Draft Systems, Inc. v. Rimar Manufacturing, Inc.
United States District Court for the Eastern District of Pennsylvania
524 F. Supp. 1049 (1981)
Draft Systems (plaintiff) made beer-keg tapping devices using syphon tubes that were supposed to be nylon-11, and contracted with Rimar Manufacturing (defendant) to supply them. Rimar instead delivered tubes made of nylon-6, though the product certification falsely stated nylon-11; the two materials can only be distinguished using infrared testing, which Draft did not have. Draft inspected the tubes for size and quantity and relied on the certification, only learning of the substitution after distributors complained that beer stored in the devices was going bad, because nylon-6 absorbs more liquid than nylon-11. Draft sued, and a jury found breach of both the implied warranty of merchantability and fitness for a particular purpose, awarding roughly $400,000 in damages, including consequential damages for interest Draft paid on a loan taken out to repair and replace the defective devices. Rimar argued it never actually knew nylon-6 could not meet Draft's needs, and that Draft should have caught the substitution during inspection.
Whether, under the Uniform Commercial Code, a buyer in a breach-of-warranty case may recover consequential damages when the seller had reason to know the buyer's specific requirements and the buyer could not have reasonably prevented the resulting loss.