Untitled Document

2015 Commercial Law Developments, Prepared by the Business Law Section Commercial Transactions Committee for the 2015 Business Law Section Annual Report
VI. U.C.C. – Sales and Personal Property Leasing

A. Scope

1. General

2. Software and Other Intangibles

B. Contract Formation and Modification; Statute of Frauds; ‘Battle of the Forms’; Contract Interpretation; Title Issues

1. General

2. Battle of the Forms

C. Warranties and Products Liability

1. Warranties

  • Ranes & Shine, LLC v. MacDonald Miller Alaska, Inc., 355 P.3d 503 (Alaska 2015) – Although the statute of limitations had run on an equipment buyer’s claim against the seller for breach of the warranty of title arising from a security interest that encumbered the equipment, the buyer could maintain a claim against the seller for misrepresentation. The fact that the secured party had filed a financing statement was insufficient to put the buyer on constructive notice so as to defeat reliance on the misrepresentation.

  • Benson v. Southern California Auto Sales, Inc., _ Cal.App.4th _ (2015) – Under the ‘lemon law’ provisions of the Consumer Legal Remedies Act, a dealer’s offer to rescind contract and accept return of the vehicle with a refund of all payments and satisfaction of any outstanding debt is an adequate offer of an ‘appropriate correction.’

  • Hernandezcueva v. E.F. Brady Company, Inc., _ Cal.App.4th _ (2015) - Drywall subcontractor potentially liable for strict liability for injuries arising from asbestos released from products that subcontractor purchased and installed if subcontractor was more than an ‘occasional seller’ of the products whose provision of those products was only incidental to its services. Subcontractor could be liable if it derived a considerable benefit from supplying the products, which were essential to its obtaining its subcontracting work – and where its relevant contracts always involved the provision of drywall and related materials.

  • T.H. v. Novartis Pharmaceuticals, _ Cal.App.4th _ (2016) - A manufacturer of a name-brand drug sold the ownership of the drug. A later manufacturer sold the drug and infants were harmed in the womb. The infants could bring claims for negligent failure to warn and negligent misrepresentation, arguing that had the original manufacturer included warning when it sold the drug, physicians who later sold the drug would have seen the warnings and not prescribed the drug.

  • T.H. v. Novartis Pharmaceuticals, _ Cal.App.4th _ (2016) - A manufacturer of a drug sold the drug. A subsequent owner manufactured and sold the drug. The drug was used for an “off-label” purpose and fetuses were injured. The injured children were allowed to state a claim against the original owner for negligently failing to warn about the adverse side effects of the off-label use when the original owner should have known about that use. The children argued that had the original owner included a warning to physicians, the physician who prescribed the drug for the mother of the infants would not have done so. There was no claim for products liability because the original owner had not manufactured the drug actually used by the mother.

  • Pavoni v. Chrysler Group, LLC, _ F.3d _ ( Cir. 2015) – Manufacturer may be held strictly liable for placing a defective product on the market if the injured person’s injury results from a reasonably foreseeable use of the product.

2. Limitation of Liability

3. ‘Economic Loss’ Doctrine

D. Performance, Breach and Damages

  • Mahlum v. Adobe Systems Incorporated, _ F.Supp.2d _ (N.D. Calif. 2015) – Early termination fee is not ‘liquidated damages’ and thus not analyzed to determine if it’s a ‘penalty’.

E. Personal Property Leasing

  • Axis Capital, Inc. v. Jaina Systems Network Inc., 13 N.Y.S.3d 860 (N.Y. Sup. Ct. 2015) – An equipment lessor with a security interest in the leased equipment was not entitled to a temporary restraining order prohibiting the defaulting lessee from moving or transferring the equipment because such an order may be issued only if immediate and irreparable injury would otherwise result and the lessor’s alleged injury would be compensable by money damages.

VII. Commercial Paper and Electronic Funds Transfers | Table of Contents