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Keystone Aeronautics Corp. v. R. J. Enstrom Corp.

decided: June 26, 1974.

KEYSTONE AERONAUTICS CORPORATION, A CORPORATION, APPELLANT
v.
R. J. ENSTROM CORPORATION, A CORPORATION V. FOUNDRY ALLIED INDUSTRIES, INC., A CORPORATION



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 72-232).

Hunter and Weis, Circuit Judges and Becker, District Judge.

Author: Weis

Opinion OF THE COURT

WEIS, Circuit Judge.

When a purchaser claims damages from a seller because of a defective product, there is often a need to evaluate the proper roles of Section 402A of the Restatement of Torts 2d and the Uniform Commercial Code. This appeal presents such an occasion. Specifically, we are confronted with the question of whether a seller may disclaim responsibility for any potential liability under ยง 402A, and, if so, what conditions must be met.

This is a diversity case, and we must be guided by the Erie light of Pennsylvania law, an uncertain illumination at best since the appellate courts of that state have not yet addressed themselves to the issue. We are mindful that our assigned role is to predict and not to form state law and so will utilize those guide posts which are available.

The factual background arises from three transactions in which the plaintiff Keystone purchased used helicopters from the defendant, R. J. Enstrom Corporation, which manufactured them. The first sale of No. 24 occurred on December 11, 1969 and was accompanied by a printed "Purchase Agreement" prepared by the defendant manufacturer. On the back of this document appeared a "Warranty" purporting to limit the obligation of the manufacturer to replacement of defective parts occurring within six months after delivery or 400 hours of operation, whichever would first occur. This undertaking was stated to be in lieu of all other warranties and "all other obligations and liability, direct or consequential . . ."*fn1

The second purchase occurred on March 27, 1970 when two demonstrators, Nos. 46 and 34, were obtained by the plaintiff. On this occasion, there was added to the front page of the purchase agreement form the following provision:

"Customer takes 'as is' without warranty of any kind except Enstrom will convey good title."

On the back of the form, the standard warranty provision was " X'ed " out, and the following language inserted:

"WARRANTY EXCLUSIONS

"The R. J. Enstrom Corporation will be held harmless of any liability in connection with this sale.

Sale of these helicopters is unconditional and no warranty of any kind is made or implied."

On September 23, 1970, No. 46 crash-landed while being flown by a Keystone pilot. There was no personal injury, but the ...


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