BLTC-9e Case Problem with Sample Answer
Chapter 21: Warranties and Product Liability
21–5 Case Problem with Sample Answer
Peter and Tanya Rothing operate Diamond R Stables near Belgrade, Montana,
where they bred, trained, and sold horses. Arnold Kallestad owns a ranch in
Gallatin County, Montana, where he grows hay and grain, and raises Red Angus
cattle. For more than twenty years, Kallestad has sold between 300 and 1,000
tons of hay annually, sometimes advertising it for sale in the Bozeman Daily
Chronicle. In 2001, the Rothings bought hay from Kallestad for $90 a ton. They
received delivery on April 23. In less than two weeks, at least nine of the
Rothings’ horses exhibited symptoms of poisoning that was diagnosed as
botulism. Before the outbreak was over, nineteen animals died. Robert Whitlock,
associate professor of medicine and the director of the Botulism Laboratory at
the University of Pennsylvania, concluded that Kallestad’s hay was the source.
The Rothings filed a suit in a Montana state court against Kallestad, claiming, in
part, breach of the implied warranty of merchantability. Kallestad asked the court
to dismiss this claim on the ground that, if botulism had been present, it had been
in no way foreseeable. Should the court grant this request? Why or why not?
[Rothing v. Kallestad, 337 Mont. 193, 159 P.3d 222 (2007)]
Sample Answer:
The court granted Kallestad's request, but on the Rothings’ appeal, the Montana
Supreme Court reversed the lower court’s judgment on this issue and remanded
the case for trial. The state supreme court found no requirement of foreseeability
to determine liability for a breach of the UCC’s implied warranty of
merchantability. The court explained that “the Rothings' purchase of hay from
Kallestad was a transaction in goods” and if Kallestad was, on remand, held to
be “a merchant for purposes of the sale of his hay to the Rothings, then the
provisions of the UCC, and more specifically, the Implied Warranty of
Merchantability [in UCC 2–314], would apply to this transaction.” To be
merchantable, goods must be, among other things, “fit for the ordinary purposes
for which such goods are used.” Goods “are not merchantable, if in their ordinary
use, the goods cause damage to the property to which they are applied or harm
to the person using them.” Under these principles, livestock feed must be not
only of the kind and quality ordered by its buyers, but also “free from deleterious
substances, poisonous to stock.” If Kallestad’s hay could not meet this test,
which the facts as stated in the problem seemed to indicate, then he would have
breached the implied warranty of merchantability, and the Rothings would likely
be entitled to damages for the deaths of their horses and related losses.