Step-Saver Data Systems, Inc. v. Wyse Technology

United States District Court for the Eastern District of Pennsylvania · Contracts

ContractsU.C.C. 2-202parol evidenceintegration clausewarranty disclaimerlimited use license agreementmerchantabilityfitness for particular purpose

Facts

Step-Saver sued Wyse and Software Link over alleged defects and incompatibilities in computer terminals and Multi-Link software used in Step-Saver's multi-user systems. Software Link distributed Multi-Link Advanced in packaging bearing a Limited Use License Agreement that conspicuously disclaimed express and implied warranties, limited remedies, and stated that it was the complete and exclusive agreement between the parties. Step-Saver had refused to enter a dealer agreement with Software Link, purchased the software, integrated it into its own system, and sold the system as a complete unit. As to Wyse, Step-Saver tested the Wyse-60 terminals before sale, and the evidence showed the terminals were widely sold and successful in the market; Step-Saver's claimed defect was incompatibility with certain software selected by Step-Saver.

Issue

Whether any of the asserted trial errors justified a new trial, including the court's exclusion of extrinsic evidence under the parol evidence rule, enforcement of Software Link's license disclaimer, directed verdicts for Software Link, refusal to charge merchantability as to Wyse, the fitness-for-particular-purpose instruction, exclusion of an unsent letter, and limitation of rebuttal testimony. More specifically, the court considered whether the verdict or its own rulings resulted in a miscarriage of justice through manifest legal or factual error.

Rule

A new trial may be granted only for manifest error of law, manifest error of fact, or newly discovered evidence. Under U.C.C. § 2-202, when a writing is a complete and exclusive agreement, extrinsic evidence of prior or contemporaneous agreements that contradict its terms is inadmissible; a conspicuous warranty disclaimer and integration clause may effectively exclude implied warranties and alleged express warranties. An implied warranty of fitness for a particular purpose requires that the seller at the time of sale had reason to know the buyer's particular purpose and that the buyer relied on the seller's skill or judgment, while merchantability concerns fitness for ordinary purposes and acceptance in the trade. Intentional misrepresentation under Pennsylvania law requires clear, precise, and convincing proof of a material misrepresentation, intent to deceive, intent to induce reliance, justifiable reliance, and resulting damage.

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In Cleveland, Orion Office Systems bought accounting software from North Coast Logic. The outside of each package displayed a bold notice stating the program was provided "AS IS," disclaimed all express and implied warranties, limited remedies, and declared itself the "complete and exclusive statement of the agreement," superseding prior communications. Orion later sued, claiming North Coast's salesperson had previously promised the software would sync flawlessly with Orion's custom inventory platform.

If the court finds the package writing unambiguous and complete, how should it treat Orion's evidence of the earlier oral promise?

Explanation. Under the majority opinion, once the court determines the writing is unambiguous and is the complete and exclusive agreement, U.C.C. § 2-202 bars extrinsic evidence of prior or contemporaneous agreements that contradict it. A conspicuous integrated disclaimer can exclude alleged warranty terms such as compatibility. (Derived from Step-Saver Data Systems, Inc. v. Wyse Technology (n.d.).)