Doan, J.d.c. (temporarily assigned).
[99 NJSuper Page 444] This action arises out of the sale by plaintiff to defendant of a new 1966 Chevrolet automobile. Within a short distance after leaving the showroom the vehicle became almost completely inoperable by reason of mechanical failure. Defendant the same day notified plaintiff that he cancelled the sale and simultaneously stopped payment on the check he had tendered in payment of the balance of the purchase price. Plaintiff sues on the check and the purchase order for the balance of the purchase price plus incidental damages and defendant counterclaims
for the return of his deposit and incidental damages.
The facts are not complex nor do they present any serious dispute.
On February 2, 1967 defendant signed a form purchase order for a new 1966 Chevrolet Biscayne Sedan which was represented to him to be a brand-new car that would operate perfectly. On that occasion he paid plaintiff $124 by way of deposit. On February 9, 1967 defendant tendered plaintiff his check for $2,069.50 representing the balance of the purchase price ($2,064) and $5.50 for license and transfer fees. Delivery was made to defendant's wife during the early evening hours of Friday, February 10, 1967, at which time she was handed the keys and the factory package of printed material, including the manual and the manufacturer-dealer's warranty, none of which she or her husband ever read before or after the sale was made, nor were the details thereof specifically explained to or agreed to by defendant. While en route to her home, about 2 1/2 miles away, and after having gone about 7/10 of a mile from the showroom, the car stalled at a traffic light, stalled again within another 15 feet and again thereafter each time the vehicle was required to stop. When about halfway home the car could not be driven in "drive" gear at all, and defendant's wife was obliged to then propel the vehicle in "low-low" gear at a rate of about five to ten miles per hour, its then maximum speed. In great distress, defendant's wife was fearful of completing the journey to her home and called her husband, who thereupon drove the car in "low-low" gear about seven blocks to his home. Defendant, considerably upset by this turn of events, thereupon immediately called his bank (which was open this Friday evening), stopped payment on the check and called plaintiff to notify them that they had sold him a "lemon," that he had stopped payment on the check and that the sale was cancelled. The next day plaintiff sent a wrecker to defendant's home, brought the vehicle to its repair shop and after inspection determined that the transmission was defective.
Plaintiff's expert testified that the car would not move, that there was no power in the transmission and in that condition the car could not move. Plaintiff replaced the transmission with another one removed from a vehicle then on plaintiff's showroom floor, notifying defendant thereafter of what had been done. Defendant refused to take delivery of the vehicle as repaired and reasserted his cancellation of the sale. Plaintiff has since kept the vehicle in storage at his place of business. Within a short period following these occurrences plaintiff and defendant began negotiations for a new 1967 Chevrolet, but these fell through when plaintiff insisted that a new deal could only be made by giving defendant credit for the previously ordered 1966 Chevrolet. This defendant refused to do because he considered the prior transaction as cancelled.
The issues in this case present problems for disposition under the Uniform Commercial Code (Code). The Code rejects the old court "lump concept" or "title" approach in favor of the "narrow issue" access to sales problems. It provides that the act shall be liberally construed and applied to promote its underlying purposes and policies. N.J.S. 12A:1-102. Further, that unless displaced by the particular provisions of the Code, the principles of law and equity or other validating or invalidating cause shall supplement its provisions, N.J.S. 12A:1-103; and further, that the remedies provided by the Code shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed. N.J.S. 12A:1-106.
Plaintiff-seller contends that all rights and remedies in this case are governed and limited by the sales contract. Paragraph 9 in fine print on the back of the order form states:
"9. There are no warranties, express or implied, on Chevrolet motor vehicles sold by Dealer except the New Vehicle Warranty which Dealer, as Seller, and not as agent of the Manufacturer, gives to Purchaser on each new Chevrolet motor vehicle sold by Dealer."
The new vehicle warranty, which defendant-buyer did not receive at the time that he signed the order form, states that the promise to repair or replace defective parts is:
"* * * in lieu of any other warranties, expressed or implied, including any implied warranty of merchantability or fitness for a particular purpose, and of any other obligations or liability on the part of the Manufacturer, and Chevrolet Motor Division neither assumes nor authorizes any other person to assume for it any other liability in connection with such motor vehicle or chassis."
Assuming that this contract of adhesion is applicable, it is not enforceable in this case. The contract does not limit the remedies of the buyer (see N.J.S. 12A:2-719), but attempts to limit the warranty obligation.
The evidence is plain that the terms of these attempted disclaimers and limitations of warranties were not actually brought to defendant's attention nor explained to him in detail. It would be difficult to conceive that a buyer of a new automobile would agree to a sale which had conditions attached to the effect that the buyer would be compelled to accept the vehicle, even if it did not operate. Obviously, this was not defendant's intention and the proof is to the contrary.
The Code makes provision for exclusion or modification of warranties. N.J.S. 12A:2-316 (2) provides as follows:
"Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that 'There are no warranties which extend beyond the description on the face hereof'."
The critical requirement is that the language be "conspicuous." The sales contract contained in the purchase order form did not effectively disclaim or exclude the implied warranties of merchantability or fitness. The attempted limitations
of these warranties were not "conspicuous" and hence failed in their purpose. Moreover, the "New Vehicle Warranty" which endeavored to limit these warranties was contained in the manual which was not received by defendant until the delivery of the car, long after the contract was signed.
"After a contract to sell has been entered into or, at any event, where title has passed to the buyer, a disclaimer of warranties, such as this one, is ineffectual. * * *" (at p. 256)
Attempts at limitation and disclaimer of this type were severely criticized in Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 385-406 (1960), where the court said:
"* * * we are of the opinion that Chrysler's attempted disclaimer of an implied warranty of merchantability and of the obligations arising therefrom is so inimical to the public good as to compel an adjudication of its invalidity." (at p. 404)
Although Henningsen was decided prior to the effective date of the Code, its basic concept that a technique such as the one described herein is against public policy now finds statutory support not only in N.J.S. 12A:2-316(2) but also in N.J.S. 12A:2-302 (unconscionable contract or clause).
The concept that the vendor's obligation goes beyond the written instrument was appropriately expressed in Henningsen, supra. The court expressed itself in this language:
"Under modern conditions the ordinary layman, on responding to the importuning of colorful advertising, has neither the opportunity nor the capacity to inspect or to determine the fitness of an automobile for use; he must rely on the manufacturer who has control of its construction, and to some degree on the dealer who, to the limited extent called for by the manufacturer's instructions, inspects and services it before delivery. In such a marketing milieu his remedies and those of persons who properly claim through him should not depend 'upon the intricacies of the law of sales. The obligation
of the manufacturer should not be based alone on privity of contract. It should rest, as was once said, upon "the demands of social justice".'" (at p. 384)
"In a society such as ours, where the automobile is a common and necessary adjunct of daily life, and where its use is so fraught with danger to the driver, passengers and the public, the manufacturer is under a special obligation in connection with the construction, promotion and sale of his cars. Consequently, the courts must examine purchase ...