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De Carvalho - Predictive Memo
De Carvalho - Predictive Memo
De Carvalho - Predictive Memo
Question Presented
Whether under New York Law, Best Manufacturing, LLCs disclaimer of the
the first page, under the additional terms and condition section, written with all-caps,
with the same font and a smaller size letter than the rest of the agreement.
Short Answer
Probably not. New York Law requires three elements to exclude or modify the
(1) The disclaimer of the warranties of merchantability and fitness must be in writing.
(3) The disclaimer of the warranties of merchantability and fitness must be written in
Here, the court is likely to find the disclaimer of warranties of merchantability and
fitness is not enforceable because it does not meet all three elements. Although the
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disclaimer is in writing and the word merchantability is used, it is not written in a
conspicuous way.
Statement of Facts
industrial metalworking equipment, asked us to review its sales agreement form that is used
merchantability and fitness. The disclaimer of the warranties can be found on the back of
the first page, under the additional terms and conditions section, written with all-caps
and with the same type but a smaller size font from the rest of the agreement.
Discussion
The court will probably rule that the disclaimer of warranties of merchantability
Under New York Law, a warranty that the goods shall be merchantable is implied
in a contract for their sale if the seller is a merchant with respect to goods of that kind.
N.Y. U.C.C. Law 2-314 (McKinney 2016). To exclude or modify the implied warranty
The warranty of fitness is implied [w]here the seller at the time of contracting has
reason to know any particular purpose for which the goods are required and that the buyer
is relying on the sellers skill or judgment to select or furnish suitable goods. N.Y. U.C.C.
Law 2-315 (McKinney 2016). To exclude or modify an implied warranty of fitness, the
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exclusion must be in writing and in a conspicuous manner. N.Y. U.C.C. Law 2-316
(McKinney 2016).
not conspicuous.
The court will probably find that Bests disclaimer is not conspicuous.
because it stands out from the remaining text. N.Y. U.C.C. Law 1-201(b)(10) (McKinney
2016). It stands out from the text when the disclaimer is juxtaposed against the rest of the
agreement. Commercial Credit Corp. v. CYC Realty, Inc., 477 N.Y.S.2d 842 (App. Div.
1984). It can be juxtaposed when it is printed: (1) in large font, (2) with capital letters, (3)
in contrasting type or color, (4) within a black border, or (5) close to the signatures.
Courts looks to things like the appearance of the disclaimer letters. Such as whether
it is in all-caps when the rest of the document is lower case and whether is in larger font or
printed in a contrasting type or color. For example, in Victor v. Mammana, where the
disclaimer was written in lower case print and it had no border, the court held that the
warranty was not conspicuous because it was not written with [c]apital letters, large print,
contrasting type or color and black border. Victor v. Mammana, 422 N.Y.S.2d 350, 351
Additionally, the courts look for the position of the disclaimer on the sales
agreement. For example, in ConTel Credit Corp. v. Mr. Jay Appliances & TV, Inc., even
though the disclaimer was in the Term and Conditions, it was in boldface, and directly
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above the signatures of the parties. ConTel Credit Corp. v. Mr. Jay Appliances & TV, Inc.
Similarly, in Commercial Credit Corp. v. CYC Realty, Inc, the court found that by
using boldface on the first page, which contained only four paragraphs, under a broad
heading and just before the authorizing signatures, was conspicuous. Commercial Credit
Corp. v. CYC Realty, Inc., 477 N.Y.S.2d 842 (App. Div. 1984).
Although is not necessary to use all the factors, having a lot of them can be helpful.
For example, in Travelers Ins. Cos. v. Howard E. Conrad, Inc, the court held that the
warranty was conspicuous because it was in all-caps and larger font that the other terms on
the back, with provisions on the front of the agreement as well as above the signature.
Travelers Ins. Cos. v. Howard E. Conrad, Inc., 649 N.Y.S.2d 586 (App. Div. 1996).
Systems, Inc, the court found that the disclaimer was not conspicuous because it was not
being printed in different, larger or contrasting type or color. Mill Printing & Lithographing
Corp. v. Solid Waste Management Systems, Inc., 409 N.Y.S.2d 257 (App. Div. 1978).
Travelers Ins. Cos, Bests disclaimer is written on the back of the first page. Travelers Ins.
Cos. v. Howard E. Conrad, Inc., 649 N.Y.S.2d 586 (App. Div. 1996). On the other hand,
Bests did not write the disclaimer in a way that would draw attention to it. Unlike
Travelers Ins. Cos, Bests disclaimer is written with the same size font, far from any
signatures, in the same color as the rest of the document, and in the middle of the
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Like the disclaimer in ConTel Credit Corp., Bests disclaimer is also under the
additional terms and conditions. Nevertheless, Bests disclaimer differs from this case
because it did not put it in boldface and close to the signatures. ConTel Credit Corp. v. Mr.
Jay Appliances & TV, Inc. 513 N.Y.S.2d 166 (App. Div. 1987).
Bests case is thus likely to be decided as Mill Printing & Lithographing Corp. v.
Solid Waste Management Systems, Inc, where the court found the disclaimer not
conspicuous because it is not printed in different, larger or contrasting type or color. Mill
Printing & Lithographing Corp. v. Solid Waste Management Systems, Inc., 409 N.Y.S.2d
Furthermore, one may argue that putting the disclaimer in all-caps is enough to
draw attention to it. Although the court is very unlikely to reach that conclusion. All the
cases that the court considered the disclaimer conspicuous had at least two of the factors
cited.
Conclusion
word merchantability, but will not be considered conspicuous by the court because is
written in a way that doesnt stand out from the rest of the text. Therefore, the court will
find the disclaimer agreement not enforceable under New York Law.
writing with all-caps, also write the disclaimer utilizing at least one more of the factors
cited by the courts, such as: (1) different size, (2) color, (3) font, (4) or putting it close to
the signatures.