New Horizon Development is a construction company that purchased pipes from Armco, Inc., a pipe manufacturer, to be used in the construction of a passive solar heating system. Armco’s ten foot pipes were designed to be able store water horizontally but had also proven to be successful in previous construction projects when installed vertically. New Horizon’s solar heating system design called for five, thirty foot, vertically installed pipes which had not been tested. However, Armco didn’t manufacture this length of pipe so ten and twenty foot pipes were delivered to New Horizon’s building site to be joined to create the desired length. After installment, New Horizon discovered that leaks were developing in the joints of the pipes. New Horizon sued Armco for “breach of express and implied warranties” in an attempt to receive payment for the damages but Armco argued that it was not liable because New Horizon had accepted/acknowledged the written contract upon payment of the pipes and it “excluded all warranties and remedies except those provided for therein.” The case was tried first in a trial court and then later reviewed in an appellate court.
The big legal issue that became the determining factor in the different judgments of the two courts was which set of requirements (the U.C.C. regarding specifications on limiting terms or clauses or Code § 11-4 regarding text size of written contracts) would be used to govern the courts’ decisions. If the latter, then the jury would be given access to additional information regarding the warranty that could potentially harm Armco’s case.
After being presented with the warranty issues, the trial court ruled in favor of New Horizon. However, when it was sent to be reviewed at an appellate court, the court found that the warranty issues should never have been submitted to the jury because the excluded language within the