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W.R. Weaver Co. v. Burroughs Corp., 580 S.W.2d 76 (Tex. Civ. App. 1979) (full-text).
Factual Background Edit
Appellant, Burroughs Corporation (“Burroughs”) leased an L7000 computer to appellee, W.R. Weaver Company (“Weaver”) on November 1, 1971. In addition to the computer, Burroughs sold Weaver multiple programs and software to be used in conjunction with the L7000 system.
The sale and lease of goods was embodied in two separate agreement]s. The lease agreement, dated November 1st, provided that the machine being leased to Weaver would be "designed to perform certain accounting procedures," while the contract for goods, dated November 2nd, ensured prompt delivery of all software. In addition, at the insistence of Weaver, Burroughs included an addendum to the lease agreement for the L7000. The addendum provided that Burroughs would provide the "cost of software programming, include the services of [Burroughs] district system analyst to completely define [Weaver’s] accounting needs and design a working system to meet [Weaver’s] specific requirements." Additionally, the addendum stated that it would provide complete training support both prior to and after the completion of the software installation.
In February 1972, Weaver received the L7000 system along with four of the five programs to be used with the L7000. In August 1972, Weaver began to notice the computer system was slow starting up and the only program that was still operational on the system was the payroll program. Several months later, Weaver received the fifth program, which was installed immediately on the L7000 and put into operation. Like the L7000, itself, Weaver noticed that the software never functioned properly and that the program, in addition to others purchased, were slow and cumbersome and often caused employees to work overtime hours.
In December 1972, Burroughs contacted Weaver to inform them that they had sold the L7000 to Funding Systems Leasing and all future lease payments should be made to them. Additionally, Burroughs cancelled all lease rentals owed by Weaver from the time of the delivery until the end of 1972.
Due to the consistent inefficiencies of the programs and the system itself, Weaver chose to discontinue use.
Trial Court Proceedings Edit
Four years later, in December 1976, Weaver filed suit against Burroughs claiming breach of an express warranty and implied warranties of fitness and merchantability. In addition, Weaver sought to collect damages based on a theory of strict liability for design defect.
After hearing the claims brought against them, Burroughs filed a motion for summary judgment. The court granted defendant’s on all counts. The court held that Weaver was barred from asserting its claims by the statute of limitations.
Appellate Court Proceedings Edit
On appeal, the court determined that the trial court had erred in granting summary judgment. In overturning the lower court's holding, the appellate court looked at each of the six claims on which summary judgment had been granted.
First, the court looked at whether the claim for breach of contract for the lease of the L7000 system and the sale agreement for the programs should be barred by the 4-year statute of limitations. The court reasoned that the statute of limitations did not start running on the day of the first breach, but rather it began on the day of the last recorded breach, which was Weaver’s repudiation of the sales contract. Since there is some evidence to indicate that the last breach was within the statute of limitations, Burroughs did not sustain its burden of proof on the first two claims.
Next, the appellate court reasoned that the two-year statute of limitations did not apply to the breach of implied warranty claim. Despite the trial court's determination that warranties are subject to a shorter statute of limitations period (2 years), the court of appeals determined that the warranty was just as much a part of the written contract as all of the other clauses and, as such, was subject to the four year statute of limitations. Since Burroughs failed to sustain its burden in showing when the actual breach occurred, the breach of warranty claim was also remanded for further proceedings.
Third, the court of appeals addressed Weaver’s breach of express and implied warranty claims. The court reasoned that, despite the effectiveness of the express waiver included in Burroughs’ agreements, the inconsistent language of the addendum, which created an express warranty, illustrated inconsistent intentions of the party. Since the inconsistencies raised a genuine question of material fact in regards to the warranty, summary judgment was not proper.
Finally, the court rejected Weaver’s allegation that it was entitled to recover incidental and consequential damages. The court pointed to Weaver’s express waiver of all damages that was part of the initial agreement. Since Weaver explicitly waived “all damages, whether direct, incidental or consequential”, Burroughs could not be held liable under the agreements for any more than the exchange of equipment under the express warranty.
The court of appeals reversed the trial court's decision and remanded the case for further proceedings.