Keith v. Buchanan

In Keith v. Buchanan (1985) 173 Cal.App.3d 13, the sole decision squarely addressing this issue under Commercial Code section 2313, the court concluded that the requirement "modifies both the degree of reliance and the burden of proof in express warranties under the code. The representation need only be part of the basis of the bargain, or merely a factor or consideration inducing the buyer to enter into the bargain. A warranty statement made by a seller is presumptively part of the basis of the bargain, and the burden is on the seller to prove that the resulting bargain does not rest at all on the representation." (Keith, supra, 173 Cal.App.3d at p. 23.) In Keith v. Buchanan, the court relied on Hauter v. Zogarts (1975) and official comments to section 2313 to conclude that the burden-shifting interpretation was the proper one. (Keith, at pp. 22-23.) Official comment 3 to section 2131 states: "In actual practice, affirmations of fact made by the seller about the goods during a bargain are regarded as part of the description of those goods; hence no particular reliance on such statements need be shown in order to weave them into the fabric of the agreement. Rather, any fact which is to take such affirmations, once made, out of the agreement requires clear affirmative proof. The issue is normally one of fact." (See Keith, supra, 173 Cal.App.3d at p. 22; U. Com. Code com. 3, 23 A pt. 1 West's Ann. Cal. Comm. Code 2313, at p. 296.) According to Keith, section 2313 "modifies both the degree of reliance and the burden of proof in express warranties under the code. The representation need only be part of the basis of the bargain, or merely a factor or consideration inducing the buyer to enter into the bargain. A warranty statement made by a seller is presumptively part of the basis of the bargain, and the burden is on the seller to prove that the resulting bargain does not rest at all on the representation." (Keith, 173 Cal.App.3d at p. 23.) " 'If . . . the resulting bargain does not rest at all on the representations of the seller, those representations cannot be considered as becoming any part of the "basis of the bargain" . . . ' " (Ibid.) As an example, Keith points out that "statements made by a manufacturer or retailer in an advertising brochure which is disseminated to the consuming public in order to induce sales can create express warranties." (Id. at p. 22.) Keith suggests that the basis-of-the-bargain language allows a plaintiff to rely on a presumption of reliance on an express warranty and places the burden on the seller to rebut this presumption by showing that "the resulting bargain did not rest at all on the representation ," i.e., the seller's statements were not an inducement for the purchase. (Keith, supra, 173 Cal.App.3d at pp. 22-23; see also Hauter, supra, 14 Cal.3d at pp. 115-116.) In Keith, the Court of Appeal concluded the defendant boat seller did not overcome that presumption where the plaintiff had presented evidence that before purchasing a sailboat he relied on sales brochures making assertions about the vessel's seaworthiness; the court observed the plaintiff "was aware of the representations regarding seaworthiness by the seller prior to contracting." (Keith, at pp. 18, 24, italics added.)