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Sperry Rand Corp. v. Industrial Supply Corp., 337 F.2d 363 (5th Cir. 1964) (full-text).
Factual Background Edit
A computer system was to be tailored to the purchaser's unique needs and was to supply order writing, invoicing, inventory, accounts receivable, salesmen's commissions, accounts payable, batch ordering and purchasing department activities. The supplied system failed to function properly and Industrial Supply brought suit for rescission, breach of express and implied warranties, and fraud.
Appellate Court Proceedings Edit
The court found that statements by Sperry Rand salesmen were "representations on behalf of Sperry Rand and not merely the opinions of salesmen, and that the [computer] equipment was not reasonably fit for the purpose and use for which it was intended and had been recommended.” Sperry Rand argued unsuccessfully that its statements constituted only an [[opinion], and pointed to a paragraph in its brochure which stated that "[ijt is understood that the recommendations herein are intended only for consideration by your organization and that the detailed operating advantages are obtainable through the integrated utilization of Remington Rand products and services." The brochure, however, went on to specify the exact computer equipment which Industrial Supply should purchase and the results which could be expected. The court found that such detailed statements were more than opinion, and that Industrial Supply could reasonably have been expected to rely upon those recommendations.
The Court also held that under state law Sperry Rand had breached its implied warranty of fitness for the intended purpose. The court said that "[t]he evidence here clearly establishes the knowledge of Sperry Rand as to the particular purposes for which Industrial Supply desired to purchase the equipment, and the reliance by the buyer upon the judgment of the seller.”
The court held that since the warranty was implied by law, the integration clause in the contract was ineffective to exclude the introduction at trial of parol evidence to show the purpose for which the equipment was to be used and Sperry Rand's knowledge of the intended use of the computer. The court, however, found against Industrial Supply on the issue of fraud.