Moorman Manufacturing Co. v. National Tank Co.

Supreme Court of Illinois · 1982 · Torts

TortsProducts liabilityEconomic lossWarrantyNegligenceMisrepresentationeconomic lossstrict liability

Facts

Moorman bought a bolted-steel grain-storage tank from National Tank in 1966 for use at its feed-processing plant. In late 1976 or early 1977, a crack developed in one of the steel plates on the tank's second ring and was discovered when the tank was being emptied in August 1977. Moorman sued for strict liability, misrepresentation, negligence, and later breach of express warranty. In all counts, it sought damages for repair and reinforcement costs and for loss of use of the tank.

Issue

May a purchaser recover repair costs and loss-of-use damages for a defective product under strict liability, negligence, or innocent misrepresentation when the claimed loss is purely economic? Also, was the express-warranty claim timely where the alleged warranty stated only that the tank was designed to withstand specified grain loads and wind speeds?

Rule

A plaintiff may not recover solely economic loss in tort under theories of strict liability, negligence, or innocent misrepresentation; such losses must be pursued through the warranty provisions of the UCC. Economic loss includes repair and replacement costs and consequential loss of use or profits where the product's defect concerns quality or fitness for intended use rather than a sudden and dangerous occurrence causing physical harm. Under UCC section 2-725(2), a warranty delays accrual only if it explicitly extends to future performance; mere expectations about product longevity are insufficient.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Prairie Ridge Milling purchased an industrial dough mixer from Lakeview Process Systems for its bakery in Wichita, Kansas. Three years later, the mixer's internal shaft wore down and the machine stopped kneading properly; Prairie Ridge paid for replacement parts and lost production time, but no person or other property was harmed.

If Prairie Ridge sues the manufacturer in strict liability seeking repair costs and lost production income, what is the most likely result?

Explanation. Under the majority rule, repair costs and consequential loss of use or profits caused by a product's failure to perform as expected are economic losses. Where the defect reflects disappointed commercial expectations rather than a sudden and dangerous occurrence causing physical harm, tort recovery in strict liability is unavailable; the buyer's remedy lies in the UCC warranty scheme.