply inapplicable in the absence of an underlying contractual relationship.

Thus, Appellees’ implied warranty claim was properly dismissed by the trial court, and the judgment of the Court of Appeals is reversed and the judgment of the Bell Circuit Court dismissing Appellees’ claim for breach of an implied warranty is hereby reinstated .

Summarized by Michael Stevens.

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