Bishop Logging Co. v. John Deere Industrial Equipment Co.

455 S.E.2d 183 (1995)

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Nature of the Case

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Facts

In 1988 P began investigating the feasibility of a fully mechanized hardwood swamp logging operation. P's main customer, Stone Container, requested that P harvest and supply hardwood for processing. Most suitable hardwood is located deep in the swamplands. P searched for improved methods of hardwood swamp logging centered on mechanizing the process. None were available, but equipment could be purchased to semi-automate the process by the system P devised. P purchased several pieces of equipment from D to comprise the system. The gross sales price of the machinery was $608,899. All the equipment came with a written 'New Equipment Warranty.' D agreed only to repair or replace the equipment during the warranty period and did not warrant the suitability of the equipment. D disclaimed express or implied warranties and excluded all incidental or consequential damages. In a trade-off, if the P system was successful, D agreed to assume part of the risk of the new enterprise by extending its standard equipment warranties notwithstanding the unusual use and modifications to the equipment. Soon after being placed in operation, the machinery began to experience numerous mechanical problems. D made over $110,000 in warranty repairs on the equipment. P claimed the swamp logging system failed to operate as represented by D and, as a result, it suffered a substantial financial loss. P sued D in part for breach of express warranty. According to its expert witness, the total financial loss was either $540,921 or $723,320 for the three-year estimated life of the equipment depending on the price of a cord of wood. P got a verdict for $1,000,000 and D moved for judgment n.o.v. and motion for a new trial. Both were denied. D appealed. D claims it did not make misrepresentations of present fact about the suitability of the equipment for the swamp logging operation. D claims the court erred in allowing P to receive lost profits and consequential damages for breach of express warranty.