What You Can Do Under New York Law When You’re Sold Defective Goods January 31, 2010

In Bimini Boat Sales, Inc. v.  Luhrs Corp., plaintiff Bimini, a retail boat dealer, bought a fishing boat from boat manufacturer Luhrs, intending to resell the boat to the general public. Unfortunately for Bimini, after they received the boat from Luhrs, they discovered that the boat had several defects that were serious enough to render it unsaleable, which in legal terms is called “unmerchantable,” or unfit for its particular purpose.

Since the boat was considered “goods” under New York law, Bimini sued to recover under two different provisions of New York’s Uniform Commercial Code. First, Bimini sought to recover damages for Luhrs’ breach of the implied warranties of merchantability [UCC 2-314]; second, Bimini claimed entitlement to damages based upon the boat’s un-fitness for a particular purpose [ UCC 2-315]. Bimini also asserted that it was entitled to consequential damages for harm to their reputation and for loss of business.

In reversing that portion of the Suffolk County trial court’s order that denied plaintiff’s motion seeking judgment as a matter of law, the Appellate Division, Second Department held that plaintiff had proven that the boat was unmerchantable and not fit for resale to the public because it had “fundamental structural deficiencies” and design flaws which required extensive repairs and “design modifications.”

The significance of this decision, in my view, is the last part, however, wherein the appellate court affirmed the trial court’s dismissal of the plaintiff’s claims to recover damages for loss of business and damage to the plaintiff’s business reputation on the grounds the terms of the dealer agreement had expressly barred these claims.

Jonathan Cooper is a New York Business Litigation and New York Commercial Litigation Lawyer with a focus on New York breach of contract and New York business fraud claims before the Nassau, Queens, Brooklyn, Bronx, Westchester and Suffolk County courts of New York State. For more information, feel free to contact his Long Island office at 516-791-5700.

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