American Contract Law for a Global Age, 2017a

Review Question 7. So does Nanakuli Paving stand for the proposition that a
contract doesn’t necessarily mean what it says? If you represent Shell and you want
to ensure that your client can actually rely on the price term, what could you do when
drafting the contract to improve your client’s position?
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Prefatory Note on Implied Warranties. You were introduced earlier (in a unit
covering “merchants” under the Uniform Commercial Code) to the concept of the
implied warranty of merchantability—a contract term implied by law where the seller
is a merchant. The American Fertilizer case that follows returns to that concept
alongside another, sometimes overlapping UCC implied warranty, that of fitness for
a particular purpose. As you read the case, pay careful attention to see if you can tell
the difference between how the two types of implied contract terms come into
existence and what each of them do.
AMERICAN FERTILIZER SPECIALISTS, INC. v. WOOD
Supreme Court of Oklahoma
1981 OK 116, 635 P.2d 592
LAVENDER, J.
Plaintiff, a dealer in agricultural fertilizer, brought suit on open account for
fertilizer sold and delivered to defendant for use on defendant’s grass lands. By way
of defense, defendant alleges breach of an implied warranty of fitness for a particular
purpose and breach of an implied warranty of merchantability under the Uniform
Commercial Code—Sales. 4
4 [By the court] 12A OKLA. STAT. § 2-101 et seq. (1971). Section 2-315 in pertinent part
provides:
Where the seller at the time of contracting has reason to know any particular purpose for which the
goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish
suitable goods, there is . . . . an implied warranty that the goods shall be fit for such purpose.
Section 2-314 insofar as is pertinent provides: “(1) Unless excluded or modified . . . . a
warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a
merchant with respect to goods of that kind . . . .
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(2) Goods to be merchantable must be at least such as . . . . (c) are fit for the ordinary
purposes for which such goods are used . . . .
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UNIT 20: IMPLIED TERMS 415