Transamerica Oil Case Study

Procedural history

Transamerica Oil Corp. (Plaintiff) brought an action to recover damages resulting from Lynes, Inc. and Baker International Corp. (Defendants) breach of an express warranty under the Kansas Uniform Commercial Code (UCC). Transamerica Oil Corporation, who conducts oil and gas drilling, solicited Lynes Incorporated about their advertisement regarding an injection packer and decided to purchase several of them only to determine that they did not function as advertised. The production injection packers did not perform properly/as advertised. The United States District Court for the District of Kansas awarded damages to the plaintiff. The defendants appealed the decision.

Facts

Plaintiff filed suit in the United States District Court for the District of Kansas against the defendant for breach of an express warranty under Kansas law. Transamerica Oil is in the business of drilling and completing oil and gas wells. Transamerica’s president, Harold Brown, saw defendants’ advertisement for “production injection packers” in a trade journal. The defendants’ advertisement, however, stated that its production injection packer was suitable for permanent use in open holes. Brown telephoned Baker’s district manager, Jack Spencer and told Spencer that he was interested in purchasing the production injection packer for use as a permanent completion device for oil and gas wells in lieu of the casing and cementing process. Spencer testified that he replied, “I think they would be applicable.” Brown testified that Spencer “assured” him that the packers would work as advertised. Plaintiff purchased ten production injection packers in six shipments from defendants during the period as issue here. Defendants delivered invoices to plaintiff with at least five of those shipments. Each invoice contained language on its reverse side disclaiming any express or implied warranties other than that the products were free from defects in materials an workmanship. Each invoice...