General Consideration

UCC definitions inapplicable to criminal prosecution. Thogerson v. State, 224 Ga. App. 76 , 479 S.E.2d 463 (1996).

The drawer of a check made payable to a third party was deemed to have used the instrument in contemplation of its presentment for payment upon the action of a collecting bank and, thus, was engaged in a transaction governed by the UCC subject to the damage limitation provision of O.C.G.A. § 11-4-103 . Farr v. Trust Co. Bank, 220 Ga. App. 423 , 469 S.E.2d 501 (1996).

Cited in Bennett v. Cannon, 114 Ga. App. 479 , 151 S.E.2d 828 (1966); Scarboro v. Universal C.I.T. Credit Corp., 364 F.2d 10 (5th Cir. 1966); McDonald v. Peoples Auto. Loan & Fin. Corp., 115 Ga. App. 483 , 154 S.E.2d 886 (1967); Sanders v. National Acceptance Co. of Am., 383 F.2d 606 (5th Cir. 1967); Decatur Coca-Cola Bottling Co. v. Variety Vending Corp., 277 F. Supp. 393 (N.D. Ga. 1967); Northside Bldg. & Inv. Co. v. Finance Co. of Am., 119 Ga. App. 131 , 166 S.E.2d 608 (1969); First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284 , 167 S.E.2d 190 (1969); First Nat'l Bank & Trust Co. v. McElmurray, 120 Ga. App. 134 , 169 S.E.2d 720 (1969); Steelman v. Associates Disct. Corp., 121 Ga. App. 649 , 175 S.E.2d 62 (1970); United States v. Big Z Whse., 311 F. Supp. 283 (S.D. Ga. 1970); Greater S. Distrib. Co. v. Usry, 124 Ga. App. 525 , 184 S.E.2d 486 (1971); Rockwin Corp. v. Kincaid, 124 Ga. App. 570 , 184 S.E.2d 509 (1971); International Harvester Credit Corp. v. Commercial Credit Equip. Corp., 125 Ga. App. 477 , 188 S.E.2d 110 (1972); L.M. Berry & Co. v. Blackmon, 129 Ga. App. 347 , 199 S.E.2d 610 (1973); Harris v. Hill, 129 Ga. App. 403 , 199 S.E.2d 847 (1973); First Nat'l Bank & Trust Co. v. Olivetti Corp. of Am., 130 Ga. App. 896 , 204 S.E.2d 781 (1974); Geohagan v. Commercial Credit Corp., 130 Ga. App. 828 , 204 S.E.2d 784 (1974); REA Express, Inc. v. Ginn, 131 Ga. App. 33 , 205 S.E.2d 94 (1974); Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435 , 208 S.E.2d 321 (1974); International Harvester Credit Corp. v. Associates Fin. Servs. Co., 133 Ga. App. 488 , 211 S.E.2d 430 (1974); Kennedy v. Thruway Serv. City, Inc., 133 Ga. App. 858 , 212 S.E.2d 492 (1975); Weaver v. Ralston Motor Hotel, Inc., 135 Ga. App. 536 , 218 S.E.2d 260 (1975); Brannon v. First Nat'l Bank, 137 Ga. App. 275 , 223 S.E.2d 473 (1976); Peoples Bank v. Northwest Ga. Bank, 139 Ga. App. 264 , 228 S.E.2d 181 (1976); UIV Corp. v. Oswald, 139 Ga. App. 697 , 229 S.E.2d 512 (1976); Rollins Communications, Inc. v. Georgia Inst. of Real Estate, Inc., 140 Ga. App. 448 , 231 S.E.2d 397 (1976); Billas v. Dwyer, 140 Ga. App. 774 , 232 S.E.2d 102 (1976); Jones v. Cranman's Sporting Goods, 142 Ga. App. 838 , 237 S.E.2d 402 (1977); BVA Credit Corp. v. Mullins, 552 F.2d 1145 (5th Cir. 1977); Perini Corp. v. First Nat'l Bank, 553 F.2d 398 (5th Cir. 1977); Anthony v. Community Loan & Inv. Corp., 559 F.2d 1363 (5th Cir. 1977); Ginn v. Citizens & S. Nat'l Bank, 145 Ga. App. 175 , 243 S.E.2d 528 (1978); B & P Lumber Co. v. First Nat'l Bank, 147 Ga. App. 762 , 250 S.E.2d 505 (1978); Footpress Corp. v. Strickland, 242 Ga. 686 , 251 S.E.2d 278 (1978); Barton v. Chemical Bank, 577 F.2d 1329 (5th Cir. 1978); Central Bank v. American Charms, Inc., 149 Ga. App. 218 , 253 S.E.2d 857 (1979); Vincent Brass & Aluminum Co. v. Johnson, 149 Ga. App. 537 , 254 S.E.2d 752 (1979); Cox Caulking & Insulating Co. v. Brockett Distrib. Co., 150 Ga. App. 424 , 258 S.E.2d 51 (1979); Broun v. Bank of Early, 243 Ga. 319 , 253 S.E.2d 755 (1979); Johnson v. Vincent Brass & Aluminum Co., 244 Ga. 412 , 260 S.E.2d 325 (1979); Trust Co. Bank v. Atlanta IBM Employees Fed. Credit Union, 245 Ga. 262 , 264 S.E.2d 202 (1980); First Bank v. Kilpatrick-Smith Constr. Co., 153 Ga. App. 112 , 264 S.E.2d 576 (1980); Trust Co. of Ga. Bank v. Port Term. & Warehousing Co., 153 Ga. App. 735 , 266 S.E.2d 254 (1980); Commercial Credit Equip. Corp. v. Bates, 154 Ga. App. 71 , 267 S.E.2d 469 (1980); Clements v. Central Bank, 155 Ga. App. 27 , 270 S.E.2d 194 (1980); Guthrie v. Pilgrim Realty Co., 156 Ga. App. 692 , 275 S.E.2d 686 (1980); Trust Co. v. Milam, 4 Bankr. 621 (M.D. Ga. 1980); Mayo v. Bank of Carroll County, 157 Ga. App. 148 , 276 S.E.2d 660 (1981); Trust Co. v. Cowart, 158 Ga. App. 488 , 280 S.E.2d 886 (1981); First Nat'l Bank v. Rivercliff Hdwe., Inc., 161 Ga. App. 259 , 287 S.E.2d 701 (1982); Sterling Nat'l Bank & Trust Co. v. Southwire Co., 713 F.2d 684 (11th Cir. 1983); Loeb v. G.A. Gertmenian & Sons (In re A.J. Nichols, Ltd.), 21 Bankr. 612 (Bankr. N.D. Ga. 1982); Ford v. Rollins Protective Servs. Co., 171 Ga. App. 882 , 322 S.E.2d 62 (1984); Thomas v. Ralston Purina Co., 43 Bankr. 201 (Bankr. M.D. Ga. 1984); Edmondson v. Northrup King & Co., 817 F.2d 742 (11th Cir. 1987); Trust Co. Bank v. Henderson, 185 Ga. App. 367 , 364 S.E.2d 289 (1987); Mark Singleton Buick, Inc. v. Taylor, 194 Ga. App. 630 , 391 S.E.2d 435 (1990); Perimeter Ford, Inc. v. Edwards, 197 Ga. App. 747 , 399 S.E.2d 520 (1990); Calhoon v. Mr. Locksmith Co., 200 Ga. App. 618 , 409 S.E.2d 226 (1991); In re Leeds Bldg. Prods., Inc., 141 Bankr. 265 (Bankr. N.D. Ga. 1992); Perez-Medina v. First Team Auction, Inc., 206 Ga. App. 719 , 426 S.E.2d 397 (1992); Tompkins v. Mayers, 209 Ga. App. 809 , 434 S.E.2d 798 (1993); D.L. Lee & Sons v. ADT Sec. Sys., 916 F. Supp. 1571 (S.D. Ga. 1995); Lewis v. Lease Atlanta, Inc., 234 Ga. App. 812 , 508 S.E.2d 188 (1998); Fedeli v. UAPA Ag. Chem., Inc., 237 Ga. App. 337 , 514 S.E.2d 684 (1999); Trust Assoc. v. Snead, 253 Ga. App. 475 , 559 S.E.2d 502 (2002); Gerber & Gerber, P.C. v. Regions Bank, 266 Ga. App. 8 , 596 S.E.2d 174 (2004); Stein v. GEICO Indem. Ins. Co., 289 Ga. App. 739 , 658 S.E.2d 153 (2008); In re Estate of Miraglia, 290 Ga. App. 28 , 658 S.E.2d 777 (2008); Cars v. W. Funding II, 349 Ga. App. 517 , 826 S.E.2d 370 (2019).

Agreement

Agreement governs rights and liabilities of parties. - It is elementary that under the law of contracts the agreement itself governs the rights and liabilities of the parties. Nothing in the Uniform Commercial Code as adopted in Georgia requires a different result. Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325 , 185 S.E.2d 393 (1971).

Agreement not a lease. - Claimant's unwritten agreement with an individual concerning a vehicle was not a lease because the claimant offered no evidence that the individual had the right to voluntarily terminate the individual's payment obligation under the agreement, i.e., to pay less than the full amount of consideration under the lease, or that the individual could purchase the vehicle only after paying additional consideration. United States v. Bushay, 34 F. Supp. 3d 1260 (N.D. Ga. Aug. 5, 2014).

Buyer in Ordinary Course of Business

Buyer's special relationship with seller does not preclude buyer from being buyer in the ordinary sense. - Although the fact that a person had a special relationship with the seller would not preclude the person from being a buyer in the ordinary course, this factor, along with other factors that the sale was not handled in every material way as a sale out of inventory to any retail customer, may preclude such person from being a buyer in the ordinary course of business. Hanington v. Palmer, 103 Bankr. 348 (Bankr. M.D. Ga. 1989).

Knowledge of security interest. - A buyer who merely knows of a security interest of another party covering certain goods constitutes a buyer in ordinary course of business and takes free of that security interest, whereas a buyer who knows that the sale actually violates some term of the security agreement not waived by the secured party takes subject to that security interest. First Nat'l Bank v. Atlanta Classic Cars, Inc., 184 Ga. App. 784 , 363 S.E.2d 16 (1987).

Although a bank's security interests in equipment were properly perfected and remained so throughout a buyer's acquisition of the equipment from the debtor, those security interests were deemed never to have been perfected as against a purchaser for value when the bank failed to file timely continuation statements, under O.C.G.A. § 11-9-515(b) , and the buyer took free of the security interests under O.C.G.A. § 11-9-317(b) because the buyer did not have actual knowledge of the security interests. Four County Bank v. Tidewater Equip. Co., 331 Ga. App. 753 , 771 S.E.2d 437 (2015).

Fractionalizing not permitted. - Fractionalizing was not allowed by O.C.G.A. § 11-1-201(9) to permit labeling a transferee a buyer in the ordinary course of business to the extent that the purchase price was not in satisfaction of a money debt, but not a buyer in the ordinary course of business to the extent that the purchase price was in satisfaction of a money debt. First Nat'l Bank v. Proceeding Ayres Aviation Holdings, Inc. (In re Ayres Aviation Holdings, Inc.), 342 Bankr. 104 (Bankr. M.D. Ga. 2006).

Because plaintiff cellular telephone trademark holder's packages contained terms and conditions inside and language on the outside of the packages that referenced those terms and conditions, there was a valid "shrink-wrap" contract between the holder and purchasers of the cell phones, and allegations that defendant competitor removed the phones from their original packaging and shipped the phones outside the United States sufficiently raised a reasonable expectation that discovery would reveal evidence that the competitor was aware of the terms and conditions, was afforded an opportunity to reject the terms and conditions, and failed to reject the terms and conditions, such that a breach of contract claim was plausible, and, because the allegations indicated a lack of good faith by the competitor, the bona fide purchaser for value and buyer in the ordinary course defenses under O.C.G.A. §§ 11-1-201 and 11-2-403(1)(a) were not available. Tracfone Wireless, Inc. v. Zip Wireless Prods., 716 F. Supp. 2d 1275 (N.D. Ga. 2010).

Conspicuous Term or Clause

Disclaimer of implied warranty was adequate. - Where the disclaimer was in letters larger than any other type on the form, where significant portions of the disclaimer were capitalized, thus distinguishing them from other language on the form, and where the language was conspicuously set forth, the limitation of the implied warranty of merchantability met the requirements of O.C.G.A. § 11-2-316(2) . Harris v. Sulcus Computer Corp., 175 Ga. App. 140 , 332 S.E.2d 660 (1985).

Warranty disclaimer language was "conspicuous" where it appeared in capital letters, in a separate paragraph on the front of an invoice, and in a type style which was otherwise employed on the form only with regard to language relating to the limitation of remedies. Apex Supply Co. v. Benbow Indus., Inc., 189 Ga. App. 598 , 376 S.E.2d 694 (1988).

Roofing material vendor's disclaimer of warranty, which stated in capitalized letters that the vendor made no warranties, express or implied, including merchantability or fitness for a particular purpose, except as expressly stated therein, was sufficient to preclude an action against the vendor for breach of the implied warranties of merchantability and fitness. Steele v. Gold Kist, Inc., 186 Ga. App. 569 , 368 S.E.2d 196 , cert. denied, 186 Ga. App. 919 , 368 S.E.2d 196 (1988).

Disclaimer inadequate. - Where a paragraph in a lease purporting to disclaim implied warranties of merchantibility and fitness was in the same size font as the rest of the printed terms and, although separately numbered, was not otherwise set apart from the other paragraphs, the language was not "conspicuous" within the meaning of O.C.G.A. § 11-1-201(10). Bailey v. Tucker Equip. Sales, Inc., 236 Ga. App. 289 , 510 S.E.2d 904 (1999).

A reasonable person would not necessarily have noticed and understood that, by the mere mention of "as is" in the context in which it appeared in a lease agreement, without any mention of any warranties or any disclaimers of warranties, he or she was agreeing to forego any rights to lease a piece of equipment in fit and suitable working condition. Bailey v. Tucker Equip. Sales, Inc., 236 Ga. App. 289 , 510 S.E.2d 904 (1999).

Notice conspicuous. - Limitation of liability language on a directory advertising order that appeared in all capital letters satisfied O.C.G.A. § 11-1-201(10). Elliott Irrigation Co. v. L. M. Berry & Co., F. Supp. 2d (N.D. Ga. Mar. 14, 2005).

Statement of payment in full conspicuous. - Deposit of a check constituted an accord and satisfaction under O.C.G.A. § 11-3-311 of a settlement agreement in a debt dispute as a dispute under O.C.G.A. § 13-4-103(b)(1) existed as to the fee portion of the settlement and the letter sent with the check contained a conspicuous statement under O.C.G.A. § 11-1-201(10) that the tender of the check was full payment and satisfaction of the settlement. Blitch v. Walker Pharm., 295 Ga. App. 347 , 671 S.E.2d 842 (2008).

Good Faith

Determination of "good faith" is a question of fact requiring consideration of all circumstances attending a transaction; however, where facts of relevant event are clear and fully developed in motion for summary judgment, it remains only for court to determine proper legal inference to be drawn from the facts. First Nat'l Bank v. Trust Co., 510 F. Supp. 651 (N.D. Ga. 1981).

The 1996 amendments of the UCC definitions of "good faith" and "holder in due course" (O.C.G.A. §§ 11-3-103 and 11-3-302 ) did not apply retroactively to transactions before their effective date; rather, the definitions in O.C.G.A. §§ 11-1-201 and 11-3-302 (former version) applied. Choo Choo Tire Serv., Inc v. Union Planters Nat'l Bank, 231 Ga. App. 346 , 498 S.E.2d 799 (1998).

Illustrative cases. - A bank was a good faith purchaser for value of certain cars under the following circumstances: The proprietor of a used-car business maintained a special checking account with the bank; the proprietor purchased cars from a car auction company with checks drawn upon this account; the proprietor then executed a promissory note to the bank, which loaned the proprietor the purchase price and took a security interest in the car; the account became overdrawn and the bank refused to honor the checks made out to the auction company. Georgia Cas. & Sur. Co. v. Tennille Banking Co. (In re Smith), 51 Bankr. 904 (Bankr. M.D. Ga. 1985).

Bank actions in failing to inform customers of a rule change on signature verification, allowing an employee of customer to place funds in a checking account from the customer's line of credit, and arranging personal loans for the employee were not evidence of a lack of good faith on the part of the bank in paying forged checks. Eason Publications, Inc. v. Nationsbank, 217 Ga. App. 726 , 458 S.E.2d 899 (1995).

Holder

Bank is holder of instrument issued to it even if payee does not endorse it. - Even if payee does not personally endorse an instrument, a bank is holder of that instrument as long as the instrument was issued to the bank. Pazol v. Citizens Nat'l Bank, 110 Ga. App. 319 , 138 S.E.2d 442 (1964).

Bank not holder of instrument lacking joint payee's endorsement. - A bank never became a holder in due course where a check made payable jointly to the bank's customer and a third party was never endorsed by the third party before deposit in the bank. Citizens & S. Nat'l Bank v. Sun Belt Elec. Constructors, Inc., 64 Bankr. 377 (Bankr. N.D. Ga. 1986).

The procedural benefit afforded by O.C.G.A. § 13-7-7 is not available to a party who is the original payee of negotiable paper even though the original payee may qualify as a "holder" under O.C.G.A. § 11-1-201 . Jones v. FDIC, 151 Ga. App. 619 , 260 S.E.2d 751 (1979).

A party can establish status as holder of instruments sued on by producing the instruments in evidence. James Talcott, Inc. v. Allahabad Bank, Ltd., 444 F.2d 451 (5th Cir.), cert. denied, 404 U.S. 940, 92 S. Ct. 280 , 30 L. Ed. 2 d 253 (1971).

Possession. - Although the corporation met the requirements for being a holder in due course to the extent that it took the promissory note regarding the mortgage for value, in good faith, and without notice of any claim to the instrument, the corporation was not a holder in due course because it was not in possession of the promissory note at the time it purchased the mortgage; since it was not in possession, it failed to achieve holder-in-due-course status and the bank's security interest prevailed. Provident Bank v. Morequity, Inc., 262 Ga. App. 331 , 585 S.E.2d 625 (2003).

Payee of a check who never received possession of the check and who was unaware that the check had been made out to the payee was not a "holder" of the check. Jenkins v. Wachovia Bank, Nat'l Ass'n, 309 Ga. App. 562 , 711 S.E.2d 80 (2011).

Pursuant to O.C.G.A. § 11-1-201(20)(a) , the holder of a check is entitled to negotiate the check, and a holder is one who has possession of the check. Sun Nurseries, Inc. v. Lake Erma, LLC, 316 Ga. App. 832 , 730 S.E.2d 556 (2012).

Notice

Knowledge refers to actual knowledge. - Knowledge of a fact is defined in the Uniform Commercial Code as actual knowledge. Hopkins v. Kemp Motor Sales, Inc., 139 Ga. App. 471 , 228 S.E.2d 607 (1976).

Where security interest in an automobile was not properly recorded and was documented only in divorce decree's incorporated agreement, the secured party failed to carry burden of proving that buyer had actual knowledge of secured party's interest, even assuming the buyer had knowledge of the divorce. Freeman v. Bentley, 205 Ga. App. 409 , 422 S.E.2d 435 (1992).

Shortly after a bank made a loan to a farmer, it mailed a cotton gin written notice of its security interest in the farmer's cotton crop. As the gin's president admitted reading the bank's letter, the gin had "actual knowledge" of the bank's security interest under O.C.G.A. § 11-1-201(25), (27), despite the president's claim that no documentation had been enclosed with the letter. Bank of Dawson v. Worth Gin Co., 295 Ga. App. 256 , 671 S.E.2d 279 (2008).

Notice not required. - Lessor was not required to comply with the notice provisions of O.C.G.A. §§ 10-1-36 and 11-9-504 because the motor vehicle lease agreement the lessor entered into with the lessee was intended to be a true lease and not to evince a secured transaction; the lessor retained a meaningful reversionary interest in the car because the option price was more than nominal since the purchase option price was approximately one-third of the car's value, and the agreement contained no provision purporting to grant the lessee equity in the vehicle prior to exercise of the purchase option. Aniebue v. Jaguar Credit Corp., 308 Ga. App. 1 , 708 S.E.2d 4 (2011).

Jury question. - Where there is conflicting evidence on the nature and extent of the debtor's knowledge, the debtor should not be estopped from raising lack of notice as a defense. Rather, the question of "reasonable notification" should be submitted to the jury. Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979).

Public Sale

When sale is commercially reasonable. - Sale is commercially reasonable where it is done in public, during business hours, upon adequate notice within reasonable time of repossession, and under conditions reasonably calculated to bring fair market price. Hardin v. Norlin Music, Inc., 159 Ga. App. 167 , 283 S.E.2d 21 (1981).

Burden of showing reasonable conduct of sale. - Secured party bears burden under O.C.G.A. § 11-1-201 (31.1) to show that sale was conducted in reasonable fashion. Hardin v. Norlin Music, Inc., 159 Ga. App. 167 , 283 S.E.2d 21 (1981).

Opportunity for competitive bidding required. - Where advertised sale under O.C.G.A. § 11-1-201 (31.1) is held as scheduled, and proper notice is given, any person has right to enter competitive bid. Opportunity for competitive bidding is established and that is all that is required, even if no third party bids at sale. Hardin v. Norlin Music, Inc., 159 Ga. App. 167 , 283 S.E.2d 21 (1981).

To require that secured party rebut mere supposition that bidding may have been chilled would be unfair. Hardin v. Norlin Music, Inc., 159 Ga. App. 167 , 283 S.E.2d 21 (1981).

Security Interest

"Magic words" not required. - Georgia law does not require "magic words" to create a valid security interest. Rather, the court must refer to the general law of contracts and determine whether the parties intended to create a security agreement. National Traveler, Inc. v. Paccom Leasing Corp., 110 Bankr. 619 (Bankr. M.D. Ga. 1990).

Filing requirements do not apply to leases. - Where the agreement is a lease it is beyond the requirements for filing O.C.G.A. § 11-1-201 . Sanders v. Commercial Credit Corp., 398 F.2d 988 (5th Cir. 1968).

A "lease intended as security" is one which has the ultimate intent of a sale. In re Atlanta Times, Inc., 259 F. Supp. 820 (N.D. Ga. 1966), aff'd sub nom. Sanders v. National Acceptance Co. of Am., 383 F.2d 606 (5th Cir. 1967).

Three elements for determining whether a lease is a security agreement: one, there must be an agreement by the lessee to pay lessor a set amount; two, amount must be equivalent to value of leased goods; and three, lessee must become owner or have option to become owner of leased goods. If any one of these elements is lacking, the lease is not a financing agreement but is a true lease. Trax, Inc. v. Wood, 7 Bankr. 543 (Bankr. N.D. Ga. 1980); Shamrock Rental Co. v. Huffman, 63 Bankr. 737 (Bankr. N.D. Ga. 1986).

Lease not a security agreement. - In a Chapter 13 bankruptcy, in which an automobile lease required the debtor to surrender possession of vehicle at the end of the lease, unless the debtor exercised the debtor's option to purchase vehicle, and the debtor was not required to purchase the vehicle or renew the lease, and the debtor could not purchase the vehicle at the end of the lease for a nominal amount - rather, the end-of-lease purchase price exceeded the market value of the vehicle at that point - pursuant to O.C.G.A. § 11-1-201(37) (2002), the lease was a true lease, not a security agreement, and the debtor, thus, had to assume the lease or surrender the vehicle, rather than paying the lessor's claim in accordance with 11 U.S.C. § 1325(a)(5). Freeway Auto Credit v. Bonner (In re Bonner), Bankr. (Bankr. M.D. Ga. July 19, 2006).

Security agreement need not be in any particular form. The requirements are as follows: (1) there must be a writing; (2) the language must reflect an intent to create a security interest; (3) the writing must reasonably describe the collateral; and (4) the agreement must be signed by the debtor. Trust Co. Bank v. Walker, 35 Bankr. 237 (Bankr. N.D. Ga. 1983).

Article 9 applies to lease intended as security interest, but not to bona fide leases. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140 (5th Cir. 1981).

While the terms of the agreement created a lease rather than a secured transaction, any ambiguity caused by the option purchase price at the end of the lease ceased to exist when the parties entered into the addendum, prior to performance by either party, which made the purchase price the fair market value. Summerhill Neighborhood Dev. Corp. v. Telerent Leasing Corp., 242 Ga. App. 142 , 528 S.E.2d 889 (2000).

Name given to transaction by parties not conclusive. - Whether lease is intended as security is to be determined by facts of each case; name which parties give it is not conclusive. Ford Motor Credit Co. v. Dowdy, 159 Ga. App. 666 , 284 S.E.2d 679 (1981), overruled on other grounds, Adams v. D & D Leasing Co., 191 Ga. App. 121 , 381 S.E.2d 94 (1989).

Motor vehicle lease agreement. - Considering the facts of the case in light of the plain language of the Georgia Code, an agreement giving debtor right to possession and use of a new truck in return for certain payments constituted a lease under Georgia law, even though the contract did not give debtor the power to terminate the agreement prior to the expiration of the term of the agreement. In re Paz, 179 Bankr. 743 (Bankr. S.D. Ga. 1995).

The best test for determining the intent of an agreement which provides for an option to buy - that is, whether it is a lease or a security agreement - is a comparison of the option price with the market value of the equipment at the time the option is to be exercised. Such a comparison shows whether the lessee is paying actual value (evidencing a lease) or acquiring the property at a substantially lower price (evidencing a security agreement). Mejia v. Citizens & S. Bank, 175 Ga. App. 80 , 332 S.E.2d 170 (1985).

When an alleged automobile lease agreement contains an option to purchase the leased vehicle, the "best test" for determining the agreement's purpose and the parties' contractual intent is a comparison of the option price with the market value of the equipment at the time the option is to be exercised. If the lessees can acquire the property under the purchase option for little or no additional consideration in relation to its true value, the lease is one intended for security. If the lessees are required to pay at least a reasonable price, if not a price equal to or greater than the actual value of the automobile, at option time in order to exercise their purchase option, the agreement is intended to be and is in fact a true lease and not a disguised security transaction. Woods v. General Elec. Credit Auto Lease, Inc., 187 Ga. App. 57 , 369 S.E.2d 334 (1988).

Factors tending to establish that "lease" transaction is a conditional sale are: lessor's purchase of equipment from supplier; requirement that lessee be responsible for payment of all taxes, insurance and expenses for repairs, an initial down payment, and additional payment of security deposit. Ford Motor Credit Co. v. Dowdy, 159 Ga. App. 666 , 284 S.E.2d 679 (1981), overruled on other grounds, Adams v. D & D Leasing Co., 191 Ga. App. 121 , 381 S.E.2d 94 (1989).

Additional factors which tend to establish that a transaction is a conditional sale instead of a true lease include an initial down payment and the requirement that the lessee be responsible for payment of taxes and insurance. Walton v. Howard, 198 Ga. App. 804 , 403 S.E.2d 90 (1991).

Lease creating security interest. - A lease will create a security interest if: (a) it secures payment or performance of an obligation upon personal property reserved by the lease; and (b) the lease is intended as security. Such intention is to be determined objectively on the basis of the facts of the case. Citizens & S. Equip. Leasing, Inc. v. Atlanta Fed. Sav. & Loan Ass'n, 144 Ga. App. 800 , 243 S.E.2d 243 (1978).

A lease-purchase agreement meeting the requirements of O.C.G.A. § 10-1-681 constituted a true lease, not a security agreement, and was subject to § 365 of the Bankruptcy Code, 11 U.S.C.S. § 365. Central Rents, Inc. v. Johnson, 203 Bankr. 498 (Bankr. S.D. Ga. 1996).

Lease disguised as security agreement. - Creditor's unqualified right to require the debtor to repurchase equipment during or at termination of a purported lease, coupled with a letter agreement that was intended to insure the return of the creditor's investment and a return on the investment of a certain percentage indicated that the lease was a disguised security agreement. Moore v. Emery (In re Am. Steel Prod., Inc.), 203 Bankr. 504 (Bankr. S.D. Ga. 1996).

"Lease" which requires lessee to purchase the property upon cancellation. - An agreement termed a "lease," which requires the lessee to purchase the vehicle upon cancellation, is equivalent to a secured sale, even though the lessor retains all indicia of ownership. Pierce v. Leasing Int'l, Inc., 142 Ga. App. 371 , 235 S.E.2d 752 (1977).

Where a "lessee" has not been given an option to purchase collateral at a nominal price, but is under a contractual duty to make the purchase, it is the purchaser, and the "lessor" is the seller and secured party. USI Capital & Leasing v. Medical Oxygen Serv., Inc., 36 Bankr. 341 (Bankr. N.D. Ga. 1984).

Lease of equipment providing that title remain in lessor and for redelivery to lessor at expiration of term. - A lease of equipment for five years at an agreed price, with title to the property remaining in the lessor and with delivery of possession of the equipment to lessor to be made at the expiration of the lease, cannot be construed as the creation of a security interest. McGuire v. Associates Capitol Servs. Corp., 133 Ga. App. 408 , 210 S.E.2d 862 (1974).

Lessee becoming owner for nominal, or no, consideration upon compliance with lease. - An agreement whereby upon compliance with the terms of a lease the lessee shall become or has the option to become the owner of the property for no additional consideration or for a nominal consideration makes the lease one intended for security. Mann Inv. Co. v. Columbia Nitrogen Corp., 173 Ga. App. 77 , 325 S.E.2d 612 (1984).

A lease agreement covering machinery and equipment was a security instrument, rather than a true lease, where the agreement provided that "the Lessee shall have the option to purchase . . . for the sum of $1.00" and there was evidence which indicated the machinery and equipment were worth much more than $1.00 upon the termination date of the lease. Melton v. J.M. Kenith Co., 182 Ga. App. 184 , 355 S.E.2d 115 , overruled on other grounds, Bank S. v. Jones, 185 Ga. App. 125 , 364 S.E.2d 281 (1987).

Computer equipment lease agreement was "true lease," where the terms of the lease required payment of more than a "nominal" price to exercise an option to purchase the equipment. Third Century, Inc. v. Morgan, 187 Ga. App. 718 , 371 S.E.2d 262 (1988).

Rental purchase agreements between a rent-to-own business and renter were true leases where, even though they contained some provisions found in secured sales agreements, the renter could return the property without any further obligation, was not required to renew the agreements or purchase the property, or to make a down payment or security deposit, the company was responsible for maintaining and paying taxes on the property, and the agreements expressly provided that the renter intended to rent rather than purchase the property and would not own the property unless the renter bought it or acquired ownership as provided by the agreements. Mr. C's Rent to Own v. Jarrells, 205 Bankr. 994 (Bankr. M.D. Ga. 1997).

Contract to lease washing machine for one week, with option to renew lease "for an additional term at the conclusion of each term or rental period, by the payment to the lessor of the rental payment," was a "true lease" and no security interest was created therein. Elcan Invs., Inc. v. Kirk, 187 Ga. App. 676 , 371 S.E.2d 146 (1988).

Telephone equipment lease agreement was a true lease, not a secured transaction, where the initial term was for five years and the lessee was not required to renew the lease or purchase the equipment at the end of the term and did not have the option to renew the lease or purchase the property at the end of the term for a nominal consideration. Carter v. Tokai Fin. Servs., Inc., 231 Ga. App. 755 , 500 S.E.2d 638 (1998).

Agreement to "lease" equipment for a fixed period for an amount which approximated the original purchase price, with an option to purchase for no additional consideration, was a security agreement rather than a true lease. Tri Leasing Corp. v. Fulton Textiles, Inc., 116 Bankr. 302 (Bankr. N.D. Ga. 1990).

Three-year "lease agreement contract," by which "lessee" would make monthly payments and, at the end of the three years, without any additional payments, would own the leased equipment, was a security agreement and not a lease. National Traveler, Inc. v. Paccom Leasing Corp., 110 Bankr. 619 (Bankr. M.D. Ga. 1990).

Agreement which did not stipulate a purchase price but indicated an intent to negotiate a purchase price was a true lease, and not a conditional sale. Chapman v. Avco Fin. Servs. Leasing Co., 193 Ga. App. 147 , 387 S.E.2d 391 (1989).

Farmers Home Administration. - Despite the fact that the form executed by the debtors did not contain a clause that "granted" a security interest to the Farmers Home Administration (FmHA), considering other language in the form, including a heading "Security Agreement (chattels and crops)," a reference to the FmHA as the "Secured Party," and a provision which read: "It is the purpose and intent of this instrument that . . . this instrument shall secure payment of the note," the debtors did grant the FmHA a security interest in crops, livestock and offspring, farm equipment, and farm products. United States v. Hollie, 42 Bankr. 111 (Bankr. M.D. Ga. 1984).

Evidence indicative of motor vehicle lease agreement. - In a "motor vehicle lease" agreement involving a question as to whether the agreement was really a security transaction, the fact that the original lessor was in the automobile rental business and that the lessor did not require a financing statement indicated that a true lease agreement was involved. Mejia v. Citizens & S. Bank, 175 Ga. App. 80 , 332 S.E.2d 170 (1985).

Summary judgment premature without Bright-Line test. - Trial court erred in entering summary judgment for a lessor without addressing whether the parties' contract for a car was a lease or a security agreement under the Bright-Line Test. Coleman v. DaimlerChrysler Servs. of N. Am., LLC, 276 Ga. App. 336 , 623 S.E.2d 189 (2005).

Signature

Maker's intent. - Whatever a maker intends as the maker's signature is the maker's signature and gives effect to the maker's contract. Kohlmeyer & Co. v. Bowen, 126 Ga. App. 700 , 192 S.E.2d 400 (1972).

A complete signature is not necessary. - Under O.C.G.A. § 11-1-201(39) a complete signature is not necessary to constitute an authentication, as it may be printed and may be on any part of the document including a billhead or letterhead. Evans v. Moore, 131 Ga. App. 169 , 205 S.E.2d 507 (1974).

Signature of face does not authenticate title retention agreement on back. - Placing of initials and/or signature on face of documents does not suffice to authenticate title retention agreement on reverse and as a consequence does not entitle it to priority over disputed collateral. Food Serv. Equip. Co. v. First Nat'l Bank, 121 Ga. App. 421 , 174 S.E.2d 216 (1970).

Absence of notary seal. - Jury verdict imposing liability on guarantors for a debt of a corporation was reversed where there was no evidence that the guarantors wrote their names on or otherwise signed the guaranty, where a witness's opinion that the guaranty "appeared" to be executed by the guarantors lacked any basis whatsoever, other than the fact that their names appeared on the signature lines, and where the notary attestation was invalid, if for no other reason, because the guaranty did not contain a notary seal. Friedrich v. APAC-Georgia, Inc., 265 Ga. App. 769 , 595 S.E.2d 620 (2004).

Unauthorized Signature or Endorsement

Apparent authority to execute indorsements. - Where its president-treasurer had at least apparent authority - if not actual authority - to execute indorsements, a corporation could not defeat such indorsements merely by alleging that in truth and in fact the officer had no such authority and that the officer's act in indorsing the paper had not been ratified. Bank S. v. Midstates Group, Inc., 185 Ga. App. 342 , 364 S.E.2d 58 (1987); Holliday Constr. Co. v. Sandy Springs Assocs., 198 Ga. App. 20 , 400 S.E.2d 380 (1990).

General Consideration

Cited in Lunsford v. Wilson, 113 Ga. App. 602 , 149 S.E.2d 515 (1966); Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968); R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973); R.N. Kelly Cotton Merchant, Inc. v. York, 494 F.2d 41 (5th Cir. 1974); Duval & Co. v. Malcom, 233 Ga. 784 , 214 S.E.2d 356 (1975); Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975); Space Leasing Assocs. v. Atlantic Bldg. Sys., 144 Ga. App. 320 , 241 S.E.2d 438 (1977); Lipson v. Hawthorne Indus., Inc., 148 Ga. App. 751 , 252 S.E.2d 639 (1979); Smith v. Dixon Ford Tractor Co., 160 Ga. App. 885 , 288 S.E.2d 599 (1982); Goldkist, Inc. v. Brownlee, 182 Ga. App. 287 , 355 S.E.2d 773 (1987); ATG Aerospace, Inc. v. High-Line Aviation Ltd., 149 Bankr. 730 (Bankr. N.D. Ga. 1992); Southern Tank Equip. Co. v. Zartic, Inc., 221 Ga. App. 503 , 471 S.E.2d 587 (1996); SunTrust Bank v. Venable, 299 Ga. 655 , 791 S.E.2d 5 (2016).

Goods

Effect of services of production and distribution of goods. - Services always play an important role in use of goods, whether it is service of transforming raw material into some usable product or service of distributing usable product to a point where it can easily be obtained by the consumer, and such services do not remove a contract from coverage under this article. Cleveland Lumber Co. v. Proctor & Schwartz, Inc., 397 F. Supp. 1088 (N.D. Ga. 1975).

Items sold are still "goods" within the definition of O.C.G.A. § 11-2-105(1) even though service may play a role in their ultimate use. Cleveland Lumber Co. v. Proctor & Schwartz, Inc., 397 F. Supp. 1088 (N.D. Ga. 1975).

Test for "goods." - Whether a product is manufactured is not the test for the definition of "goods" under the commercial code, but rather whether the items are movable at the time of identification of the contract. Willis Mining, Inc. v. Noggle, 235 Ga. App. 747 , 509 S.E.2d 731 (1998).

Oral agreement between manufacturer and distributor for the manufacture of a special grade of fertilizer to be sold by the distributor was covered by the UCC whether it was classified as one for the sale of fertilizer, or as a distributorship agreement. PCS Joint Venture, Ltd. v. Davis, 219 Ga. App. 519 , 465 S.E.2d 713 (1995).

Fact that contract involves substantial amounts of labor does not remove it from definition of goods under O.C.G.A. § 11-2-105(1) . Cleveland Lumber Co. v. Proctor & Schwartz, Inc., 397 F. Supp. 1088 (N.D. Ga. 1975).

Granite blocks. - Because granite blocks were movable at the time of identification of the contract, they were "goods" under O.C.G.A. § 11-2-105 , and an implied warranty of merchantability applied to their sale. Willis Mining, Inc. v. Noggle, 235 Ga. App. 747 , 509 S.E.2d 731 (1998).

Ships are "goods" under the Uniform Commercial Code. R.C. Craig, Ltd. v. Ships of Sea, Inc., 345 F. Supp. 1066 (S.D. Ga. 1972), later proceeding, 401 F. Supp. 1051 (S.D. Ga. 1975).

Growing crops, including cotton, are "goods" within contemplation of O.C.G.A. § 11-2-105 . Harris v. Hine, 232 Ga. 183 , 205 S.E.2d 847 (1974).

Sale of horse for recreational use. - Transaction for purchase of a horse, apparently for recreational use, while possibly a casual sale, nevertheless, is provided for in the Uniform Commercial Code and is a transaction in goods. Key v. Bagen, 136 Ga. App. 373 , 221 S.E.2d 234 (1975).

The sale of water is the sale of goods whether delivery is made through a waterworks system or in bottles. Hence, the sale of water by a municipality is the sale of goods and a transaction which is governed by Art. 2 of the UCC. Zepp v. Mayor of Athens, 180 Ga. App. 72 , 348 S.E.2d 673 (1986).

Future Goods

Contracts for future delivery of commodities where parties contemplate actual delivery are valid. Taunton v. Allenberg Cotton Co., 378 F. Supp. 34 (M.D. Ga. 1973).

Contract to sell future crop is sale of goods within scope of O.C.G.A. § 11-2-105 . R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973), aff'd, 494 F.2d 41 (5th Cir. 1974); Seminole Peanut Co. v. Goodson, 176 Ga. App. 42 , 335 S.E.2d 157 (1985).

Contract for sale of crops is not invalid merely because contract was executed before crop in question was planted. Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973).

Contract for sale of goods not yet in existence. - Although a contract may be invalid because its execution was fraudulently induced, it will not be inoperative because it involves goods which are nonexistent at the time of the execution of the contract. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

A contract to sell, as distinguished from an actual sale, can relate to a commodity which is not in existence at the time the contract is executed. Taunton v. Allenberg Cotton Co., 378 F. Supp. 34 (M.D. Ga. 1973).

Fungible Goods

Sale of fungible goods without specific identification. - O.C.G.A. § 11-2-105 does not forbid sale of fungible goods without specific identification. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Peanuts were a farm commodity, and peanuts were also "goods" for purposes of applying the Statute of Frauds within the Uniform Commercial Code. Brooks Peanut Co. v. Great S. Peanut, LLC, 322 Ga. App. 801 , 746 S.E.2d 272 (2013).

General Consideration

Oral agreement between manufacturer and distributor for the manufacture of a special grade of fertilizer to be sold by the distributor was covered by the UCC whether it was classified as one for the sale of fertilizer or as a distributorship agreement. PCS Joint Venture, Ltd. v. Davis, 219 Ga. App. 519 , 465 S.E.2d 713 (1995).

Contracts for future delivery of commodities where parties contemplate actual delivery are valid. Taunton v. Allenberg Cotton Co., 378 F. Supp. 34 (M.D. Ga. 1973).

Sale of crops to be planted in future. - Contract for sale of crops is not invalid merely because it was executed before crop in question was planted. Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973).

Cited in Byrd v. Moore Ford Co., 116 Ga. App. 292 , 157 S.E.2d 41 (1967); R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973); Sylvester Motor & Tractor Co. v. Farmers Bank, 153 Ga. App. 614 , 266 S.E.2d 293 (1980); International Harvester Credit Corp. v. Associates Fin. Servs. Co., 133 Ga. App. 488 , 211 S.E.2d 430 (1974); Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975); Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975); Fender v. Colonial Stores, Inc., 138 Ga. App. 31 , 225 S.E.2d 691 (1976); Sylvester Motor & Tractor Co. v. Farmers Bank, 153 Ga. App. 614 , 266 S.E.2d 293 (1980); Johnson v. State, 154 Ga. App. 353 , 268 S.E.2d 406 (1980); Madewell v. Marietta Dodge, Inc., 506 F. Supp. 286 (N.D. Ga. 1980); Freeman v. State, 163 Ga. App. 71 , 292 S.E.2d 563 (1982); American Whse. & Moving Serv. of Atlanta, Inc. v. Floyd's Diesel Serv., Inc., 164 Ga. App. 106 , 296 S.E.2d 64 (1982); Robinson v. State, 164 Ga. App. 652 , 297 S.E.2d 751 (1982); Mail Concepts, Inc. v. Foote & Davies, Inc., 200 Ga. App. 778 , 409 S.E.2d 567 (1991).

Contract for Sale

Promises to buy and sell. - Promise to buy certain goods is good consideration for promise to sell those goods. Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973).

Delivery of goods pursuant to offer to pay in future. - Where defendant offered to pay in future for goods to be delivered presently, and seller agreed, delivered the merchandise to defendant, and did not retain any security interest therein, there was a completed "sale" of the goods in question, and defendant had not only rightful possession of the items, but title to them as well. Elliott v. State, 149 Ga. App. 579 , 254 S.E.2d 900 (1979).

Auto lease agreement. - Lease agreement for automobile, even though it places burden of repairs, taxes, insurance, etc., upon lessee is not a sale under O.C.G.A. § 11-2-106 . Mays v. Citizens & S. Nat'l Bank, 132 Ga. App. 602 , 208 S.E.2d 614 (1974), overruled on other grounds, Mock v. Canterbury Realty Co., 152 Ga. App. 872 , 264 S.E.2d 489 (1980).

Buyer as titled owner. - Although a warranty of merchantability was implied in any sale of goods under O.C.G.A. § 11-2-314 , the warranty only ran to a buyer in privity of contract with the seller and did not pass to a second or subsequent purchaser; thus, buyers who were not placed on the title and the title transferees had no cause of action against the seller under Georgia law under O.C.G.A. § 11-2-106(1) for breach of implied warranties because of their lack of privity as original purchasers. Gill v. Blue Bird Body Co., F.3d (11th Cir. June 17, 2005).

An agreement for the installation and maintenance of a protective alarm system was not a sale and, as a result, the implied warranty and other U.C.C. considerations were not applicable. D.L. Lee & Sons v. ADT Sec. Sys., 916 F. Supp. 1571 (S.D. Ga. 1995).

Conforming to Contract

Encompasses totality of seller's contracts. - Nonconformity cannot be viewed as a question of the quantity and quality of goods alone or of breaches of warranties, but of the performance of the totality of the seller's contractual undertaking. Esquire Mobile Homes, Inc. v. Arrendale, 182 Ga. App. 528 , 356 S.E.2d 250 (1987).

General Consideration

Editor's notes. - In light of the similarity of the provisions, decisions under former Code 1933, §§ 20-401(7) and 96-101 are included in the annotations for this section.

Action for commission due under oral agreement. - Trial court properly denied lessor's motion to strike lessee's counterclaim for commission due under oral agreement to sell aircraft since a commission is earned by providing services and Uniform Commercial Code statute of frauds is applicable to transactions in goods. Harris v. Clark, 157 Ga. App. 549 , 278 S.E.2d 132 (1981).

Oral authorization to agent to give lessee of personalty option to buy. - Where owner of personal property orally authorizes agent to lease it to another for a period of three months and orally authorizes the agent to give to sublessee option to buy, option price being more than $5750.00, the option so given by agent is not binding on owner since the agent's authority rested in parol, in absence of facts sufficient to work an estoppel or show ratification of a completed sale. Collier v. Wilson-Weesner-Wilkinson Co., 58 Ga. App. 44 , 197 S.E. 516 (1938) (decided under former Code 1933, § 20-401).

No mention of personalty in deed or contract for sale of farm. - Where deed to farm land was delivered in accordance with contract of sale and purchase price paid, and where no mention was made in either deed or contract of sale of personalty alleged to have gone with farm, there was no "sale" of personalty and subsequent delivery of such personalty to vendee upon vendee's representation that it was part of the transaction did not prevent its recovery by vendor. Gostin v. Scott, 80 Ga. App. 630 , 56 S.E.2d 778 (1949) (decided under former Code 1933, § 96-101).

"Letter of intent" stating terms for proposed sale of plant and equipment therein, which sale was to be contingent on a future agreement as to an inventory of assets, involved a "package deal" for real estate and goods and was thus governed by (and failed under) O.C.G.A. § 13-5-30 rather than the less stringent standards of O.C.G.A. § 11-2-201 . Beaulieu of Am., Inc. v. Coronet Indus., Inc., 173 Ga. App. 556 , 327 S.E.2d 508 (1985).

Delivery and acceptance of goods removes transaction from statute of frauds. - Where transfer of title to personal property is consummated by delivery and acceptance there is no requirement of law that it be in writing. Jack Fred Co. v. Lago, 96 Ga. App. 675 , 101 S.E.2d 165 (1957) (decided under former § 20-401(7)).

Sufficient evidence that bank was holder of note. - In a bank's suit against the guarantor of a note, the affidavit of the bank's vice-president established that the note was among the bank's business records and in the bank's possession; as such, the bank submitted competent proof that the bank was the holder of the note for purposes of the bank's summary judgment motion. Salahat v. FDIC, 298 Ga. App. 624 , 680 S.E.2d 638 (2009).

Cited in Evans Implement Co. v. Thomas Indus., Inc., 117 Ga. App. 279 , 160 S.E.2d 462 (1968); Hale v. Higginbotham, 228 Ga. 823 , 188 S.E.2d 515 (1972); Kenimer v. Thompson, 128 Ga. App. 253 , 196 S.E.2d 363 (1973); L.M. Berry & Co. v. Blackmon, 129 Ga. App. 347 , 199 S.E.2d 610 (1973); Giant Peanut & Grain Co. v. Long Mfg. Co., 129 Ga. App. 685 , 201 S.E.2d 26 (1973); R.L. Kimsey Cotton Co. v. Ferguson, 233 Ga. 962 , 214 S.E.2d 360 (1975); Hagan v. Jockers, 138 Ga. App. 847 , 228 S.E.2d 10 (1976); Smith v. Hornbuckle, 140 Ga. App. 871 , 232 S.E.2d 149 (1977); Whitehead v. Capital Auto. Co., 239 Ga. 460 , 238 S.E.2d 104 (1977); Hip Pocket, Inc. v. Levi Strauss & Co., 144 Ga. App. 792 , 242 S.E.2d 305 (1978); Hatley v. Frey, 145 Ga. App. 658 , 244 S.E.2d 604 (1978); Custom Radio Whsles., Inc. v. Hamilton/Avnet Elecs., 147 Ga. App. 110 , 248 S.E.2d 187 (1978); Skyway Cycle Sales, Inc. v. Gordon, 148 Ga. App. 150 , 251 S.E.2d 118 (1978); Jem Patents, Inc. v. Frost, 156 Ga. App. 311 , 274 S.E.2d 707 (1980); Madewell v. Marietta Dodge, Inc., 506 F. Supp. 286 (N.D. Ga. 1980); David J. Joseph Co. v. S & M Scrap Metal Co., 163 Ga. App. 685 , 295 S.E.2d 860 (1982); Integrated Micro Sys. v. NEC Home Elec. (USA), Inc., 174 Ga. App. 197 , 329 S.E.2d 554 (1985); Seminole Peanut Co. v. Goodson, 176 Ga. App. 42 , 335 S.E.2d 157 (1985); Atlanta Dairies Coop. v. Grindle, 182 Ga. App. 409 , 356 S.E.2d 42 (1987); Kal-O-Mine Indus., Inc. v. Camp (In re Lumpkin Sand & Gravel, Inc.), 104 Bankr. 529 (Bankr. M.D. Ga. 1989); Isbell v. Credit Nation Lending Serv., LLC, 319 Ga. App. 19 , 735 S.E.2d 46 (2012); Brooks Peanut Co. v. Great S. Peanut, LLC, 322 Ga. App. 801 , 746 S.E.2d 272 (2013).

Requisites of Writing

Requirements for writing to be sufficient. - Three definite and invariable requirements as to a writing are made by O.C.G.A. § 11-2-201(1) : first, it must evidence a contract for the sale of goods; second, it must be "signed," which includes any authentication which identifies the party to be charged; and third, it must specify a quantity. Jinright v. Russell, 123 Ga. App. 706 , 182 S.E.2d 328 (1971); Harris v. Hine, 232 Ga. 183 , 205 S.E.2d 847 (1974); O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983).

Written contract enforceable if showing agreement, basis for relief, and signed by party charged. - Written agreement signed by party against whom enforcement is sought constitutes valid, enforceable contract if it shows that a contract has been agreed to and there is a reasonably certain basis for granting relief. Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973).

A series of writings may properly be considered to prove the existence of a contract for the sale of goods for the price of $500 or more. Roboserve, Ltd. v. Tom's Foods, Inc., 940 F.2d 1441 (11th Cir. 1991).

Required writing need not contain all material terms of contract and material terms stated need not be precise. All that is required is that the writing afford a basis for believing that the offered oral evidence rests on a real transaction. Harris v. Hine, 232 Ga. 183 , 205 S.E.2d 847 (1974); O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983); Lipsey Motors v. Karp Motors, Inc., 194 Ga. App. 15 , 389 S.E.2d 537 (1989); Roboserve, Ltd. v. Tom's Foods, Inc., 940 F.2d 1441 (11th Cir. 1991).

Only term which must appear in writing is the quantity term which need not be accurately stated, but recovery is limited to amount stated. The price, time, and place of payment or delivery, general quality of the goods, or any particular warranties may all be omitted. Alice v. Robett Mfg. Co., 328 F. Supp. 1377 (N.D. Ga. 1970), aff'd, 445 F.2d 316 (5th Cir. 1971).

Unsigned invoice is not a writing in confirmation of a contract under O.C.G.A. § 11-2-201 . Jackson v. Meadows, 153 Ga. App. 1 , 264 S.E.2d 503 (1980).

Invoices on printed forms bearing sender's name and address. - Invoices which are sent on printed forms bearing a party's name and address are "sufficient against the sender" and thus may be considered a written confirmation of an alleged contract within meaning of O.C.G.A. § 11-2-201 . Jem Patents, Inc. v. Frost, 147 Ga. App. 839 , 250 S.E.2d 547 (1978).

Complete signature of seller is not necessary to constitute authentication. Troutt v. Nash AMC/Jeep, Inc., 157 Ga. App. 399 , 278 S.E.2d 54 (1981).

Where the seller does not sign the sales contract, that fact would not render its provisions unenforceable against the buyer as there is no question that the buyer signed it and that it in fact constitutes the agreement under which the sale was made. Frick Forest Prods., Inc. v. International Hardwoods, Inc., 161 Ga. App. 359 , 288 S.E.2d 625 (1982).

Purchase orders of the buyer which were not signed by any employee or authorized agent of the manufacturer did not satisfy the requirements of O.C.G.A. § 11-2-201(1) . Entertainment Sales Co. v. SNK, Inc., 232 Ga. App. 669 , 502 S.E.2d 263 (1998).

Signature may be printed and may be on any part of document, including billhead or letterhead. Troutt v. Nash AMC/Jeep, Inc., 157 Ga. App. 399 , 278 S.E.2d 54 (1981).

A writing is "signed" if it bears any authentication which identifies the party to be charged on the contract. Roboserve, Ltd. v. Tom's Foods, Inc., 940 F.2d 1441 (11th Cir. 1991).

Writing insufficient to evidence contract for the sale of goods. See Alice v. Robett Mfg. Co., 328 F. Supp. 1377 (N.D. Ga. 1970), aff'd, 445 F.2d 316 (5th Cir. 1971).

Letter stating buyer's willingness to purchase seller's output where seller had not begun producing goods. - Letter outlining nature of buyer's operations, seller's efforts and expertise, and stating that buyer had informed seller of buyer's being "willing and able to purchase" all seller's output at a cost no greater than buyer's own cost of production is, as a matter of law, insufficient as a writing under O.C.G.A. § 11-2-201 , because at time the letter was written, seller had taken no action to begin producing goods referred to in the letter. Accordingly, no contract could have existed at the time the letter was written. Maderas Tropicales v. Southern Crate & Veneer Co., 588 F.2d 971 (5th Cir. 1979).

Signed check used as down payment on store, with notation "For Binder on Store," meets all requirements of a writing sufficient to indicate that contract for sale was made between parties. The check does not prove a contract, but would authorize introduction of oral evidence toward that end. Jinright v. Russell, 123 Ga. App. 706 , 182 S.E.2d 328 (1971).

Merchants' Confirmations

One party signing written confirmation. - O.C.G.A. § 11-2-201 allows formation of enforceable contract even though only one party signs written confirmation. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).

Effect of failure to answer written confirmation within 10 days of receipt. - Between merchants, failure to answer written confirmation of contract within 10 days of receipt is tantamount to a writing under O.C.G.A. § 11-2-201(2) and is sufficient against both parties under O.C.G.A. § 11-2-201(1) . The only effect, however, is to take away from the party who fails to answer the defense of the statute of frauds; burden of persuading trier of fact that a contract was in fact made orally prior to written confirmation is unaffected. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).

Written confirmation between merchants enforceable only as to quantity specified. - Between merchants, requirement of a writing is satisfied by a writing in confirmation of contract which is received within a reasonable time by party against whom enforcement is sought and which is sufficient to bind the sender, but is enforceable only with respect to quantity of goods shown in the writing. Maderas Tropicales v. Southern Crate & Veneer Co., 588 F.2d 971 (5th Cir. 1979).

Confirmation order of broker sufficient writing. - As there was evidence from which it could be inferred that a peanut commodities broker's confirmation order was a writing that was signed by both parties to the transaction, through the broker as their agent, and that the confirmation was signed by the sender's agent such that it was sufficient against the sender, the seller could not rely on a defense under the Statute of Frauds to the buyer's claims. Brooks Peanut Co. v. Great S. Peanut, LLC, 322 Ga. App. 801 , 746 S.E.2d 272 (2013).

Invoices held to be written confirmation of the contract between merchants within the meaning of O.C.G.A. § 11-2-201(2) . Dalesso v. Reliable-Triple Cee of N. Jersey, Inc., 167 Ga. App. 372 , 306 S.E.2d 415 (1983).

Where the sale of goods involves two parties who are merchants, the invoices for the sale constitute written confirmation of the agreement; in addition, buyer's acceptance of the delivered goods takes the agreement out of the statute of frauds due to partial performance. Bicknell v. Joyce Sportswear Co., 173 Ga. App. 897 , 328 S.E.2d 564 (1985).

Italian companies that sold goods to a Georgia corporation were not required to obtain a certificate of authority from the State of Georgia prior to doing business in Georgia, and Georgia courts had jurisdiction over actions which the Italian companies filed against the Georgia corporation after they delivered goods, submitted invoices for payment, but were not fully paid. Imex Int'l v. Wires Eng'g, 261 Ga. App. 329 , 583 S.E.2d 117 (2003).

Farming corporation as "merchant." - Evidence supported a finding that defendant farming corporation was a "merchant" bound by an oral agreement to sell 5,000 bushels of soybeans, which agreement was confirmed in writing to which the corporation made no response. Thunderbird Farms, Inc. v. Abney, 178 Ga. App. 335 , 343 S.E.2d 127 (1986).

Preprinted "limited warranty" language. - Under O.C.G.A. § 13-2-2(7) , preprinted "limited warranty" language on the back of a confirmation had no effect because it directly contradicted the full warranty language that was typed on the front of the preprinted confirmation form; the court erred when it relied on this warranty to bar claims for lost profits or other special damages. Authentic Architectural Millworks, Inc. v. SCM Group USA, Inc., 262 Ga. App. 826 , 586 S.E.2d 726 (2003).

"Merchants" as including farmers who orally "book" crops. - Construing "merchants" in O.C.G.A. § 11-2-104(1) as not excluding as a matter of law farmers who orally "book" crops such as soybeans for sale protects them equally as well as the buyer. If the market price declines after the booking, they are assured of the higher booking price; the buyer cannot renege as O.C.G.A. § 11-2-201 would apply. Goldkist, Inc. v. Brownlee, 182 Ga. App. 287 , 355 S.E.2d 773 (1987).

Deposition testimony of merchant's representative sufficient to form oral agreement. - When a car dealer admitted that a contract existed for the sale of a specific quantity of goods, namely, one vehicle, via the dealer's representative's deposition, but on different terms and conditions than those alleged by the car's potential buyer, the oral agreement between the parties was enforceable under the exception to the statute of frauds set forth in O.C.G.A. § 11-2-201(3)(b). Jones v. Baran Co., LLC, 290 Ga. App. 578 , 660 S.E.2d 420 (2008).

Objection requirements of O.C.G.A. §§ 11-2-201(2) , 11-2-202 , and 11-2-207 applied to work orders issued by a home improvement store to a contractor for the purchase of carpeting because the contractor's installation service was incidental to the purchase of carpeting by the store's customers. On the other hand, change orders that dealt with services that the contractor was asked to provide over and above the initial installation of the carpeting were not subject to the requirements of the Uniform Commercial Code. Ricciardelli v. Home Depot U.S.A., Inc., F. Supp. 2d (DC Jan. 15, 2009).

Actions

When insufficient contract enforceable. - A contract which is otherwise insufficient may still be enforceable if party against whom enforcement is sought admits by pleading or testimony that a contract of sale was in fact made. Jackson v. Meadows, 153 Ga. App. 1 , 264 S.E.2d 503 (1980).

A contract which is within statute of frauds at time of filing petition or cross action can become enforceable by admissions in the case itself by party charged, but not by admissions made outside the case prior to filing of petition or cross action. Garrison v. Piatt, 113 Ga. App. 94 , 147 S.E.2d 374 (1966).

Failure to object to goods constituted acceptance and formed contract. - Under the merchant rule in O.C.G.A. § 11-2-201(2) , a hospital's failure to object in writing to a medical supplier's invoice for pumps within ten days of receipt constituted the hospital's acceptance of the goods and formed an enforceable contract, even though the hospital's purchase order noted that the purchase was contingent on approval by the hospital's board of directors. Ardus Med., Inc. v. Emanuel County Hosp. Auth., 558 F. Supp. 2d 1301 (S.D. Ga. 2008).

Party admitting contract may not claim benefit of statute of frauds. - Party charged cannot admit fact of parol contract and at same time claim benefit of statute of frauds. Garrison v. Piatt, 113 Ga. App. 94 , 147 S.E.2d 374 (1966).

O.C.G.A. § 11-2-201(3)(b) was designed to prevent the statute of frauds itself from becoming an aid to fraud, by prohibiting one claiming the benefit of the statute who admits in the case the oral contract sued upon. Garrison v. Piatt, 113 Ga. App. 94 , 147 S.E.2d 374 (1966).

An oral agreement for the sale of a horse for $35,000 was enforceable under O.C.G.A. § 11-2-201(3)(b); the seller admitted that a contract was made for the sale of one horse. Rowland v. Scarborough Farms, LLC, 285 Ga. App. 831 , 648 S.E.2d 151 (2007).

Petition for enforcement of contract otherwise valid not demurrable. - Because it is clearly the intent of the legislature that enforceability of contract, which on its face may be within statute of frauds, is tested by answer, testimony, or plea of party charged, and not merely by allegations in the petition or cross action brought to enforce the contract, it follows that a petition upon such a contract which is valid in other respects is not demurrable because it shows on its face that it is within the statute of frauds. Garrison v. Piatt, 113 Ga. App. 94 , 147 S.E.2d 374 (1966).

Agreement found outside of statute of frauds due to partial performance. See Dan Gurney Indus., Inc. v. Southeastern Wheels, Inc., 168 Ga. App. 504 , 308 S.E.2d 637 (1983).

Parol defense. - In action on account by seller, O.C.G.A. § 11-2-201 does not prohibit setting up by parol evidence a defense based upon term of contract of sale as to when payments on account become due. Giant Peanut Co. v. Carolina Chems., Inc., 129 Ga. App. 718 , 200 S.E.2d 918 (1973).

Secured transactions. - While it appeared that O.C.G.A. § 9-3-24 , rather than O.C.G.A. § 11-2-725 , would most likely apply to defendant collection attorney's state court deficiency action against plaintiff consumer, and it was not for the federal court to say what the Georgia courts would hold, the uncertainty meant there was no intentional unfair conduct and the consumer's Fair Debt Collection Practices Act claim was dismissed; language in O.C.G.A. § 11-2-201 excluded "secured transactions" from § 11-2-201 . Almand v. Reynolds & Robin, P.C., 485 F. Supp. 2d 1361 (M.D. Ga. 2007).

Summary judgment. - Lender and attorney were properly granted summary judgment against a home buyer's breach of contract, fraud, and conspiracy claims, as: (1) there was no evidence of a written purchase agreement for the home and the land it was placed on; and (2) a simple reading of the contract by the buyer would have protected against any alleged misrepresentations; moreover, to the extent that the home buyer's claim of a conspiracy depended upon the viability of the fraud and breach of contract claims, it also failed. Parrish v. Jackson W. Jones, P.C., 278 Ga. App. 645 , 629 S.E.2d 468 (2006).

Because an oral contract concerning the disposal of car skeletons on property operated as a junkyard did not violate the O.C.G.A. §§ 11-2-201 and 11-2-725 , the trial court erred in granting summary judgment against a seller on his counterclaim for fraud, due to the option holder's repudiation of the contract in filing for specific performance. Henry v. Blankenship, 284 Ga. App. 578 , 644 S.E.2d 419 (2007).

General Consideration

No other construction of contract allowed. - Where the language of the contract is plain, unambiguous, and capable of only one reasonable interpretation, no other construction is permissible. Golden Peanut Co. v. Hunt, 203 Ga. App. 469 , 416 S.E.2d 896 (1992).

Parol evidence of prior agreement not effective to vary terms of writing. - Parol evidence as to terms of agreement made prior to execution of document is not effective to vary terms of written contract. Romines v. Wagstaff Motor Co., 120 Ga. App. 608 , 171 S.E.2d 752 (1969); Hill Aircraft & Leasing Corp. v. Planes, Inc., 158 Ga. App. 151 , 279 S.E.2d 250 (1981).

Express terms of written contract generally may not be materially varied by parol evidence of prior agreement or of contemporaneous oral agreement between parties. Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975).

Parties bound by writing. - In dispute over meaning of contract and subsequent acts of parties to it during execution thereof which is not over language of the contract, a party is bound by what has been reduced to writing. R.S. Helms, Inc. v. GST Dev. Co., 135 Ga. App. 845 , 219 S.E.2d 458 (1975).

O.C.G.A. § 11-2-306(1) precludes a finding that a contract for requirements is too indefinite, since the quantity is determined by the actual good faith requirements of the particular party. O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983).

Cited in Economy Forms Corp. v. Kandy, Inc., 391 F. Supp. 944 (N.D. Ga. 1974); Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975); Richards & Assocs. v. Fidelity Sound, Inc., 137 Ga. App. 752 , 224 S.E.2d 832 (1976); Atlanta Army & Navy Store, Inc. v. Stuckman, 143 Ga. App. 850 , 240 S.E.2d 220 (1977); Corbett v. North Fla. Clarklift, Inc., 155 Ga. App. 701 , 272 S.E.2d 563 (1980); Troutt v. Nash AMC/Jeep, Inc., 157 Ga. App. 399 , 278 S.E.2d 54 (1981); Chatham v. Southern Ry., 157 Ga. App. 831 , 278 S.E.2d 717 (1981); David J. Joseph Co. v. S & M Scrap Metal Co., 163 Ga. App. 685 , 295 S.E.2d 860 (1982); W. Linton Howard, Inc. v. Gibbs Mach., Inc., 169 Ga. App. 627 , 314 S.E.2d 259 (1984).

Legislative Intent

Oral contracts enforceable. - Existence of O.C.G.A. § 11-2-202 indicates that terms of oral contracts are enforceable under Uniform Commercial Code. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).

O.C.G.A. § 11-2-202 requires courts to apply to contracts the meaning intended by parties. See R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973), aff'd, 494 F.2d 41 (5th Cir. 1974).

Section intended to prevent false claims of oral warranties. - O.C.G.A. § 11-2-202 was intended to allow sellers to prevent buyers from making false claims of oral warranties in contract actions. City Dodge, Inc. v. Gardner, 232 Ga. 766 , 208 S.E.2d 794 (1974).

Liberalization of parole evidence rule. - O.C.G.A. § 11-2-202 was intended to liberalize common-law parol evidence rule to allow evidence of agreements outside contract without a prerequisite finding that contract was ambiguous. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Admission of evidence contradicting express terms of contract ignores purpose of section. - To admit evidence of agreement contradicting express terms of contract would clearly eviscerate purpose of O.C.G.A. § 11-2-202 . Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Construction and Application

Consideration given to official comments. - O.C.G.A. § 11-2-202 was adopted verbatim from § 2-202 of the Uniform Commercial Code and therefore, in its application by Georgia courts, intentions of drafters of the Uniform Commercial Code as evidenced in official comments to it should be given due consideration. Warren's Kiddie Shoppe, Inc. v. Casual Slacks, Inc., 120 Ga. App. 578 , 171 S.E.2d 643 (1969).

Effect of allowing challenges to specific agreements by extrinsic evidence. - In contracts which set out fairly specific quantity, price, and time specifications, to allow such specific agreements to be challenged by extrinsic evidence might jeopardize certainty of contractual duties which parties have right to rely on. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Unreasonable construction of contract. - Construction of contract which negates its express terms, allowing unilateral abandonment of specifications, is patently unreasonable. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Contracts to be interpreted in light of commercial setting. - O.C.G.A. § 11-2-202 requires that contracts be interpreted in light of commercial context in which they were written and not by rules of legal construction. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Evidence admissible to show written confirmation incorrectly stated terms of prior oral agreement. - Recognizing extensive use of oral contracts in securities and commodities markets it is clear that if use of oral contracts is to be fostered, party seeking to enforce oral contract should not be prevented from doing so merely because an alleged written confirmation incorrectly stated terms of prior oral contract. If the law was construed differently, a party to an oral contract could easily elude enforcement by sending a confirmatory memorandum which incorrectly stated all terms of prior oral contract. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).

Contract established by memorandum, correspondence, and agreement despite indefinite quantity term. - Where the evidence demonstrated that both parties intended a requirements contract based on purchaser's good faith needs for the trademarked yarns and the existence of this contract was established by a memorandum, the correspondence between the parties, and a trademark licensing agreement which was to remain in effect subject to cancellation by either party on 90 days' notice, the indefiniteness of the written quantity term did not invalidate the contract. O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983).

Actual agreement not contained in one document. - Trial court correctly considered matters outside a buyer's request for quotation (RFQ) to determine the intended final obligations of the buyer and a seller under their agreement because the evidence supported the trial court's finding that the parties' actual agreement was not contained in any one document, such as the RFQ, since the RFQ anticipated that necessary terms such as material specifications, quantities, pricing information, and delivery dates would be supplied as part of the bidding and ordering process; because before, during, and after accepting the seller's bid, the buyer was aware of the seller's overseas supply chain and did not object to the seller's stated reliance on a promised three-month forecast to obtain material, the trial court did not err in construing the written terms of the contract in light of that understanding and thereby denying the buyer cover damages for items exceeding the usage data provided to the seller. Scovill Fasteners, Inc. v. Northern Metals, Inc., 303 Ga. App. 246 , 692 S.E.2d 840 (2010).

Where parties disagree on terms, evidence of prior oral agreement admissible. - O.C.G.A. § 11-2-202 forbids use of evidence of prior agreements only with respect to terms in confirmatory memoranda to which parties agree, and where parties disagree on every term in alleged confirmatory memorandum, this section will not prohibit use of evidence of any prior agreement. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).

Where implied warranties are properly excluded, evidence of prior or contemporaneous parol agreements not admissible. - Where provisions of contract meet requirements of O.C.G.A. § 11-2-316 and no implied warranty arises out of the transaction, either as to merchantability or as to fitness for a particular purpose, evidence of a contradictory prior or contemporaneous parol agreement is prohibited. Avery v. Aladdin Prods. Division, Nat'l Serv. Indus., Inc., 128 Ga. App. 266 , 196 S.E.2d 357 (1973).

Evidence of samples admitted to support claim of breach of express warranty by sample. - Because there was no indication that the written contract was a complete and exclusive statement of the agreement between the parties, and because the terms expressed by the sample did not contradict those in the written contract, the parol evidence rule did not prevent the admission of evidence of peanut samples sent by the seller to describe what the buyer would receive in bulk shipment to provide a foundation for the claim against the seller for breach of express warranty by sample. Alimenta (U.S.A.), Inc. v. Anheuser-Busch Cos., 803 F.2d 1160 (11th Cir. 1986).

Unambiguous agreement cannot be modified. - Where the clear intention of the parties was that if they could not agree upon a price, seller could then entertain bona fide purchase offers from any third party, buyer cannot modify that unambiguous agreement by use of parol evidence to additionally require the bona fide offer to come from a federally registered peanut handler. Golden Peanut Co. v. Hunt, 203 Ga. App. 469 , 416 S.E.2d 896 (1992).

The phrase "local taxes," as used in contracts which excluded local taxes from the lump sum purchase price for advertising signs, did not include state sales taxes, where the phrase was at best an ambiguous phrase, admitting of no single, reasonable meaning, without resort to construction. Outdoor Displays Welding & Fabrication, Inc. v. United States Enters., Inc., 84 Bankr. 260 (Bankr. S.D. Ga. 1988).

Parol evidence admissible if no final sales price. - Where written contracts were not intended by the parties as a complete and exclusive statement of the agreed upon terms, because only a floor price, rather than the final sales price, was stated, parol evidence as to the parties' prescribed method for fixing the final price was admissible. Golden Peanut Co. v. Bass, 275 Ga. 145 , 563 S.E.2d 116 (2002), cert. denied, 537 U.S. 886, 123 S. Ct. 32 , 154 L. Ed. 2 d 146 (2002).

Usage of Trade, Course of Dealing, and Course of Performance

Customs of trade considered in interpreting contract terms. - Customs of trade should be relevant to interpretation of certain terms of contract, and should be considered in determining what variation in specifications is considered acceptable. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Contracts are to be interpreted with assumption that usages of trade were taken for granted when document was phrased. Unless carefully negated they become an element of meaning of words used. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Modification need not be in writing. - Modification or restitution of the remedy available for breach of warranty need not be in writing. Parole evidence to show the usage of the trade to explain or supplement the available remedies for breach of warranty was improperly excluded. Topeka Mach. Exch., Inc. v. Stoler Indus., Inc., 220 Ga. App. 799 , 470 S.E.2d 250 (1996).

When contract terms and trade usage construed as consistent. - The express terms of a contract and trade usage shall be construed as consistent with each other only when such construction is reasonable and a construction which negates the express terms of the contract by allowing unilateral abandonment of its specifications is patently unreasonable. Golden Peanut Co. v. Hunt, 203 Ga. App. 469 , 416 S.E.2d 896 (1992).

Assumption that parties intend specific price and quantity terms observed. - Though courts are free to apply custom and trade usage in interpreting terms, it should be assumed that specifications in contract as to quantity and price are intended to be observed by parties and unilateral right to make major departure from such specifications must be expressly agreed to in written contract. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

No need to negate applicability of trade usage to preserve written price and quantity terms. - If clause expressly negating applicability of trade usage is necessary to preserve specified price and quantity terms of a contract, the purposes of the Uniform Commercial Code will be quickly frustrated, for while consideration of commercial custom is an important aid in interpretation of terms of a contract, parties will have no choice but to foreclose use of such an aid if inevitable result of such consideration is to have explicit contracts negated by an evidentiary free-for-all. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 589 F.2d 1154 (5th Cir. 1978).

Complete and Exclusive Agreements

Effect of merger and disclaimer clauses. - In contract actions, effect of merger and disclaimer clauses must be determined under provisions of Uniform Commercial Code. City Dodge, Inc. v. Gardner, 232 Ga. 766 , 208 S.E.2d 794 (1974).

Contract clause specifying that conditions not incorporated in contract will not be recognized indicates that writing was intended to be complete and exclusive statement of terms of agreement. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Where writing appears to be complete and certain agreement and there is no evidence or allegation of fraud or accident, contract will be presumed to contain entire agreement, and parol evidence of prior or contemporaneous representations or statements will not be considered to add to, take from, or vary written instruments involved. R.S. Helms, Inc. v. GST Dev. Co., 135 Ga. App. 845 , 219 S.E.2d 458 (1975).

"Consistent additional terms" refers to matters not dealt with in written contract. - Evidence which may be admitted under O.C.G.A. § 11-2-202(b) pertains to agreements covering matters not dealt with in the written contract. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

O.C.G.A. § 11-2-202(b) cannot be used merely as an alternative means of introducing evidence of trade usage. See Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Fraud

Charge of fraud, if adequately alleged, may be established by parol evidence. See Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Even though contract is in writing, fact that it was induced by false representations may be shown by parol or extrinsic evidence as a sheer matter of necessity. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Evidence of fraud in procurement of contract. - Though terms of agreement may indicate existence of valid contract, it will not stand in face of proof evidencing fraud in its procurement. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Evidence that material term was founded on misrepresentations or was inserted or omitted fraudulently. - Fact that contract is in writing does not preclude introduction of evidence to show that material stipulation therein was founded on misrepresentations and fraud of one party, or was inserted or omitted by fraudulent means. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Tort action for fraudulent misrepresentation not precluded. - The Uniform Commercial Code does not preclude an action in tort based upon fraudulent misrepresentation inducing sale where plaintiff proves by preponderance of evidence the elements of fraud and deceit recognized under Georgia law, and such a tort action cannot be controlled by the terms of the contract itself. City Dodge, Inc. v. Gardner, 232 Ga. 766 , 208 S.E.2d 794 (1974).

Procedure

Objection requirements of O.C.G.A. §§ 11-2-201(2) , 11-2-202 , and 11-2-207 applied to work orders issued by a home improvement store to a contractor for the purchase of carpeting because the contractor's installation service was incidental to the purchase of carpeting by the store's customers. On the other hand, change orders that dealt with services that the contractor was asked to provide over and above the initial installation of the carpeting were not subject to the requirements of the Uniform Commercial Code. Ricciardelli v. Home Depot U.S.A., Inc., F. Supp. 2d (DC Jan. 15, 2009).

Jury questions. - Evidence of trade usage of terms is admissible to construe a contract, and whether delivery terms of contract have been breached presents issue of fact for jury. Warren's Kiddie Shoppe, Inc. v. Casual Slacks, Inc., 120 Ga. App. 578 , 171 S.E.2d 643 (1969).

Question of reliance on alleged fraudulent misrepresentation in tort cases cannot be determined by provisions of contract sought to be rescinded but is a question of fact for jury. City Dodge, Inc. v. Gardner, 232 Ga. 766 , 208 S.E.2d 794 (1974).

General Consideration

"Unconscionable" defined. - "Unconscionable" under O.C.G.A. § 11-2-302 means "one-sided contracts." R.C. Craig, Ltd. v. Ships of Sea, Inc., 345 F. Supp. 1066 (S.D. Ga. 1972), later proceeding, 401 F. Supp. 1051 (S.D. Ga. 1975).

An unconscionable contract is such an agreement as no sane man not acting under a delusion would make, and that no honest man would take advantage of. R.L. Kimsey Cotton Co. v. Ferguson, 233 Ga. 962 , 214 S.E.2d 360 (1975); Stefan Jewelers, Inc. v. Electro-Protective Corp., 161 Ga. App. 385 , 288 S.E.2d 667 (1982).

Section not intended merely to relieve party from bad bargain. - If court determines as a matter of law that provision of a contract is unconscionable when made, it may, among other things, so limit the application of any unconscionable provision to avoid an unconscionable result, but O.C.G.A. § 11-2-302 is not designed merely to relieve a party of a bad bargain. Romine, Inc. v. Savannah Steel Co., 117 Ga. App. 353 , 160 S.E.2d 659 (1968).

Limitation of warranty held unconscionable. - A general limitation of warranty, if construed so as to limit remedy in all events, would be unconscionable under O.C.G.A. § 11-2-302 . Jacobs v. Metro Chrysler-Plymouth, Inc., 125 Ga. App. 462 , 188 S.E.2d 250 (1972).

Cited in Holcomb v. Approved Bancredit Corp., 225 Ga. 271 , 167 S.E.2d 655 (1969); Avery v. Aladdin Prods. Div., Nat'l Serv. Indus., Inc., 128 Ga. App. 266 , 196 S.E.2d 357 (1973); Westinghouse Credit Corp. v. Chapman, 129 Ga. App. 830 , 201 S.E.2d 686 (1973); Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973); F.N. Roberts Pest Control Co. v. McDonald, 132 Ga. App. 257 , 208 S.E.2d 13 (1974); R.C. Craig, Ltd. v. Ships of Sea, Inc., 401 F. Supp. 1051 (S.D. Ga. 1975); Fratelli Gardino v. Caribbean Lumber Co., 447 F. Supp. 1337 (S.D. Ga. 1978); Holman Motor Co. v. Evans, 169 Ga. App. 610 , 314 S.E.2d 453 (1984).

Application

O.C.G.A. § 11-2-302 does not by its terms apply to transactions not involving a sale. Interstate Sec. Police, Inc. v. Citizens & S. Emory Bank, 237 Ga. 37 , 226 S.E.2d 583 (1976).

Discretion of courts over enforcement of sales contracts. - While it is a general rule in this state that parties may contract as they please subject to the exceptions of O.C.G.A. § 13-8-1 et seq., O.C.G.A. § 11-2-302 modifies this general rule that parties are free to make whatever contracts they please so long as there is no fraud or illegality by giving the courts discretion to refuse to enforce sales contracts under Georgia Uniform Commercial Code, in whole or in part, which they find to be "unconscionable." Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435 , 208 S.E.2d 321 (1974).

Exclusion or modification of warranty. - Although a seller may exclude or modify warranties, a court may refuse to enforce an exclusion or modification on the basis of unconscionability. Mullis v. Speight Seed Farms, Inc., 234 Ga. App. 27 , 505 S.E.2d 818 (1998).

Test for unconscionability. - The basic test is whether, in light of general commercial background and commercial needs of particular trade or case, clauses involved are so one-sided as to be unconscionable under circumstances existing at the time of making of contract. R.L. Kimsey Cotton Co. v. Ferguson, 233 Ga. 962 , 214 S.E.2d 360 (1975).

Deletion of unconscionable clauses. - O.C.G.A. § 11-2-302 allows a court to determine whether any clause in a contract is unconscionable at the time it was made and, if so, to allow the contract to be construed with the offending clause deleted. Jacobs v. Metro Chrysler-Plymouth, Inc., 125 Ga. App. 462 , 188 S.E.2d 250 (1972).

A limitation of remedies in a commercial setting is not considered unconscionable. Hall v. Fruehauf Corp., 179 Ga. App. 362 , 346 S.E.2d 582 (1986).

Nonresidents not allowed to assert that city water fees were unconscionable. - Nonresident plaintiffs, having no enforceable right to be supplied with water from a city at any price, were not allowed to assert that it was "unconscionable" that they were not being supplied with water for a fee that was less than that assessed by the authorities legally authorized to determine the rate to be charged. Zepp v. Mayor of Athens, 180 Ga. App. 72 , 348 S.E.2d 673 (1986).

Contract provision not unconscionable. - Contract provision that provider of burglar alarm service "shall not be liable for" and jeweler "waives any rights against [provider] on account of any loss" was not unconscionable, particularly with reference to a theft by a third party, seemingly performed by professionals, in cutting the phone lines on which the service was based, thereafter cutting into the roof of the building, bypassing this protective barrier and then cutting the wire to the outside alarm bell. Stefan Jewelers, Inc. v. Electro-Protective Corp., 161 Ga. App. 385 , 288 S.E.2d 667 (1982).

Plaintiffs failed to state a claim for breach of express warranty against a vehicle manufacturer and distributor when they did not allege that they presented their vehicles for repairs within the warranty period, and the court would not use the unconscionability provisions of O.C.G.A. § 11-2-302 , Cal. Civ. Code § 1670.5, Fla. Stat. § 672.302, 810 ILCS 5/2-302, and Va. Code Ann. § 8.2-302 to strike the time and mileage limitations. Defendants' knowledge of the alleged defect at the time of sale, standing alone, was insufficient to render the time and mileage limitations unconscionable. McCabe v. Daimler AG, F. Supp. 2d (N.D. Ga. June 7, 2013).

Guaranty not unconscionable. - When the owner of a Chapter 11 debtor signed a personal guaranty of the debtor's debt, which included a waiver of defenses clause, in return for the withdrawal of a motion by a creditor for the appointment of a trustee, the guaranty was not unconscionable because the guaranty went through several iterations, the owner read the guaranty's final terms, and the owner discussed the guaranty with counsel. Abdulla v. Klosinski, F. Supp. 2d (S.D. Ga. Sept. 25, 2012).

Bank charges not unconscionable. - While plaintiff bank customers alleged defendant bank had a practice of manipulating the posting of transactions to impose overdraft fees, there was no substantive unconscionability under O.C.G.A. § 11-2-302 as the deposit agreement was consistent with O.C.G.A. § 11-4-303(b) as to the order items were paid. White v. Wachovia Bank, N.A., 563 F. Supp. 2d 1358 (N.D. Ga. 2008).

Warranty excluding consequential damages not unconscionable. - A warranty on a television set which excluded all incidental and consequential damages was not unconscionable under both a procedural and substantive analysis. NEC Technologies, Inc. v. Nelson, 267 Ga. 390 , 478 S.E.2d 769 (1996).

Provision in California lender's contract allowing repossession of automobile if removed from California more than 30 days was not unconscionable. Francis v. Union Bank, 183 Ga. App. 84 , 357 S.E.2d 837 , cert. denied, 183 Ga. App. 906 , 357 S.E.2d 837 (1987).

Motor vehicle title pawn transaction. - Although O.C.G.A. § 11-2-302 by its terms applies to transactions involving a sale, there is nothing unconscionable about a pawn ticket that authorizes the pawnbroker to sell the pawned vehicle following the debtor's default. Hooks v. Cobb Ctr. Pawn & Jewelry Brokers, Inc., 241 Ga. App. 305 , 527 S.E.2d 566 (1999).

Liability limited to purchase price. - A disclaimer of liability for breach of warranty by a tobacco seed manufacturer, which stated that liability would be limited to the purchase price, was unconscionable and would not be enforced; an absence of liability on the part of the manufacturer would leave farmers with no recourse for a loss caused by a crop failure, and the allocation of risk for ineffective seeds is better shouldered by the manufacturer than the consumer. Mullis v. Speight Seed Farms, Inc., 234 Ga. App. 27 , 505 S.E.2d 818 (1998).

General Consideration

Editor's notes. - In light of the similarity in the provisions, cases decided under former Civil Code 1910, § 4139 and former Code 1933, § 96-301 are included in the annotations for this section.

Warranty by seller. - If there is no express covenant of warranty, purchaser must exercise caution in detecting defects, but seller in all cases, unless expressed or from nature of the transaction excepted, warrants title and right to sell, that article sold is merchantable and reasonably suited to use intended, and that seller knows of no latent defects undisclosed. Jones v. Knightstown Body Co., 52 Ga. 667 , 184 S.E. 427 (1936); Wilkinson v. Rich's, Inc., 77 Ga. App. 239 , 48 S.E.2d 552 (1948) (decided under former Code 1933, § 96-301).

Where plaintiff purchaser in affidavit denies that plaintiff had actual knowledge that automobile had prior lien lodged against it at time of purchase transaction, and lack of prior actual knowledge has not been controverted in any manner by defendant, warranty that goods shall be delivered free of any lien is included in contract of sale. Christopher v. McGehee, 124 Ga. App. 310 , 183 S.E.2d 624 , aff'd, 228 Ga. 466 , 186 S.E.2d 97 (1971).

Implied warranty in sale of personalty. - In every sale of personalty there is implied full warranty of title by vendor, unless such a warranty is negatived or restricted by express contract. Cook v. Pollard, 50 Ga. App. 752 , 179 S.E. 264 (1935) (decided under former Civil Code 1910, § 4135).

How warranties raised. - Implied warranty is raised by statute, while express warranty is by contract. Stewart v. Gainesville Glass Co., 131 Ga. App. 747 , 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578 , 212 S.E.2d 377 (1975).

Buyer is entitled to transfer of good, clean title in rightful manner so that buyer will not be exposed to a law suit in order to protect it. R.C. Craig, Ltd. v. Ships of Sea, Inc., 345 F. Supp. 1066 (S.D. Ga. 1972), later proceeding, 401 F. Supp. 1051 (S.D. Ga. 1975).

Mere fact that another name appears as the owner of a motor vehicle on the certificate of title does not negate a seller's warranty of title, particularly in the face of the seller's alleged representation that the seller owns the vehicle. Spoon v. Herndon, 167 Ga. App. 794 , 307 S.E.2d 693 (1983).

The issuance of certificates of title pursuant to O.C.G.A. § 40-3-28 of the motor vehicles law does not, as a matter of law, negate the existence of express or implied warranties of title which the seller gives the purchaser in the course of their dealings. Hudson v. Gaines, 199 Ga. App. 70 , 403 S.E.2d 852 (1991).

Cited in Bell v. Menzies, 110 Ga. App. 436 , 138 S.E.2d 731 (1964); Cochran v. Horner, 121 Ga. App. 297 , 173 S.E.2d 448 (1970); Moister v. National Bank (In re Guaranteed Muffler Supply Co.), 1 Bankr. 324 (Bankr. N.D. Ga. 1979); Fritts v. Mid-Coast Trading Corp., 166 Ga. App. 31 , 303 S.E.2d 148 (1983).

Breach of Warranty

Elements of action for breach of implied warranty are invalidity of seller's title and loss to buyer. A petition which by its allegations makes both of these elements appear is not subject to demurrer. Welfare Fin. Corp. v. Waters, 98 Ga. App. 20 , 104 S.E.2d 669 (1958) (decided under former Code 1933, § 96-301).

Breach of warranty shown. - Where petition alleges that through failure of warranty in sale of personalty vendee became liable to pay sum of money and discharged the liability by paying the money, then petition shows breach of warranty and loss to plaintiff appears from its allegations. Welfare Fin. Corp. v. Waters, 98 Ga. App. 20 , 104 S.E.2d 669 (1958) (decided under former Code 1933, § 96-301).

Notice of breach. - A condition precedent to a contract action for breach of warranty of title is that the plaintiff must have notified the defendant of the breach within a reasonable time thereof as provided in O.C.G.A. § 11-2-607(3)(a). Oden & Sims Used Cars, Inc. v. Thurman, 165 Ga. App. 500 , 301 S.E.2d 673 (1983).

Impleaded claims. - Third-party claims of breach of warranty under O.C.G.A. § 11-2-312(3) , and indemnity were proper to implead into a patent infringement case under Fed. R. Civ. P. 14(a) because the essence of the claims were to show that others were liable for any infringement. However, because the claims involved separate areas of law and might be prejudicial or confuse the jury, severance was proper under Fed. R. Civ. P. 42(b). Tillotson Corp. v. Shijiazhaung Hongray Plastic Prods., F. Supp. 2d (N.D. Ga. Oct. 23, 2006).

General Consideration

How warranties raised. - Implied warranty is raised by statute, while express warranty is by contract. Stewart v. Gainesville Glass Co., 131 Ga. App. 747 , 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578 , 212 S.E.2d 377 (1975).

A warranty is a statement of representation made by the seller of goods contemporaneously with and as a part of the contract of sale, though collateral to the express object of it, having reference to the character, quality, or title to the goods and by which the seller promises or undertakes to insure that certain facts are or shall be as the seller then represents them. North Ga. Ready Mix Concrete Co. v. L & L Constr., Inc., 235 Ga. App. 68 , 508 S.E.2d 722 (1998).

Representation as to quality, character, or title. - An express warranty is a representation or statement made by seller at time of sale and as a part thereof, having reference to quality, character, or title to goods, and is part of the transaction between seller and purchaser. Stewart v. Gainesville Glass Co., 131 Ga. App. 747 , 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578 , 212 S.E.2d 377 (1975).

Test. - Decisive test in determining whether language used is mere expression of opinion or warranty, is whether it purported to state fact upon which it may fairly be presumed seller expected buyer to rely, and upon which buyer would ordinarily rely. If language used is of that character, fact of reliance on part of buyer and presumption of intent on part of seller which the law would raise in such case would operate to create warranty. Bell v. Menzies, 110 Ga. App. 436 , 138 S.E.2d 731 (1964); Moore v. Berry, 217 Ga. App. 697 , 458 S.E.2d 879 (1995).

Failure to limit warranty made or to exclude any implied warranties may give rise to liability under either O.C.G.A. §§ 11-2-313 or 11-2-314 . Jones v. Cranman's Sporting Goods, 142 Ga. App. 838 , 237 S.E.2d 402 (1977).

Express and implied warranties. - A warranty may be express or implied; it is the former when created by the apt and explicit statements of the seller; it is the latter when the law derives it by implication or inference from the nature of the transaction or the relative situation or circumstances of the parties. North Ga. Ready Mix Concrete Co. v. L & L Constr., Inc., 235 Ga. App. 68 , 508 S.E.2d 722 (1998).

Trial court erred in denying a corporation's motion for summary judgment on an individual's claim for breach of an express warranty when the individual's three-wheeled motorized scooter tipped over while the individual was operating the scooter in the individual's yard as the individual failed to present any evidence that the scooter was generally unsuitable for use on non-paved and sloped surfaces and, therefore, the individual had not identified any evidence that the scooter did not conform to a salesperson's description. Foothills Pharms., Inc. v. Powers, 313 Ga. App. 630 , 722 S.E.2d 331 (2012).

Description of vehicle as new created express warranty. Horne v. Claude Ray Ford Sales, Inc., 162 Ga. App. 329 , 290 S.E.2d 497 (1982).

Contract for sale of car describing it as new created express warranty to that effect, which was not negated by disclaimer of express warranties in same contract. Century Dodge, Inc. v. Mobley, 155 Ga. App. 712 , 272 S.E.2d 502 (1980); Thompson v. Huckabee Auto Co., 190 Ga. App. 540 , 379 S.E.2d 411 (1989).

Where a retail sales contract described a car as new, neither specific disclaimer of express or implied warranties nor "sold as is" language could negate the express warranty that the car was new. Rivers v. BMW of N. Am., Inc., 214 Ga. App. 880 , 449 S.E.2d 337 (1994).

Error as to actual mileage of automobile. - The defendant did not breach any express warranty concerning the actual mileage of an automobile where, at the time it made a statement regarding an odometer reading, it had no knowledge or any reason to believe that the true mileage differed from the mileage shown on the odometer. Charles Evans Nissan, Inc. v. Trussell Ford-Mazda, Inc., 200 Ga. App. 432 , 408 S.E.2d 419 , cert. denied, 200 Ga. App. 895 , 408 S.E.2d 419 (1991).

Disclaimer in same contract. - It is unreasonable to allow express warranty to be negated by disclaimer in same contract. Century Dodge, Inc. v. Mobley, 155 Ga. App. 712 , 272 S.E.2d 502 (1980).

The issuance of certificates of title pursuant to O.C.G.A. § 40-3-28 of the motor vehicles law does not, as a matter of law, negate the existence of express or implied warranties of title which the seller gives the purchaser in the course of their dealings. Hudson v. Gaines, 199 Ga. App. 70 , 403 S.E.2d 852 (1991).

No wrongful death action arises from breach of warranties absent negligence or criminal conduct. Miles v. Bell Helicopter Co., 385 F. Supp. 1029 (N.D. Ga. 1974).

Learned intermediary doctrine. - Plaintiff's breach of warranty claims against a drug manufacturer to the extent the claims were based upon failure to provide accurate or sufficient information regarding the use of the drug to the decedent, were barred by the learned intermediary doctrine, but the claims were not barred to the extent the claims were based upon failure to provide accurate or sufficient information regarding the use of the drug to others. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Cited in Jacobs Pharmacy Co. v. Gipson, 116 Ga. App. 760 , 159 S.E.2d 171 (1967); Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969); Hill Aircraft & Leasing Corp. v. Simon, 122 Ga. App. 524 , 177 S.E.2d 803 (1970); Smith v. Bruce, 129 Ga. App. 97 , 198 S.E.2d 697 (1973); City Dodge, Inc. v. Gardner, 232 Ga. 766 , 208 S.E.2d 794 (1974); Weaver v. Ralston Motor Hotel, Inc., 135 Ga. App. 536 , 218 S.E.2d 260 (1975); Key v. Bagen, 136 Ga. App. 373 , 221 S.E.2d 234 (1975); Lancaster v. Eberhardt, 141 Ga. App. 534 , 233 S.E.2d 880 (1977); Hutchinson Homes, Inc. v. Guerdon Indus., Inc., 143 Ga. App. 664 , 239 S.E.2d 553 (1977); Tillman & Deal Farm Supply, Inc. v. Deal, 146 Ga. App. 232 , 246 S.E.2d 138 (1978); Transart Indus., Inc. v. Gaines-American Moulding Corp., 148 Ga. App. 363 , 251 S.E.2d 384 (1978); Solomon Refrigeration, Inc. v. Osburn, 148 Ga. App. 772 , 252 S.E.2d 686 (1979); Ramsey Brick Sales Co. v. Outlaw, 152 Ga. App. 37 , 262 S.E.2d 227 (1979); Patron Aviation, Inc. v. Teledyne Indus., Inc., 154 Ga. App. 13 , 267 S.E.2d 274 (1980); Preiser v. Jim Letts Oldsmobile, Inc., 160 Ga. App. 658 , 288 S.E.2d 219 (1981); Rigdon v. Walker Sales & Serv., Inc., 161 Ga. App. 459 , 288 S.E.2d 711 (1982); Sires v. Luke, 544 F. Supp. 1155 (S.D. Ga. 1982); GMC v. Green, 173 Ga. App. 188 , 325 S.E.2d 794 (1984).

Applicability

Chattel leases. - Provisions of O.C.G.A. § 11-2-313 are not applicable to all commercial chattel leases. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

Warranty provisions of Uniform Commercial Code are applicable to chattel leases where transaction is analogous to sale. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

Defect in instruction manual. - O.C.G.A. § 11-2-313 does not go beyond physical goods to include freedom from defect in manual of instructions accompanying appliance. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

Statements deemed not mere sales talk or opinion. - Statements by defendant's sales clerk that a product was "probably the safest one on the market" and that there was "no way you [could] fall" from it were sufficient to create an express warranty. Moore v. Berry, 217 Ga. App. 697 , 458 S.E.2d 879 (1995).

Statements deemed opinion or commendation. - Sellers' statement that a horse would be a good show horse was a mere opinion, commendation, or puffing. Sheffield v. Darby, 244 Ga. App. 437 , 535 S.E.2d 776 (2000).

Seller's opinions as to the working order of electrical components in a motor home and some other issues did not create a warranty. Gill v. Bluebird Wanderlodge & Holland Motor Homes, F. Supp. 2d (M.D. Ga. Feb. 4, 2004).

Privity between manufacturer and ultimate consumer. - To the extent the plaintiff's express warranty claim against a drug manufacturer was based upon affirmations of fact or promises to the decedent, the plaintiff asserted a claim upon which relief could be granted because a manufacturer could extend an express warranty to the ultimate consumer. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Medical device. - In a case arising from surgical implantation of a medical device and the injuries sustained from the device's failure and removal, the plaintiff's claim for breach of express warranty was properly asserted because the manufacturer's limited warranty for the implantable pulse generator met the definition of an express warranty pursuant to O.C.G.A. § 11-2-313(1) , and was not preempted under the Medical Device Amendments of 1976, 21 U.S.C. § 360c et seq. Cline v. Advanced Neuromodulation Sys., F. Supp. 2d (N.D. Ga. June 15, 2012).

Evidence

Admission of evidence of samples. - Because there was no indication that the written contract was a complete and exclusive statement of the agreement between the parties, and because the terms expressed by the sample did not contradict those in the written contract, the parol evidence rule did not prevent the admission of evidence of the peanut samples sent by the seller to describe what the buyer would receive in bulk shipment to provide a foundation for the claim against the seller for breach of express warranty by sample. Alimenta (U.S.A.), Inc. v. Anheuser-Busch Cos., 803 F.2d 1160 (11th Cir. 1986).

Parol evidence. - A disclaimer of warranty in an equipment purchase contract barred any claim that the dealer made an express warranty that the equipment would be sold in "working" condition based on oral representations where the contract required that any warranty be contained in a separate writing. Stephens v. Crittenden Tractor Co., 187 Ga. App. 545 , 370 S.E.2d 757 (1988).

Damages. - In a consumer's suit against a car dealer for breach of an express warranty, regarding the sale of a used car which the dealer's salesman falsely represented had not been in a wreck, it was not error for the trial court to grant a directed verdict to the dealer because, while the salesman's representation was an express warranty, under O.C.G.A. § 11-2-313(1)(a), the consumer offered no probative evidence of damages. Mitchell v. Backus Cadillac-Pontiac, Inc., 274 Ga. App. 330 , 618 S.E.2d 87 (2005).

Substantial repairs over three-year period. - Trial court erred in entering summary judgment for a manufacturer on the owners' suit for breach of an express warranty where the owners made 22 trips to the dealership for repairs over a three-year period and, despite the replacement of multiple parts and extensive repairs to the vehicle, the problems continued, including: (1) that the check engine light and the fluid light came on; (2) that the radio's sound quality was inconsistent; (3) that there was engine hesitation and jerking; (4) that squeaking occurred on entering and exiting the vehicle; and (5) that the operation of the wiper blades was noisy. Hill v. Mercedes Benz USA, LLC, 274 Ga. App. 826 , 619 S.E.2d 353 (2005).

General Consideration

Editor's notes. - In light of the similarity between the provisions, decisions under former Code 1910, § 4135 and former Code 1933, §§ 96-301 and 96-307 are included in the annotations to this section. Since this section does not expressly exclude manufacturers from its coverage, cases decided under former Code 1933, § 96-307 have been included here. See Official Comment 2 to Uniform Commercial Code § 2-314.

Purpose of former Code 1933, § 96-307 to distribute losses. - Purpose of former Code 1933, § 96-307 was that enterprise which causes losses should lift them from the individual victims and distribute them widely among those who benefit from activities of the enterprise. Wood v. Hub Motor Co., 110 Ga. App. 101 , 137 S.E.2d 674 (1964) (decided under former Code 1933, § 96-307).

Implied warranty is raised by statute, while express warranty is by contract. Stewart v. Gainesville Glass Co., 131 Ga. App. 747 , 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578 , 212 S.E.2d 377 (1975).

Statutory implied warranty is an obligation that the law places upon a party as a result of some transaction entered into; it is not a contractual obligation. Wood v. Hub Motor Co., 110 Ga. App. 101 , 137 S.E.2d 674 (1964) (decided under former Code 1933, § 96-307).

Because granite blocks were movable at the time of identification of the contract, they were "goods" under O.C.G.A. § 11-2-314 , and an implied warranty of merchantability applied to their sale. Willis Mining, Inc. v. Noggle, 235 Ga. App. 747 , 509 S.E.2d 731 (1998).

Under Georgia's Uniform Commercial Code, O.C.G.A. § 11-2-314(1) , a warranty that the goods shall be merchantable is implied in a contract for the goods' sale if the seller is a merchant with respect to goods of that kind. That warranty protects consumers from defects or conditions existing at the time of sale. Paulk v. Thomasville Ford Lincoln Mercury, Inc., 317 Ga. App. 780 , 732 S.E.2d 297 (2012).

Warranties exist unless excepted. - Implied warranties exist unless expressly or from nature of transaction excepted. Wilson v. Eargle, 98 Ga. App. 241 , 105 S.E.2d 474 (1958) (decided under former Code 1933, § 96-301).

If there is no express covenant of warranty, purchaser must exercise caution in detecting defects, but seller in all cases, unless expressed or from the nature of the transaction excepted, warrants it has title and right to sell, that article sold is merchantable and reasonably suited to use intended, and that seller knows of no latent defects undisclosed. Jones v. Knightstown Body Co., 52 Ga. App. 667 , 184 S.E. 427 (1936); Wilkinson v. Rich's, Inc., 77 Ga. App. 239 , 48 S.E.2d 552 (1948) (decided under former Code 1933, § 96-301).

Implied warranty remains effective for a reasonable time. Wood v. Hub Motor Co., 110 Ga. 101 , 137 S.E.2d 674 (1964) (decided under former Code 1933, § 96-307).

Implied warranties warrant against defects or conditions existing at the time of sale, but do not provide a warranty of continuing serviceability. Jones v. Marcus, 217 Ga. App. 372 , 457 S.E.2d 271 (1995).

Implied warranties inapplicable to settlement agreements. - Seller sued a buyer who rejected the seller's goods; the parties settled. As the parties' agreement was a contract to settle litigation, with any sale of goods merely incidental, the implied warranties of merchantability and fitness, O.C.G.A. §§ 11-2-314 and 11-2-315 , did not apply to their settlement agreement. Ole Mexican Foods, Inc. v. Hanson Staple Co., 285 Ga. 288 , 676 S.E.2d 169 (2009).

Evidence negated buyer's claim that vehicle was unmerchantable at time of sale. - Summary judgment for the seller of a vehicle was proper in a case in which the buyer claimed breach of implied warranties under O.C.G.A. § 11-2-314 ; the buyer's complaints were minor and did not render the vehicle unusable, and the vehicle had 57,000 miles on it when the buyer purchased it, and the fact that the buyer drove it 25,000 more miles before abandoning it at the seller's lot negated the claim that the vehicle was unmerchantable when purchased. Soto v. CarMax Auto Superstores, Inc., 271 Ga. App. 813 , 611 S.E.2d 108 (2005).

Parties may expressly broaden or narrow warranty. - Parties may expressly agree on provisions of contract and extent of warranty, which may be more limited or more extensive than implied warranty of law. Jones v. Knightstown Body Co., 52 Ga. App. 667 , 184 S.E. 427 (1936) (decided under former Code 1933, § 96-301).

Vendor may act in good faith in transaction, and yet violate O.C.G.A. § 11-2-314 . A.D.L. Sales Co. v. Gailey, 48 Ga. App. 798 , 173 S.E. 734 (1934) (decided under former Code 1910, § 4135).

Patent, discoverable, or disclosed latent defects. - Implied warranty is a guaranty against loss only from latent defects. The law of implied warranty will not avail against patent defects, nor against latent defects which are either disclosed or are discoverable by exercise of caution on part of purchaser. Where property is brought under an implied warranty that it is reasonably suited to the use intended, an acceptance by the purchaser waives all defects discovered by the purchaser, or which by exercise of ordinary care and prudence, the purchaser might have discovered before delivery. Jones v. Knightstown Body Co., 52 Ga. App. 667 , 184 S.E. 427 (1936); Wilkinson v. Rich's, Inc., 77 Ga. App. 239 , 48 S.E.2d 552 (1948); Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32 , 67 S.E.2d 836 (1951) (decided under former Code 1933, § 96-301); Moore v. Berry, 217 Ga. App. 697 , 458 S.E.2d 879 (1995);.

Implied warranty of fitness of thing sold for ordinary use, does not embrace defects discoverable by ordinary prudence and care. Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32 , 67 S.E.2d 836 (1951) (decided under former Code 1933, § 96-301).

In an action by a customer against a drugstore for burns suffered when bleach spilled from a bottle as the customer removed it from a shelf, the customer's claim was not defeated by failure to exercise care for the customer's own safety since the bleach was located at a height above the customer's eye level and there was no patent or obvious defect; reversing A.B.C. Drug Co. v. Monroe, 214 Ga. App. 136 , 447 S.E.2d 315 (1994). Keaton v. A.B.C. Drug Co., 266 Ga. 385 , 467 S.E.2d 558 (1996).

Defects not ascertainable by examination of property. - The law imposes upon vendee the duty of exercising caution in detecting defects, and hence it is a well-established rule that where defect is patent, or could have been ascertained by exercise of diligence, there can be no recovery upon ground of an implied warranty and in all such cases the doctrine of caveat emptor applies; but in cases of latent defects, the existence of which cannot be ascertained by an examination of the property, the law protects a purchaser by imposing upon vendor an implied warranty, whenever the defect is of such a nature as to render article sold unsuited to use intended, and in cases of latent defects, therefore, the doctrine of caveat venditor applies. Williams v. Ballenger, 87 Ga. App. 255 , 73 S.E.2d 509 (1952) (decided under former Code 1933, § 96-301).

While the seller's argument that no warranty existed because the buyer inspected the blocks the buyer was buying and used own judgment in selecting purchases was relevant to an implied warranty of fitness for a particular purpose, it was not applicable to the warranty of merchantability at issue. Since the implied warranty of merchantability was not clearly disclaimed, it applied to this sale of goods absent one of the exceptions enumerated in O.C.G.A. § 11-2-316(3) . Willis Mining, Inc. v. Noggle, 235 Ga. App. 747 , 509 S.E.2d 731 (1998).

Sale of common article. - In sale of common article there is always an implied warranty that it is made of good material and reasonably fit to be employed in use for which it is designed by maker. Jones v. Knightstown Body Co., 52 Ga. App. 667 , 184 S.E. 427 (1936) (decided under former Code 1933, § 96-301).

Defective container or packaging. - In an action by a customer against a drugstore for burns suffered when bleach spilled from a bottle as she removed it from a shelf, the jury was authorized to find a breach of implied warranty because, as a merchant of bleach, the store was required to adequately contain and package the bleach that it sold and bleach which spills from a loose cap is not adequately contained or packaged; reversing A.B.C. Drug Co. v. Monroe, 214 Ga. App. 136 , 447 S.E.2d 315 (1994). Keaton v. A.B.C. Drug Co., 266 Ga. 385 , 467 S.E.2d 558 (1996).

Adaption of machine to uses for which it is made is always warranted. A.D.L. Sales Co. v. Gailey, 48 Ga. App. 798 , 173 S.E. 734 (1934) (decided under former Code 1910, § 4135(2)).

Used or second-hand goods. - When the article even though used or second-hand is sold by one who "is a merchant with respect to goods of that kind," an implied warranty of merchantability attaches to the sale under O.C.G.A. § 11-2-314 unless excluded or modified by O.C.G.A. § 11-2-316 . Georgia Timberlands, Inc. v. Southern Airways Co., 125 Ga. App. 404 , 188 S.E.2d 108 (1972).

Implied warranty of merchantability does not base distinctions upon whether or not goods are sold in original packages. Pierce v. Liberty Furn. Co., 141 Ga. App. 175 , 233 S.E.2d 33 (1977).

Instruction manual accompanying product. - Under warranty provisions of Uniform Commercial Code, where a product is sold which is to be installed by the consumer, written instructions that accompany it create an implied warranty that it will be fit for ordinary purpose for which it is used and will be safely operable when installed in accordance with such directions. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

When contract originates in self-service store. - Where defendant self-service store offered soft drinks for sale by placing them on its shelf, contract for sale of goods came into being when plaintiff accepted offer by taking physical possession thereof with intent to pay for them; and from that moment forward implied warranties of O.C.G.A. § 11-2-314 were applicable. Fender v. Colonial Stores, Inc., 138 Ga. App. 31 , 225 S.E.2d 691 (1976).

Blood furnished by hospital in course of treatment is not a sales transaction covered by implied warranty under O.C.G.A. § 11-2-314 . Lovett v. Emory Univ., Inc., 116 Ga. App. 277 , 156 S.E.2d 923 (1967).

Medical center's furnishing of facility for use in connection with surgery to install a plate device to stabilize plaintiff's spine was a transaction involving "services and labor with an incidental furnishing of equipment and materials" and, as such, the Uniform Commercial Code had no application. McCombs v. Southern Regional Medical Ctr., Inc., 233 Ga. App. 676 , 504 S.E.2d 747 (1998).

Distributor of anti-psychotic drug. - The distributor of an anti-psychotic drug could not be held liable for the suicide of a patient based on warranty claims because it neither manufactured nor prescribed the drug. Presto v. Sandoz Pharmaceuticals Corp., 226 Ga. App. 547 , 487 S.E.2d 70 (1997).

Pharmaceutical products. - Patient who died after taking medicine which a pharmaceutical manufacturer gave to the doctor and which the doctor gave to the patient was not entitled to an extension of any implied warranty existing between the manufacturer and the doctor, and the appellate court upheld the trial court's judgment dismissing claims the patient's spouse filed against the manufacturer, alleging breach of express and implied warranties, but reversed the trial court's judgment dismissing the husband's claims against the manufacturer alleging strict liability and negligent failure to warn. Bryant v. Hoffmann-La Roche, Inc., 262 Ga. App. 401 , 585 S.E.2d 723 (2003).

Federal law on medical devices preempted implied warranty. - Medical Device Amendments, 21 U.S.C. § 360k, preempted state law claims in a products liability case alleging an implied warranty of merchantability under O.C.G.A. § 11-2-314 with respect to a Precision Spinal Cord Stimulator medical device. Horn v. Boston Sci. Neuromodulation Corp., F. Supp. 2d (S.D. Ga. Aug. 26, 2011).

"Learned intermediary" doctrine. - The manufacturer of an anti-psychotic drug could not be held liable for the suicide of a patient under any warranty claim because of the "learned intermediary" doctrine, absent some showing that the product itself was defective. Presto v. Sandoz Pharmaceuticals Corp., 226 Ga. App. 547 , 487 S.E.2d 70 (1997).

Plaintiff's breach of warranty claims against a drug manufacturer, to the extent the claims were based upon failure to provide accurate or sufficient information regarding the use of the drug to the decedent, were barred by the learned intermediary doctrine but the claims were not barred to the extent the claims were based upon failure to provide accurate or sufficient information regarding the use of the drug to others. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Handgun used to accidentally kill another. - Handgun with cocked hammer which was discovered by three-year-old, who pulled the trigger and thereby killed another child, could not be considered "not merchantable and not reasonably suited to the use intended" since the gun performed exactly as intended - when the hammer was cocked and the trigger was pulled, it fired. Rhodes v. R.G. Indus., Inc., 173 Ga. App. 51 , 325 S.E.2d 465 (1984).

Skylights. - Where a subcontractor's initial proposal and the general contractor's purchase order referencing the "plans and specs" required that skylights be water-tight or leak free, but the skylights were not leak free, the goods were not merchantable. American Aluminum Prods. Co. v. Binswanger Glass Co., 194 Ga. App. 703 , 391 S.E.2d 688 (1990).

A contract for rebuilding an engine was not a sale by a merchant so as to invoke the warranty of O.C.G.A. § 11-2-314 . American Whse. & Moving Serv. of Atlanta, Inc. v. Floyd's Diesel Serv., Inc., 164 Ga. App. 106 , 296 S.E.2d 64 (1982).

Breach and consequent damages complete a cause of action on an implied warranty. Wood v. Hub Motor Co., 110 Ga. App. 101 , 137 S.E.2d 674 (1964) (decided under former Code 1933, § 96-307).

Negligence is not an element of breach of warranty. - If goods do not conform to warranty, warrantor's utmost care will not relieve warrantor of liability. Wood v. Hub Motor Co., 110 Ga. App. 101 , 137 S.E.2d 674 (1964) (decided under former Code 1933, § 96-307).

Strict liability of manufacturer distinguished. - Establishment of the implied warranty of merchantability as applied to a seller under O.C.G.A. § 11-2-314 is not the same as the strict liability imposed on a manufacturer under O.C.G.A. § 51-1-11 . Buford v. Toys R' Us, Inc., 217 Ga. App. 565 , 458 S.E.2d 373 (1995), overruled on other grounds, Wal-Mart Stores, Inc. v. Wheeler, 262 Ga. App. 607 , 586 S.E.2d 83 (2003).

Essential elements not proved. - Proof that the car was defective when sold was an essential element of the buyer's claim, which the buyer did not satisfy; the evidence showed that the buyer drove the used car approximately 26,000 miles before the cooling system began to malfunction. Dildine v. Town & Country Truck Sales, Inc., 259 Ga. App. 732 , 577 S.E.2d 882 (2003).

To recover in Georgia under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., a plaintiff must show that a defendant breached the implied warranty of merchantability arising under Georgia law, and summary judgment for a car seller in a case alleging breach of implied warranties under 15 U.S.C. § 2301 et seq., and O.C.G.A. § 11-2-314(1) was correct because the buyers failed to show that car was defective when sold; numerous repairs to the car during first year of ownership were mostly for different items each time, and all of the needed repairs were made. Crowe v. CarMax Auto Superstores, Inc., 272 Ga. App. 249 , 612 S.E.2d 90 (2005).

Trial court did not err in granting a seller's motion for summary judgment in a customer's action seeking to recover damages for injuries the customer sustained when the customer was burned from a ceramic, scented-oil burner and alleging, among other things, that the seller breached an implied warranty of merchantability because the trial court's conclusion that the ceramic burner was not defective for the burner's ordinary purpose at the time of sale was supported by the evidence of record; the customer presented no evidence that some defect existed in the item such that it was inappropriate to use for the item's ordinary purpose as a ceramic oil burner other than the mere existence of the customer's injury, and the sellers' owners and employees deposed that the item and others like it were marketed by the manufacturer as oil burners and were displayed as such at various trade shows the seller's personnel attended. Rivers v. H. S. Beauty Queen, Inc., 306 Ga. App. 866 , 703 S.E.2d 416 (2010).

Cited in Bell v. Menzies, 110 Ga. App. 436 , 138 S.E.2d 731 (1964); Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968); Horne v. Armstrong Prods. Corp., 416 F.2d 1329 (5th Cir. 1969); Rupee v. Mobile Home Brokers, Inc., 124 Ga. App. 86 , 183 S.E.2d 34 (1971); Hornbuckle v. Escambia Chem. Corp., 127 Ga. App. 522 , 194 S.E.2d 344 (1972); Lashley v. Ford Motor Co., 359 F. Supp. 363 (M.D. Ga. 1972); Smith v. Bruce, 129 Ga. App. 97 , 198 S.E.2d 697 (1973); Evershine Prods., Inc. v. Schmitt, 130 Ga. App. 34 , 202 S.E.2d 228 (1973); Mays v. Citizens & S. Nat'l Bank, 132 Ga. App. 602 , 208 S.E.2d 614 (1974); Weaver v. Ralston Motor Hotel, Inc., 135 Ga. App. 536 , 218 S.E.2d 260 (1975); Higginbotham v. Ford Motor Co., 540 F.2d 762 (5th Cir. 1976); Caldwell v. Lord & Taylor, Inc., 142 Ga. App. 137 , 235 S.E.2d 546 (1977); Ford Motor Co. v. Carter, 239 Ga. 657 , 238 S.E.2d 361 (1977); Hutchinson Homes, Inc. v. Guerdon Indus., Inc., 143 Ga. App. 664 , 239 S.E.2d 553 (1977); Pepsico Truck Rental, Inc. v. Eastern Foods, Inc., 145 Ga. App. 410 , 243 S.E.2d 662 (1978); Vance v. Miller-Taylor Shoe Co., 147 Ga. App. 812 , 251 S.E.2d 52 (1978); Ramsey Brick Sales Co. v. Outlaw, 152 Ga. App. 37 , 262 S.E.2d 227 (1979); Maddux v. R.O.E.M., Inc., 152 Ga. App. 732 , 264 S.E.2d 31 (1979); Patron Aviation, Inc. v. Teledyne Indus., Inc., 154 Ga. App. 13 , 267 S.E.2d 274 (1980); Preiser v. Jim Letts Oldsmobile, Inc., 160 Ga. App. 658 , 288 S.E.2d 219 (1981); Salome v. First Nat'l Bank, 162 Ga. App. 394 , 291 S.E.2d 452 (1982); Alterman Foods, Inc. v. G.C.C. Beverages, Inc., 168 Ga. App. 921 , 310 S.E.2d 755 (1983); W. Linton Howard, Inc. v. Gibbs Mach., Inc., 169 Ga. App. 627 , 314 S.E.2d 259 (1984); Gee v. Chattahoochee Tractor Sales, Inc., 172 Ga. App. 351 , 323 S.E.2d 176 (1984); Citizens Jewelry Co. v. Walker, 178 Ga. App. 897 , 345 S.E.2d 106 (1986); Warner Robins Tree Surgeons, Inc. v. Kolb & Co., 181 Ga. App. 20 , 351 S.E.2d 486 (1986); Ream Tool Co. v. Newton, 209 Ga. App. 226 , 433 S.E.2d 67 (1993); Dixon Dairy Farms, Inc. v. Conagra Feed Co., 245 Ga. App. 836 , 538 S.E.2d 897 (2000); Imex Int'l v. Wires Eng'g, 261 Ga. App. 329 , 583 S.E.2d 117 (2003).

Leases

Section applicable to sales and not leases. - It would appear from a literal reading of O.C.G.A. § 11-2-314 that it was intended to apply only to "sales" and not leases. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

Commercial chattel leases. - Provisions of O.C.G.A. § 11-2-314 are not applicable to all commercial chattel leases. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

Warranty provisions of Uniform Commercial Code are applicable to those chattel leases where transaction in question is analogous to a sale. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

Irrevocable agreement to transfer ownership in future. - Where owner had contracted irrevocably to transfer ownership to another at some time in the future, the transaction was analogous to a sale even though in the form of a lease and even though the owner retained title, the implied warranties of O.C.G.A. § 11-2-314 applied. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

Four-year lease of vehicle. - Where a lessee leased a vehicle for four years, title remained with the assignee, and the lessee was required to surrender the car at the expiration of the lease term, there being no option to purchase it, neither the implied warranty provisions nor the exclusion rules therefor of the Uniform Commercial Code applied to the lease agreement. Mark Singleton Buick, Inc. v. Taylor, 194 Ga. App. 630 , 391 S.E.2d 435 (1990).

Torts

Wrongful death action. - No wrongful death action arises from any breach of warranties absent negligence or criminal conduct. Miles v. Bell Helicopter Co., 385 F. Supp. 1029 (N.D.Ga. 1974).

A wrongful death action may not be predicated on a breach of warranty arising from the sale of goods, except specified articles intended for human consumption or use. Ryals v. Billy Poppell, Inc., 192 Ga. App. 787 , 386 S.E.2d 513 (1989).

Retailer's liability parallels that of manufacturer under O.C.G.A. § 51-1-11 . - O.C.G.A. § 11-2-314 establishes a concept for retailers similar to that employed in O.C.G.A. § 51-1-11 , by which manufacturers may be held strictly liable for defective products. Pierce v. Liberty Furn. Co., 141 Ga. App. 175 , 233 S.E.2d 33 (1977).

O.C.G.A. § 11-2-314 , defining implied warranty of merchantability, is involved under O.C.G.A. § 51-1-11 , which relate to actions for product liability. Parzini v. Center Chem. Co., 134 Ga. App. 414 , 214 S.E.2d 700 , rev'd on other grounds, 234 Ga. 868 , 218 S.E.2d 580 (1975).

Dealer not liable for manufacturer's warranty. - Defendant used-car dealer could not be held liable under a complaint alleging that plaintiffs' decedent was killed while driving a used car purchased from defendant which was defective when manufactured and that the car was covered by an express warranty of merchantability, issued by defendant at the time of purchase, where the vehicle in question was not manufactured by defendant. Ryals v. Billy Poppell, Inc., 192 Ga. App. 787 , 386 S.E.2d 513 (1989).

Liability for food served. - Trial court erred by granting summary judgment to a restaurant on a customer's claim that the restaurant served the customer a hamburger that breached the implied warranties of merchantability and fitness for purpose when the hamburger contained a bit of bone that broke the customer's tooth when the customer bit into the hamburger. Because this material question had to be decided by a jury, the trial court erred in its grant of summary judgment to the restaurant. Mitchell v. BBB Servs. Co., 261 Ga. App. 240 , 582 S.E.2d 470 (2003).

Existence of defect. - In an action in which an insurance company filed suit against a company in a subrogation action to recover money paid by the insurance company to a restaurant in Norcross, Georgia, after a fire destroyed the restaurant, the company's motion for summary judgment was granted on the breach of implied warranty claim; the insurance company proffered no evidence in the record from which a jury could conclude that the defect existed when the power supply left the manufacturing facility or even after it was re-manufactured. Colony Ins. Co. v. Coca-Cola Co., 239 F.R.D. 666 (N.D. Ga. 2007).

Exclusion or Waiver

Waiver must be clear and certain. - Contract intended to waive implied warranties written into the sale by law should be clear and certain on that point. Wilson v. Eargle, 98 Ga. App. 241 , 105 S.E.2d 474 (1958) (decided under former Code 1933, § 96-301).

Inconspicuous disclaimer in installment contract could not constitute exclusion of implied warranty of seller that mobile home was fit for ordinary purposes. BCS Fin. Corp. v. Sorbo, 213 Ga. App. 259 , 444 S.E.2d 85 (1994).

Because the language "THERE ARE NO ... IMPLIED WARRANTIES WITH RESPECT TO MERCHANTABILITY ... CONCERNING THE VEHICLE, PARTS, OR ACCESSORIES DESCRIBED HEREIN," appeared in bold type and all capital letters in the sales contract, the implied warranty of merchantability was excluded. Gill v. Bluebird Wanderlodge & Holland Motor Homes, F. Supp. 2d (M.D. Ga. Feb. 4, 2004).

Failure to exclude warranty. - Failure to limit warranty made or to exclude any implied warranties may give rise to liability under either O.C.G.A. §§ 11-2-313 or 11-2-314 . Jones v. Cranman's Sporting Goods, 142 Ga. App. 838 , 237 S.E.2d 402 (1977).

Vendee's inspection of property. - A vendee of personal property, by making a personal examination and inspection of same before purchase, with view of vendee determining quality and condition of the property, does not thereby waive an implied warranty by vendor that article sold is merchantable, and reasonably suited to use intended; and vendee can maintain a suit for such breach of warranty growing out of a latent defect which could not, in the exercise of due caution, have been detected; this is true notwithstanding the vendor was ignorant of the existence of such defect. Williams v. Ballenger, 87 Ga. App. 255 , 73 S.E.2d 509 (1952) (decided under former Code 1933, § 96-301).

Purchaser's acceptance of property bought with full knowledge of its defective condition constitutes a waiver of implied warranty that property is in merchantable condition and suited for purpose intended. Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32 , 67 S.E.2d 836 (1951) (decided under former Code 1933, § 96-301).

Acceptance of used goods in exchange for reduced price. - Acceptance of used equipment in exchange for reduced purchase price does not cause corresponding waiver of implied warranty of fitness for ordinary purposes for which such goods are intended. Solomon Refrigeration, Inc. v. Osburn, 148 Ga. App. 772 , 252 S.E.2d 686 (1979).

Warranty limiting liability to repair or replacement of defective goods. - Seller was not liable for consequential damages resulting from alleged breach of warranty arising from defects in its goods where seller's written warranty specifically limited any liability to repairing or replacing any defective goods and where buyer had notice of the existence of the written warranty but never requested or saw a copy of the written warranty. A-Larms, Inc. v. Alarms Device Mfg. Co., 165 Ga. App. 382 , 300 S.E.2d 311 (1983).

Automobile invoice containing language, "I accept the above-described car in its present condition . . ." indicated that the car was sold "as is" and operated to exclude any implied warranties; trial court, therefore, erred in not granting partial summary judgment to seller in regard to the claim for breach of implied warranties. Joseph Charles Parrish, Inc. v. Hill, 173 Ga. App. 97 , 325 S.E.2d 595 (1984).

Implied warranty not excluded. - Paragraph written in same size and color type as all other paragraphs on back of form fails completely to comply with O.C.G.A. § 11-2-316 for excluding the warranties implied by law in O.C.G.A. § 11-2-314 . Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435 , 208 S.E.2d 321 (1974).

Evidentiary Issues

Merchantability may concern whether product is dangerous for ordinary use. - Under merchantability such questions may be considered as whether drain solvent consisting of 95 percent to 99 1/2 percent pure sulphuric acid is unmerchantable and dangerous because it is too potent for ordinary use. Parzini v. Center Chem. Co., 134 Ga. App. 414 , 214 S.E.2d 700 , rev'd on other grounds, 234 Ga. 868 , 218 S.E.2d 580 (1975).

Guarantor of debtor may not raise defense of breach of warranty. - Whether or not warranty provisions of Uniform Commercial Code apply to lease of machinery, defense of breach of warranty cannot be raised by guarantor of debtor. Hurst v. Stith Equip. Co., 133 Ga. App. 374 , 210 S.E.2d 851 (1974).

Negating causal connection between breach and damages. - Defendant may demonstrate in defense that product was in fact merchantable and fit for purpose intended, or that if there was a deficiency in such regard there was no causal connection between breach and damages sued for, or that some other factor was the sole proximate cause of damage. Firestone Tire & Rubber Co. v. Jackson Transp. Co., 126 Ga. App. 471 , 191 S.E.2d 110 (1972).

Mere fact of tire blowout does not demonstrate manufacturer's negligence, nor tend to establish that tire was defective. Firestone Tire & Rubber Co. v. Jackson Transp. Co., 126 Ga. App. 471 , 191 S.E.2d 110 (1972).

Evidence of defect at time of sale. - Where there was a factual question as to whether a defect existed in a re-treaded tire at the time of sale, summary judgment was correctly denied. Jones v. Marcus, 217 Ga. App. 372 , 457 S.E.2d 271 (1995).

Trial court erred in granting a manufacturer's summary judgment motion on a buyer's breach of the implied warranty of merchantability claim on a ground not raised in the motion because the manufacturer argued in its motion that the buyer failed to show that the vehicle was defective at the time it was purchased; at the hearing, the manufacturer claimed that the buyer's expert did not establish that the vehicle was unmerchantable under Georgia law. Knight v. Am. Suzuki Motor Corp., 272 Ga. App. 319 , 612 S.E.2d 546 (2005).

Because the product defect must exist at the time of sale or lease for an action under warranty to be valid, plaintiff could not recover for breach of the implied warranty of merchantability since plaintiff failed to show that defendant manufacturer was responsible for the truck's brake failure. Jenkins v. GMC, 240 Ga. App. 636 , 524 S.E.2d 324 (1999).

Trial court erred in entering summary judgment for a manufacturer on the owners' breach of the implied warranty of merchantability claim as there were triable issues as to the driveability of a car at the time of its delivery where an owner brought the vehicle to the dealership approximately one month after the owner picked it up and had driven only 1,923 miles, and, among other things, there was a recurrant problem with the coolant lamp. Hill v. Mercedes Benz USA, LLC, 274 Ga. App. 826 , 619 S.E.2d 353 (2005).

Evidence insufficient to show vehicle not merchantable. - Because there was no evidence that a vehicle's driveability or usefulness was ever affected by alleged defects, and the purchaser did not allege that the vehicle was ever rendered inoperable or that its capacity to operate as a means of transportation was ever disabled by alleged defects, there was no basis for a decision that the vehicle was not merchantable as guaranteed by the implied warranty pursuant to O.C.G.A. § 11-2-314 . Hines v. Mercedes-Benz USA, LLC, 358 F. Supp. 2d 1222 (N.D. Ga. 2005).

Defective product. - Affidavit of plaintiff's expert stating that a product was defective and unsuitable for its intended purpose did not suggest the alleged defect was patent so as to justify a grant of summary judgment on the issue of an implied warranty. Moore v. Berry, 217 Ga. App. 697 , 458 S.E.2d 879 (1995).

Evidence from a veterinarian and farm manager raised an issue of fact regarding whether plaintiff's feed was fit for its intended purpose. Dixon Dairy Farms, Inc. v. Conagra Feed Co., 239 Ga. App. 233 , 519 S.E.2d 729 (1999).

Seller of an all-terrain vehicle was entitled to summary judgment on breach of warranty claims because plaintiffs did not present evidence that the vehicle was unfit or unsafe for only one rider and there was no evidence that the seller knew that plaintiffs intended to operate the vehicle with a passenger. Battersby v. Boyer, 241 Ga. App. 115 , 526 S.E.2d 159 (1999).

In a consumer's suit against a car dealer for breach of an implied warranty, under 15 U.S.C. § 2310(d)(1) of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., regarding the sale of a used car which the dealer's salesman falsely represented had not been in a wreck, it was not error for the trial court to grant a directed verdict to the dealer because the consumer did not show the vehicle was not merchantable, under O.C.G.A. § 11-2-314(1) . Mitchell v. Backus Cadillac-Pontiac, Inc., 274 Ga. App. 330 , 618 S.E.2d 87 (2005).

Defendant's compliance with plaintiff's specifications did not eliminate the defendant's duty to supply merchantable pallets; as there were genuine issues of material fact regarding plaintiff's claim for breach of the implied warranty of merchantability, summary judgment was inappropriate. Plaintiff's expert testimony indicated that many pallet manufacturers were aware of mold issues caused by surface moisture on green heat-treated wood and, as a result, were drying pallets used for export, however, neither the pallet manufacturing standards nor the heat-treatment standards required any specific moisture content; this conflicting evidence raised a question of fact as to whether pallets with high moisture content were defective and unfit for shipping products overseas. Kraft Reinsurance Ir., Ltd. v. Pallets Acquisitions, LLC, F. Supp. 2d (N.D. Ga. Sept. 30, 2011).

Sale of horse. - No breach of implied warranty could be shown after undisputed evidence demonstrated that the sellers' representation at the time of sale that a horse would be a good show horse was true. Sheffield v. Darby, 244 Ga. App. 437 , 535 S.E.2d 776 (2000).

Privity

Law as to liability under a warranty requires privity. Stewart v. Gainesville Glass Co., 131 Ga. App. 747 , 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578 , 212 S.E.2d 377 (1975).

Plaintiff must be purchaser. - For plaintiff to maintain action against manufacturer based on implied warranties, plaintiff must be purchaser either directly from manufacturer or from some other person such as a wholesaler or retailer. Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969); Lamb v. Georgia-Pacific Corp., 194 Ga. App. 848 , 392 S.E.2d 307 (1990); Cobb County Sch. Dist. v. MAT Factory, Inc., 215 Ga. App. 697 , 452 S.E.2d 140 (1994).

Implied warranty that goods are merchantable clearly arises out of contract of sale of goods, so it can only run to buyer who is in privity of contract with seller. Chaffin v. Atlanta Coca-Cola Bottling Co., 127 Ga. App. 619 , 194 S.E.2d 513 (1972).

Although a warranty of merchantability was implied in any sale of goods under O.C.G.A. § 11-2-314 , the warranty only ran to a buyer in privity of contract with the seller and did not pass to a second or subsequent purchaser; thus, the buyers who were not placed on the title and title transferees had no cause of action against the seller under Georgia law under O.C.G.A. § 11-2-106(1) for breach of implied warranties because of their lack of privity as original purchasers. Gill v. Blue Bird Body Co., F.3d (11th Cir. June 17, 2005).

Legal transaction conducted in name of corporate entity. - Motor home seller's renewed motion for judgment as a matter of law was denied because the buyers presented sufficient evidence to support jury verdict in their favor as to state law breach of implied warranty claim; the buyers presented evidence showing that they were the real buyers of the motor home even though the legal transaction was done in the name of a corporate entity; thus, the seller could not challenge the buyers' standing to assert breach of warranty claims because it assured the buyers that they were covered under the motor home's warranty and that the warranty was being honored. Gill v. Bluebird Body Co., F. Supp. 2d (M.D. Ga. Jan. 21, 2005).

Under Uniform Commercial Code, no implied warranty runs from manufacturer to one not purchasing directly from it. Lashley v. Ford Motor Co., 359 F. Supp. 363 (M.D. Ga. 1972), aff'd, 480 F.2d 158 (5th Cir.), cert. denied, 414 U.S. 1072, 94 S. Ct. 585 , 38 L. Ed. 2 d 478 (1973).

In a products liability diversity action brought on the theory of breach of implied warranty of merchantability, Georgia procedural law, which looked to the lex loci delicti, controlled the claim. Since the injury took place in Georgia, Georgia substantive law, which required privity, was applied. The plaintiff, who was an employee of the purchaser of the product, failed to satisfy this privity requirement. Morgan v. Mar-Bel, Inc., 614 F. Supp. 438 (N.D. Ga. 1985).

Lack of privity between manufacturer and ultimate consumer. - Ordinarily under O.C.G.A. § 11-2-314 there is no implied warranty existing between a manufacturer and an ultimate consumer due to the fact that no privity of contract exists between the two. Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435 , 208 S.E.2d 321 (1974).

Purchaser did not have a claim for breach of implied warranty against the manufacturers of component parts of the purchaser's recreational vehicle because there was no privity between the manufacturers and the purchaser. Monticello v. Winnebago Indus., 369 F. Supp. 2d 1350 (N.D. Ga. 2005).

Privity between manufacturer and ultimate consumer. - Because the plaintiff established privity with respect to an express warranty claim against a drug manufacturer based upon affirmations of fact or promises to the decedent, the plaintiff also could bring claims for the implied warranties of merchantability and fitness for a particular purpose. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Warranty issued through dealer as part of sale. - Although in Georgia privity is required in order to impose liability under the theory of express or implied warranty, where an automobile manufacturer, through its authorized dealer issues to a purchaser of one of its automobiles from such dealer, admittedly as a part of the sale, a warranty by the manufacturer running to the purchaser, privity exists and O.C.G.A. § 11-2-314 becomes operative. Jones v. Cranman's Sporting Goods, 142 Ga. App. 838 , 237 S.E.2d 402 (1977); Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435 , 208 S.E.2d 321 (1974).

Ordinarily, there is no implied warranty existing between manufacturer and purchaser of automobile when there is no privity between the two, yet where an automobile manufacturer, through its authorized dealer, issues to a purchaser a warranty by the manufacturer to said purchaser, the implied warranty statute becomes operative. Ford Motor Co. v. Lee, 137 Ga. App. 486 , 224 S.E.2d 168 , aff'd in part and rev'd in part on other grounds, 237 Ga. 554 , 229 S.E.2d 379 (1976).

Dealer's warranty not binding on manufacturer. - Absent a showing of a de facto principal/agent relationship between an automobile manufacturer and its authorized dealer, a warranty made by the dealer for repair work done on a used vehicle would not extend any responsibility to the manufacturer. Lauria v. Ford Motor Co., 169 Ga. App. 203 , 312 S.E.2d 190 (1983).

No privity meant no duty to warn. - Claim, based on warranty law, that a hospital had a duty to warn regarding the effects of discontinuing prescription drug use was meritless since the hospital neither manufactured nor prescribed the drug. Presto v. Charter Peachford Behavioral Health Sys., 229 Ga. App. 576 , 494 S.E.2d 377 (1997).

Damages

Loss of expected profits. - Where there is evidence of defect in goods which renders them unfit for ordinary purposes for which such goods are used, vendor may be held liable under O.C.G.A. § 11-2-314 . However, loss of expected profits cannot be recovered except where evidence of such loss can be shown with reasonable certainty. Farmers Mut. Exch. of Baxley, Inc. v. Dixon, 146 Ga. App. 663 , 247 S.E.2d 124 (1978).

Emotional distress. - Summary judgment, pursuant to O.C.G.A. § 9-11-56(c) , to a restaurant was properly granted by a trial court in an action by a restaurant patron, alleging emotional distress when the patron discovered two blood spots on the french fry container, fearing that the patron would contract HIV or hepatitis, because the patron failed to provide evidence of more than the patron's "fear" of exposure to the diseases; accordingly, the patron's claims for negligence, negligence per se, and breach of the implied warranty of merchantability, under O.C.G.A. § 51-1-23 and O.C.G.A. § 11-2-314 , failed due to the patron's failure to meet the damages requirement. Wilson v. J & L Melton, Inc., 270 Ga. App. 1 , 606 S.E.2d 47 (2004).

General Consideration

Editor's notes. - In light of the similarity between the provisions, decisions under former Code 1933, § 96-301 are included in the annotations for this section.

Implied warranty is raised by statute, while express warranty is by contract. Stewart v. Gainesville Glass Co., 131 Ga. App. 747 , 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578 , 212 S.E.2d 377 (1975).

What is warranted. - Warranty of fitness warrants that goods sold are suitable for special purpose of buyer. Multivision N.W., Inc. v. Jerrold Elecs. Corp., 356 F. Supp. 207 (N.D. Ga. 1972).

Buying goods for general resale is not a "particular purpose" within meaning of O.C.G.A. § 11-2-315 . Bruce v. Calhoun First Nat'l Bank, 134 Ga. App. 790 , 216 S.E.2d 622 (1975).

Requirements for creation of warranty of fitness. - In order to create implied warranty of fitness for particular purpose, O.C.G.A. § 11-2-315 requires that seller have reason to know of particular purpose for which goods are required and that buyer rely on seller's skill or judgment in selecting or furnishing suitable goods. Bruce v. Calhoun First Nat'l Bank, 134 Ga. App. 790 , 216 S.E.2d 622 (1975).

Applicability to latent defects. - Implied warranty is a guaranty against loss only from latent defects. Jones v. Knightstown Body Co., 52 Ga. App. 667 , 184 S.E. 427 (1936); Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32 , 67 S.E.2d 836 (1951).

Law of implied warranty will not avail against patent defects, nor against latent defects which are either disclosed or are discoverable by exercise of caution on part of purchaser. Jones v. Knightstown Body Co., 52 Ga. App. 667 , 184 S.E. 427 (1936); Wilkinson v. Rich's, Inc., 77 Ga. App. 239 , 48 S.E.2d 552 (1948); Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32 , 67 S.E.2d 836 (1951).

While plaintiff's argument that no warranty existed because a buyer inspected the blocks buying and used the buyer's own judgment in selecting purchases was relevant to an implied warranty of fitness for a particular purpose, it was not applicable to the warranty of merchantability at issue. Willis Mining, Inc. v. Noggle, 235 Ga. App. 747 , 509 S.E.2d 731 (1998).

Parties may expand or limit warranty. - Parties may expressly agree on provisions of contract and extent of warranty, which may be more limited or more extensive than implied warranty of law. Jones v. Knightstown Body Co., 52 Ga. App. 667 , 184 S.E. 427 (1936).

Waiver of warranty. - Purchaser's acceptance of property bought with full knowledge of its defective condition constitutes waiver of implied warranty that property is in merchantable condition and suited for the purpose intended. Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32 , 67 S.E.2d 836 (1951).

Where property is brought under implied warranty that it is reasonably suited to use intended, an acceptance by purchaser waives all defects discovered by the purchaser, or which, by the exercise of ordinary care and prudence, the purchaser might have discovered before delivery. Jones v. Knightstown Body Co., 52 Ga. App. 667 , 184 S.E. 427 (1936); Wilkinson v. Rich's, Inc., 77 Ga. App. 239 , 48 S.E.2d 552 (1948).

Implied warranties inapplicable to settlement agreement. - Seller sued a buyer who rejected the seller's goods; the parties settled. As the parties' agreement was a contract to settle litigation, with any sale of goods merely incidental, the implied warranties of merchantability and fitness, O.C.G.A. §§ 11-2-314 and 11-2-315 , did not apply to their settlement agreement. Ole Mexican Foods, Inc. v. Hanson Staple Co., 285 Ga. 288 , 676 S.E.2d 169 (2009).

Medical center's furnishing of facility for use in connection with surgery to install a plate device to stabilize plaintiff's spine was a transaction involving "services and labor with an incidental furnishing of equipment and materials" and, as such, the Uniform Commercial Code had no application. McCombs v. Southern Regional Medical Ctr., Inc., 233 Ga. App. 676 , 504 S.E.2d 747 (1998).

Pharmaceutical products. - Patient who died after taking medicine which a pharmaceutical manufacturer gave to the doctor and which the doctor gave to the patient was not entitled to an extension of any implied warranty existing between the manufacturer and the doctor, and the appellate court upheld the trial court's judgment dismissing claims the patient's spouse filed against the manufacturer, alleging breach of express and implied warranties, but reversed the trial court's judgment dismissing the husband's claims against the manufacturer alleging strict liability and negligent failure to warn. Bryant v. Hoffmann-La Roche, Inc., 262 Ga. App. 401 , 585 S.E.2d 723 (2003).

Federal law preempted implied warranty provisions. - Medical Device Amendments, 21 U.S.C. § 360k, preempted state law claims in a products liability case alleging an implied warranty of fitness for a particular purpose under O.C.G.A. § 11-2-315 with respect to a precision spinal cord stimulator medical device. Horn v. Boston Sci. Neuromodulation Corp., F. Supp. 2d (S.D. Ga. Aug. 26, 2011).

Sale of horse. - No breach of implied warranty could be shown after undisputed evidence demonstrated that the sellers' representation at the time of sale that a horse would be a good show horse was true. Sheffield v. Darby, 244 Ga. App. 437 , 535 S.E.2d 776 (2000).

Scented oil burner. - Trial court did not err in granting a seller's motion for summary judgment in a customer's action seeking to recover damages for injuries the customer sustained when the customer was burned from a ceramic, scented-oil burner and alleging, among other things, that the seller breached the seller's duty of implied warranty of fitness for a particular purpose because there was no evidence that the seller's employees knew that the customer intended to use the product in any way other than its ordinary purpose, burning scented oil; the customer utilized the ceramic burner for the ordinary purpose for which the item was intended, i.e., using the receptacle on the item to hold scented oil over a burning candle, causing the scent to diffuse throughout the customer's home. Rivers v. H. S. Beauty Queen, Inc., 306 Ga. App. 866 , 703 S.E.2d 416 (2010).

Pallets. - It was undisputed that the defendant knew the plaintiff would be using the heat-treated pallets to ship products overseas and it was similarly undisputed that plaintiff specifically requested certain heat-treated pallets and that the pallets supplied by the defendant met these specifications; however, it was also undisputed that the plaintiff did not specify any particular moisture content for the pallets the plaintiff ordered. There was conflicting evidence in the record as to whether the plaintiff requested green or raw wood or whether the defendant decided unilaterally to use green wood; accordingly, as there was a question of fact as to whether the plaintiff relied on the defendant's skill and judgment to supply it with pallets with appropriate moisture content for shipping products overseas in freight containers and whether the defendant failed to do so, summary judgment was inappropriate on the implied warranties claim. Kraft Reinsurance Ir., Ltd. v. Pallets Acquisitions, LLC, F. Supp. 2d (N.D. Ga. Sept. 30, 2011).

Cited in Bell v. Menzies, 110 Ga. App. 436 , 138 S.E.2d 731 (1964); Hill Aircraft & Leasing Corp. v. Simon, 122 Ga. App. 524 , 177 S.E.2d 803 (1970); Security Dev. & Inv. Co. v. Ben O'Callaghan Co., 125 Ga. App. 526 , 188 S.E.2d 238 (1972); Avery v. Aladdin Prods. Div., Nat'l Serv. Indus., Inc., 128 Ga. App. 266 , 196 S.E.2d 357 (1973); Smith v. Bruce, 129 Ga. App. 97 , 198 S.E.2d 697 (1973); Evershine Prods., Inc. v. Schmitt, 130 Ga. App. 34 , 202 S.E.2d 228 (1973); Mays v. Citizens & S. Nat'l Bank, 132 Ga. App. 602 , 208 S.E.2d 614 (1974); Parzini v. Center Chem. Co., 134 Ga. App. 414 , 214 S.E.2d 700 (1975); Weaver v. Ralston Motor Hotel, Inc., 135 Ga. App. 536 , 218 S.E.2d 260 (1975); Key v. Bagen, 136 Ga. App. 373 , 221 S.E.2d 234 (1975); Lancaster v. Eberhardt, 141 Ga. App. 534 , 233 S.E.2d 880 (1977); Caldwell v. Lord & Taylor, Inc., 142 Ga. App. 137 , 235 S.E.2d 546 (1977); Hutchinson Homes, Inc. v. Guerdon Indus., Inc., 143 Ga. App. 664 , 239 S.E.2d 553 (1977); Farmers Mut. Exch. of Baxley, Inc. v. Dixon, 146 Ga. App. 663 , 247 S.E.2d 124 (1978); Transart Indus., Inc. v. Gaines-American Moulding Corp., 148 Ga. App. 363 , 251 S.E.2d 384 (1978); Ramsey Brick Sales Co. v. Outlaw, 152 Ga. App. 37 , 262 S.E.2d 227 (1979); Patron Aviation, Inc. v. Teledyne Indus., Inc., 154 Ga. App. 13 , 267 S.E.2d 274 (1980); Corbett v. North Fla. Clarklift, Inc., 155 Ga. App. 701 , 272 S.E.2d 563 (1980); Rigdon v. Walker Sales & Serv., Inc., 161 Ga. App. 459 , 288 S.E.2d 711 (1982); Salome v. First Nat'l Bank, 162 Ga. App. 394 , 291 S.E.2d 452 (1982); W.B. Anderson Feed & Poultry Co. v. Georgia Gas Distribs., Inc., 164 Ga. App. 96 , 296 S.E.2d 395 (1982); Atlanta Cutlery Corp. v. Queen Cutlery Co., 168 Ga. App. 584 , 309 S.E.2d 691 (1983); Alterman Foods, Inc. v. G.C.C. Beverages, Inc., 168 Ga. App. 921 , 310 S.E.2d 755 (1983); Citizens Jewelry Co. v. Walker, 178 Ga. App. 897 , 345 S.E.2d 106 (1986); Hill v. Jay Pontiac, Inc., 191 Ga. App. 258 , 381 S.E.2d 417 (1989); Cobb County Sch. Dist. v. MAT Factory, Inc., 215 Ga. App. 697 , 452 S.E.2d 140 (1994); Imex Int'l v. Wires Eng'g, 261 Ga. App. 329 , 583 S.E.2d 117 (2003).

Manufacturer's Instructions

Instruction manual accompanying product. - Under warranty provisions of Uniform Commercial Code where a product is sold which is to be installed by consumer, written instructions that accompany it create implied warranty that it will be fit for ordinary purpose for which it is used and will be safely operable when installed in accordance with such directions. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

If a manufacturer furnishes instructions as to manner in which product is to be used, consumer is entitled to think that so used it will not injure the consumer and there is implied warranty that goods are fit for that particular use. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

A manufacturer furnishing instructions for use of product is warranting same for that particular purpose and use, and no other. This is especially true where appliance sold becomes dangerous if used improperly. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

Exclusion or Modification

Warranty limiting liability to repair or replacement of defective goods. - Seller was not liable for consequential damages resulting from alleged breach of warranty arising from defects in its goods where seller's written warranty specifically limited any liability to repairing or replacing any defective goods and where buyer had notice of the existence of the written warranty but never requested or saw a copy of the written warranty. A-Larms, Inc. v. Alarms Device Mfg. Co., 165 Ga. App. 382 , 300 S.E.2d 311 (1983).

Leases

Applicable to sales and not leases. - It would appear from a literal reading of O.C.G.A. § 11-2-315 that it was intended to apply only to "sales" and not leases. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

Applicable to leases which are analogous to sales. - Warranty provisions of Uniform Commercial Code are applicable to those chattel leases where transaction in question is analogous to a sale. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

Commercial chattel leases. - Provisions of O.C.G.A. § 11-2-315 are not applicable to all commercial chattel leases. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

O.C.G.A. § 11-2-315 is not applicable to commercial chattel leases, and lessor may exculpate liability with a disclaimer clause, as long as the disclaimer is expressed in clear and unambiguous language. Petroziello v. United States Leasing Corp., 176 Ga. App. 858 , 338 S.E.2d 63 (1985).

Irrevocable commitment to transfer ownership in future. - Where owner contracted irrevocably to transfer ownership to another at some time in the future, the transaction was analogous to sale even though in the form of a lease and even though the owner retained title, the implied warranties of O.C.G.A. § 11-2-315 applied. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

Four-year lease of vehicle. - Where a lessee leased a vehicle for four years, title remained with the assignee, and the lessee was required to surrender the car at the expiration of the lease term, there being no option to purchase it, neither the implied warranty provisions nor the exclusion rules therefor of the Uniform Commercial Code applied to the lease agreement. Mark Singleton Buick, Inc. v. Taylor, 194 Ga. App. 630 , 391 S.E.2d 435 (1990).

Actions

To bring action against manufacturer, plaintiff must be purchaser. - For plaintiff to maintain action against manufacturer based on implied warranties, plaintiff must be purchaser either directly from manufacturer or from some other person such as a wholesaler or retailer. Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969).

Privity between manufacturer and ultimate consumer. - Because the plaintiff established privity with respect to an express warranty claim against a drug manufacturer based upon affirmations of fact or promises to the decedent, the plaintiff also could bring claims for the implied warranties of merchantability and fitness for a particular purpose. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Lack of privity between the manufacturer and user of exercise machine at a health club precluded the user's implied warranty claim against the manufacturer. Bodymaster Sports Indus., Inc. v. Wimberley, 232 Ga. App. 170 , 501 S.E.2d 556 (1998).

Defense of breach of warranty may not be raised by guarantor of debtor. - Whether or not warranty provisions of Uniform Commercial Code apply to lease of machinery, defense of breach of warranty cannot be raised by guarantor of debtor. Hurst v. Stith Equip. Co., 133 Ga. App. 374 , 210 S.E.2d 851 (1974).

Seller's defense. - Defendant may demonstrate in defense that product was in fact merchantable and fit for purpose intended, or that if there was a deficiency in such regard there was no causal connection between the breach and the damages sued for, or that some other factor was the sole proximate cause of the damage. Firestone Tire & Rubber Co. v. Jackson Transp. Co., 126 Ga. App. 471 , 191 S.E.2d 110 (1972).

Mere fact of tire blowout does not demonstrate manufacturer's negligence, nor tend to establish that tire was defective. Firestone Tire & Rubber Co. v. Jackson Transp. Co., 126 Ga. App. 471 , 191 S.E.2d 110 (1972).

Distributor of anti-psychotic drug. - The distributor of an anti-psychotic drug could not be held liable for the suicide of a patient based on warranty claims because it neither manufactured nor prescribed the drug. Presto v. Sandoz Pharmaceuticals Corp., 226 Ga. App. 547 , 487 S.E.2d 70 (1997).

"Learned intermediary" doctrine. - The manufacturer of an anti-psychotic drug could not be held liable for the suicide of a patient under any warranty claim because of the "learned intermediary" doctrine, absent some showing that the product itself was defective. Presto v. Sandoz Pharmaceuticals Corp., 226 Ga. App. 547 , 487 S.E.2d 70 (1997).

Plaintiff's breach of warranty claims against a drug manufacturer, to the extent they were based upon failure to provide accurate or sufficient information regarding the use of the drug to the decedent, were barred by the learned intermediary doctrine, but the claims were not barred to the extent they were based upon failure to provide accurate or sufficient information regarding the use of the drug to others. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Seller's knowledge of use. - Where there was no evidence that the seller of re-treaded tires for a pick-up truck knew that it would be used in the owner's construction business, the seller was not liable to the owner based on breach of an implied warranty for a particular purpose. Jones v. Marcus, 217 Ga. App. 372 , 457 S.E.2d 271 (1995).

Manufacturer's knowledge of use. - Where it was not shown that plaintiff relied on defendant manufacturer's skill and judgment in selecting the truck, or that, if plaintiff did, defendant knew of the reliance, plaintiff could not establish an implied warranty of fitness for a particular purpose under this section. Jenkins v. GMC, 240 Ga. App. 636 , 524 S.E.2d 324 (1999).

General Consideration

Editor's notes. - In light of the similarity of the issues dealt with, decisions under former Code 1910, § 4136 and former Code 1933, § 96-301 are included in the annotations for this section.

Unconscionability of exclusion or modification. - Although a seller may exclude or modify warranties, a court may refuse to enforce an exclusion or modification on the basis of unconscionability. Mullis v. Speight Seed Farms, Inc., 234 Ga. App. 27 , 505 S.E.2d 818 (1998).

Implied warranties exist unless expressly or from nature of transaction excepted. Wilson v. Eargle, 98 Ga. App. 241 , 105 S.E.2d 474 (1958) (decided under former Code 1933, § 96-301).

Purpose of O.C.G.A. § 11-2-316 includes preventing indirect elimination of warranty liability through indemnification. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

How warranties are raised. - Implied warranty is raised by statute, while express warranty is by contract. Stewart v. Gainesville Glass Co., 131 Ga. App. 747 , 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578 , 212 S.E.2d 377 (1975).

O.C.G.A. § 11-2-316 does not apply to a warranty under O.C.G.A. § 44-12-63 . Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

An agreement for the installation and maintenance of a protective alarm system was not a sale and, as a result, the implied warranty and other U.C.C. considerations were not applicable. D.L. Lee & Sons v. ADT Sec. Sys., 916 F. Supp. 1571 (S.D. Ga. 1995).

Section does not govern limitation of remedies. - The provisions of O.C.G.A. § 11-2-316 have no bearing on the seller's ability to achieve the less comprehensive legal effect of limiting the remedies which are available to the buyer for breach of implied warranties. It is the separate provisions of O.C.G.A. §§ 11-2-718 or 11-2-719 which govern the limitation of remedies. Apex Supply Co. v. Benbow Indus., Inc., 189 Ga. App. 598 , 376 S.E.2d 694 (1988).

No public policy against all disclaimers. - Disclaimer provisions of O.C.G.A. § 11-2-316 do not establish public policy against use of disclaimers in all commercial transactions. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975).

It is unreasonable to allow express warranty to be negated by disclaimer in same contract. Century Dodge, Inc. v. Mobley, 155 Ga. App. 712 , 272 S.E.2d 502 (1980).

Contract for sale of car describing it as new created express warranty to that effect which was not negated by disclaimer of express warranties in same contract. Century Dodge, Inc. v. Mobley, 155 Ga. App. 712 , 272 S.E.2d 502 (1980).

Disclaimer limiting liability to purchase price unconscionable. - A disclaimer of liability for breach of warranty by a tobacco seed manufacturer, which stated that liability would be limited to the purchase price, was unconscionable and would not be enforced; an absence of liability on the part of the manufacturer would leave farmers with no recourse for a loss caused by a crop failure, and the allocation of risk for ineffective seeds is better shouldered by the manufacturer than the consumer. Mullis v. Speight Seed Farms, Inc., 234 Ga. App. 27 , 505 S.E.2d 818 (1998).

Consequential damages excluded by warranty. - Seller was not liable for consequential damages resulting from alleged breach of warranty arising from defects in its goods where seller's written warranty specifically limited any liability to repairing or replacing any defective goods and where buyer had notice of the existence of the written warranty but never requested or saw a copy of the written warranty. A-Larms, Inc. v. Alarms Device Mfg. Co., 165 Ga. App. 382 , 300 S.E.2d 311 (1983).

Description of vehicle as "new" not inconsistent with recognition of possible factory-damage. - There is nothing unreasonable or inconsistent in an affirmation, promise or description by a manufacturer that its vehicle is "new" and its recognition that, even so, the vehicle might contain factory-damage and/or factory-repairs. GMC v. Green, 173 Ga. App. 188 , 325 S.E.2d 794 (1984).

Prior contrary oral representations merged into written contract. - Where there was a written contract covering the sale of an engine from plaintiff to defendant, which contained certain stipulations and warranties by plaintiff, any oral agreement by plaintiff at time of or before written agreement was entered into to the contrary would be merged into and done away with by the written agreement. Worthington Pump & Mach. Corp. v. Briarcliff, 67 Ga. App. 71 , 19 S.E.2d 574 (1942) (decided under former Code 1933, § 96-301).

Revocation of acceptance under O.C.G.A. § 11-2-608 is an available remedy even where the seller has attempted to limit its warranties. Esquire Mobile Homes, Inc. v. Arrendale, 182 Ga. App. 528 , 356 S.E.2d 250 (1987).

Revocation is an available remedy even where the seller has attempted to limit its warranties by use of "as is" language under O.C.G.A. § 11-2-316 . Prudential Metal Supply Corp. v. Atlantic Freight Sales Co., 204 Ga. App. 439 , 419 S.E.2d 520 (1992).

Where there is no express covenant of warranty, purchaser must exercise caution in detecting defects. Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32 , 67 S.E.2d 836 (1951) (decided under former Code 1933, § 96-301).

Waiver of implied warranty. - A contract drawn so as to waive implied warranties written into sale by law should be clear and certain on that point. Wilson v. Eargle, 98 Ga. App. 241 , 105 S.E.2d 474 (1958) (decided under former Code 1933, § 96-301).

Acceptance of article with obvious defect waives claim for damages growing out of implied warranty. - If defects or discrepancies in article purchased are patent, such as might have been discovered by exercise of ordinary care and prudence, then acceptance by purchaser, in the absence of fraud, will operate as an absolute waiver on the purchaser's part even of a claim for damages growing out of an implied warranty, but such mere acceptance will not prevent the purchaser from making a claim for damages arising out of an express warranty. Evans v. Mitchell, 44 Ga. App. 695 , 162 S.E. 660 (1932) (decided under former Code 1910, § 4136).

Purchaser's acceptance of property bought with full knowledge of its defective condition constitutes waiver of implied warranty that property is in merchantable condition and suited for purpose intended. Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32 , 67 S.E.2d 836 (1951) (decided under former Code 1933, § 96-301).

Cited in Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969); GMC v. Halco Instruments, Inc., 124 Ga. App. 630 , 185 S.E.2d 619 (1971); Jacobs v. Metro Chrysler-Plymouth, Inc., 125 Ga. App. 462 , 188 S.E.2d 250 (1972); Smith, Kline & French Labs. v. Just, 126 Ga. App. 643 , 191 S.E.2d 632 (1972); Avery v. Aladdin Prods. Div., Nat'l Serv. Indus., Inc., 128 Ga. App. 266 , 196 S.E.2d 357 (1973); Smith v. Bruce, 129 Ga. App. 97 , 198 S.E.2d 697 (1973); Harison-Gulley Chevrolet, Inc. v. Carr, 134 Ga. App. 449 , 214 S.E.2d 712 (1975); Lancaster v. Eberhardt, 141 Ga. App. 534 , 233 S.E.2d 880 (1977); Transart Indus., Inc. v. Gaines-American Moulding Corp., 148 Ga. App. 363 , 251 S.E.2d 384 (1978); Patron Aviation, Inc. v. Teledyne Indus., Inc., 154 Ga. App. 13 , 267 S.E.2d 274 (1980); Hardee v. Coastal Tractor Co., 153 Ga. App. 487 , 265 S.E.2d 838 (1980); Burroughs Corp. v. Macon Rubber Co., 154 Ga. App. 322 , 268 S.E.2d 374 (1980); Corbett v. North Fla. Clarklift, Inc., 155 Ga. App. 701 , 272 S.E.2d 563 (1980); Bicknell v. B & S Enters., 160 Ga. App. 307 , 287 S.E.2d 310 (1981); Frick Forest Prods., Inc. v. International Hardwoods, Inc., 161 Ga. App. 359 , 288 S.E.2d 625 (1982); Rigdon v. Walker Sales & Serv., Inc., 161 Ga. App. 459 , 288 S.E.2d 711 (1982); Teledyne Indus., Inc. v. Patron Aviation, Inc., 161 Ga. App. 596 , 288 S.E.2d 911 (1982); Sires v. Luke, 544 F. Supp. 1155 (S.D. Ga. 1982); W. Linton Howard, Inc. v. Gibbs Mach., Inc., 169 Ga. App. 627 , 314 S.E.2d 259 (1984); Holman Motor Co. v. Evans, 169 Ga. App. 610 , 314 S.E.2d 453 (1984); Entertainment Developers, Inc. v. Relco, Inc., 172 Ga. App. 176 , 322 S.E.2d 304 (1984); W.M. Hobbs, Ltd. v. Accusystems of Ga., Inc., 177 Ga. App. 432 , 339 S.E.2d 646 (1986); Citizens Jewelry Co. v. Walker, 178 Ga. App. 897 , 345 S.E.2d 106 (1986); McCrimmon v. Tandy Corp., 202 Ga. App. 233 , 414 S.E.2d 15 (1991).

Writing Requirement

Conspicuous writing. - Requirement that disclaimer terms be conspicuous follows main current of interpretation of O.C.G.A. § 11-2-316 . White v. First Fed. Sav. & Loan Ass'n, 158 Ga. App. 373 , 280 S.E.2d 398 (1981).

O.C.G.A. § 11-2-316(2) requires that, to exclude or modify an implied warranty of fitness, the actual warranty disclaimer language itself be conspicuous. That requirement is not satisfied if the disclaimer provision contains only general introductory language which is conspicuous. Leland Indus., Inc. v. Suntek Indus., Inc., 184 Ga. App. 635 , 362 S.E.2d 441 (1987).

Warranty disclaimer language was "conspicuous" where it appeared in capital letters, in a separate paragraph on the front of an invoice, and in a type style which was otherwise employed on the form only with regard to language relating to the limitation of remedies. Apex Supply Co. v. Benbow Indus., Inc., 189 Ga. App. 598 , 376 S.E.2d 694 (1988).

Although, by its terms, O.C.G.A. § 11-2-316(3)(a) does not explicitly require that the "other language" be conspicuous, it implicitly imposes such a requirement. Leland Indus., Inc. v. Suntek Indus., Inc., 184 Ga. App. 635 , 362 S.E.2d 441 (1987).

A writing would, regardless of its "conspicuousness," be ineffective to disclaim the implied warranty of merchantability if that writing nowhere specifically mentions "merchantability." Leland Indus., Inc. v. Suntek Indus., Inc., 184 Ga. App. 635 , 362 S.E.2d 441 (1987).

Effect of font. - Language printed in type which was bolder and larger than that generally used in the document, and emphasized by capitalization and by being within a dark bordered rectangle, was sufficiently conspicuous to satisfy the requirements of O.C.G.A. § 11-2-316(2) . Webster v. Sensormatic Elec. Corp., 193 Ga. App. 654 , 389 S.E.2d 15 (1989).

Modification need not be in writing. - Modification or restitution of the remedy available for breach of warranty need not be in writing. Parole evidence to show the usage of the trade to explain or supplement the available remedies for breach of warranty was improperly excluded. Topeka Mach. Exch., Inc. v. Stoler Indus., Inc., 220 Ga. App. 799 , 470 S.E.2d 250 (1996).

Leases

Inapplicability to auto lease not providing for purchase at termination. - Restrictions of O.C.G.A. § 11-2-316 on exclusion of warranties are not applicable to lease contract for automobile containing no provision for purchase at termination. Mays v. Citizens & S. Nat'l Bank, 132 Ga. App. 602 , 208 S.E.2d 614 (1974), overruled on other grounds, Mock v. Canterbury Realty Co., 152 Ga. App. 872 , 264 S.E.2d 489 (1980).

Where a lessee leased a vehicle for four years, title remained with the assignee, and the lessee was required to surrender the car at the expiration of the lease term, there being no option to purchase it, neither the implied warranty provisions nor the exclusion rules therefor of the Uniform Commercial Code applied to the lease agreement. Mark Singleton Buick, Inc. v. Taylor, 194 Ga. App. 630 , 391 S.E.2d 435 (1990).

Debtor may waive any defense of nonexpressed warranties in plain language in a lease, and such waiver is enforceable under O.C.G.A. § 11-2-316 by party to the lease. Hurst v. Stith Equip. Co., 133 Ga. App. 374 , 210 S.E.2d 851 (1974).

Implied Warranty of Merchantability

Implied warranty of merchantability runs only to buyer. - Implied warranty that goods are merchantable clearly arises out of contract of sale of goods, so it can only run to buyer who is in privity of contract with seller. Chaffin v. Atlanta Coca-Cola Bottling Co., 127 Ga. App. 619 , 194 S.E.2d 513 (1972).

Second-hand sales. - When article sold, even though used or second-hand, was sold by seller who "is a merchant with respect to goods of that kind," an implied warranty of merchantability attaches to the sale under O.C.G.A. § 11-2-314 unless excluded or modified by O.C.G.A. § 11-2-316 . Georgia Timberlands, Inc. v. Southern Airways Co., 125 Ga. App. 404 , 188 S.E.2d 108 (1972).

Statement of mileage. - It is an illogical extension to include within the concept of warranty of merchantability or fitness for purposes intended a statement of mileage required by an unrelated statute absent any showing that the statement of mileage is incorrect and/or connected to the injuries suffered. Troutt v. Nash AMC/Jeep, Inc., 157 Ga. App. 399 , 278 S.E.2d 54 (1981).

Georgia's "blood shield" statutes applied to a commercial laboratory, so as to bar a hemophiliac's strict liability and breach of warranty claims against the laboratory for a defective blood-clotting agent which allegedly exposed the hemophiliac to the virus associated with acquired immune deficiency syndrome (AIDS). Jones v. Miles Labs., Inc., 705 F. Supp. 561 (N.D. Ga. 1987), aff'd, 887 F.2d 1576 (11th Cir. 1989), aff'd, 887 F.2d 1576 (11th Cir. 1989).

Exclusions must be conspicuous. - Exclusions of implied warranties of fitness or merchantability must be in writing and conspicuous. White v. First Fed. Sav. & Loan Ass'n, 158 Ga. App. 373 , 280 S.E.2d 398 (1981).

Exclusion by course of conduct. - Implied warranty provisions of the Uniform Commercial Code (UCC) did not apply to a settlement between a supplier and a customer because the primary purpose of the settlement was not a sale of goods, but was to resolve a dispute about whether the customer was obligated to purchase any goods and whether the goods were merchantable. Alternatively, under O.C.G.A. § 11-2-316(3)(c), the parties had excluded the UCC's implied warranties based upon the parties course of conduct. Hanson Staple Co. v. Ole Mexican Foods, Inc., 293 Ga. App. 4 , 666 S.E.2d 398 (2008), aff'd, 285 Ga. 288 , 676 S.E.2d 169 (2009).

Jury decides factual question of modification or exclusion of warranty. - Where the trial court specifically instructed the jury that "an implied warranty can be excluded or modified by course of dealings or course of performance or usage of trade," the evidence of such, sufficient to create an exception to the rule requiring conspicuous written exclusion of warranties, were questions of fact for the jury to determine. Willis Mining, Inc. v. Noggle, 235 Ga. App. 747 , 509 S.E.2d 731 (1998).

Exclusionary paragraph of same size and color type as rest of form. - Paragraph written in same size and color type as all other paragraphs on back of form fails completely to comply with O.C.G.A. § 11-2-316 for excluding the warranties implied by law in O.C.G.A. § 11-2-314 . Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435 , 208 S.E.2d 321 (1974).

Disclaimer of implied warranty was adequate. - Where the disclaimer was in letters larger than any other type on the form, where significant portions of the disclaimer were capitalized, thus distinguishing them from other language on the form, and where the language was conspicuously set forth, the limitation of the implied warranty of merchantability met the requirements of O.C.G.A. § 11-2-316(2) . Harris v. Sulcus Computer Corp., 175 Ga. App. 140 , 332 S.E.2d 660 (1985).

Roofing material vendor's disclaimer of warranty, which stated in capitalized letters that the vendor made no warranties, express or implied, including merchantability or fitness for a particular purpose, except as expressly stated therein, was sufficient to preclude an action against the vendor for breach of the implied warranties of merchantability and fitness. Steele v. Gold Kist, Inc., 186 Ga. App. 569 , 368 S.E.2d 196 , cert. denied, 186 Ga. App. 919 , 368 S.E.2d 196 (1988).

Printed language effectively precluded a claim for breach of implied warranty, where, although the text of the disclaimer was not in bold print, the heading "DISCLAIMER OF WARRANTIES" was in large capital letters and the entire paragraph was blocked off by an outline. Bennett v. Matt Gay Chevrolet Oldsmobile, Inc., 200 Ga. App. 348 , 408 S.E.2d 111 , cert. denied, 200 Ga. App. 895 , 408 S.E.2d 111 (1991).

Goods "Sold As Is"

Term "sold as is" excludes implied warranties. - The term, "sold as is," when contained in contract for sale of personalty, means that buyer takes article in its then present state or condition without any implied warranty as to soundness of condition, or suitability for use, or purposes intended. Hutchinson Homes, Inc. v. Guerdon Indus., Inc., 143 Ga. App. 664 , 239 S.E.2d 553 (1977).

Express warranty not negated. - Statement in purchase agreement that goods are sold "as is" does not negate express warranty. City Dodge, Inc. v. Gardner, 232 Ga. 766 , 208 S.E.2d 794 (1974).

Automobile invoice containing language, "I accept the above-described car in its present condition . . ." indicated that the car was sold "as is" and operated to exclude any implied warranties; trial court, therefore, erred in not granting partial summary judgment to seller in regard to the claim for breach of implied warranties. Joseph Charles Parrish, Inc. v. Hill, 173 Ga. App. 97 , 325 S.E.2d 595 (1984).

Buyer's Examination of Goods

Demand that buyer fully examine goods. - To bring transaction within scope of "refused to examine" of O.C.G.A. § 11-2-316(3)(b), it is not sufficient that goods are available for inspection. There must in addition be demand by seller that buyer examine goods fully, which demand puts buyer on notice that the buyer is assuming risk of defects which examination ought to reveal. The language "refused to examine" in that subsection is intended to make clear the necessity for such demand. Austin Lee Corp. v. Cascades Motel, Inc., 123 Ga. App. 642 , 182 S.E.2d 173 (1971).

Actions

Action for deceit. - Where purchaser did not receive car described and identified in bill of sale, but instead received one-half of described vehicle welded to one-half of another unidentified and unidentifiable vehicle, disclaimer of warranties in bill of sale was not sufficient defense against action for deceit. Bill Spreen Toyota, Inc. v. Jenquin, 163 Ga. App. 855 , 294 S.E.2d 533 (1982).

Revival of waived defense. - If debtor waives defense of nonexpressed warranties in plain language, the debtor's guarantor cannot revive it. Hurst v. Stith Equip. Co., 133 Ga. App. 374 , 210 S.E.2d 851 (1974).

Defense of breach of warranty cannot be raised by guarantor of debtor. - Whether or not warranty provisions of Uniform Commercial Code apply to lease of machinery, defense of breach of warranty cannot be raised by a guarantor of debtor. Hurst v. Stith Equip. Co., 133 Ga. App. 374 , 210 S.E.2d 851 (1974).

The grant of summary judgment to a defendant with respect to an allegation that equipment is not fit for the purpose intended will be affirmed where the lease/purchase agreement effectively excludes any implied warranties of merchantability or suitability for a particular purpose, pursuant to O.C.G.A. § 11-2-316 . Holcomb v. Commercial Credit Servs. Corp., 180 Ga. App. 451 , 349 S.E.2d 523 (1986).

General Consideration

Expression of public policy on product liability. - O.C.G.A. §§ 11-2-318 and 51-1-11 are recent expressions of legislature establishing and limiting public policy of state in area of product liability. Ellis v. Rich's, Inc., 233 Ga. 573 , 212 S.E.2d 373 (1975).

Exception to privity requirement. - Under O.C.G.A. § 51-1-11 , no privity is necessary to institute an action for tort, but if tort results from violation of duty, itself the consequence of contract, right of action is generally confined to parties and privies of that contract except in cases where party would have right of action for injury done independently of contract and except as provided in O.C.G.A. § 11-2-318 . Shell v. Watts, 125 Ga. App. 542 , 188 S.E.2d 269 , rev'd on other grounds, 229 Ga. 474 , 192 S.E.2d 265 (1972).

O.C.G.A. § 51-1-11 purportedly limits the right of tort action based on the violation of a duty, itself the consequence of a contract, to a party or privy, except in "cases where the party would have had a right of action for the injury done, independently of the contract" or in cases covered by O.C.G.A. § 11-2-318 of the Uniform Commercial Code extending the benefit of express or implied warranties to certain natural persons without regard to privity. Koppers Co. v. Parks, 120 Ga. App. 551 , 171 S.E.2d 639 (1969).

Generally, this state has recognized the necessity of privity between parties where plaintiff-purchaser of an article has been injured because of its alleged defectiveness and brings action based on warranty, but an exception to this rule requiring privity is expressed in O.C.G.A. § 11-2-318 . Evershine Prods., Inc. v. Schmitt, 130 Ga. App. 34 , 202 S.E.2d 228 (1973).

The rule of privity in contract actions is made a statutory requirement by O.C.G.A. § 51-1-11 . In actions based upon the breach of express or implied warranties this requirement is subject only to the exception contained in O.C.G.A. § 11-2-318 . Ellis v. Rich's, Inc., 233 Ga. 573 , 212 S.E.2d 373 (1975).

Privity is required in actions for breach of express warranties except as provided in O.C.G.A. § 11-2-318 and except where warranty clearly extends to some identifiable third person. Stewart v. Gainesville Glass Co., 233 Ga. 578 , 212 S.E.2d 377 (1975).

Necessity of privity between buyer and seller. - Nothing contained in O.C.G.A. § 11-2-318 , which extends the seller's warranties to family members and guests in the buyer's home who may reasonably be expected to use the product and who are injured thereby, eliminates the requirement that the buyer and the defendant be in privity. Thomaston v. Fort Wayne Pools, Inc., 181 Ga. App. 541 , 352 S.E.2d 794 (1987); Gowen v. Cady, 189 Ga. App. 473 , 376 S.E.2d 390 , cert. denied, 189 Ga. App. 912 , 376 S.E.2d 390 (1988).

Plaintiff, parent of a child who sustained burns from spilled coffee, was not in privity with defendant restaurant that sold the coffee to a family friend of plaintiff, who was in turn purchasing the coffee for another family friend. Barnett v. Leiserv, Inc., 968 F. Supp. 690 (N.D. Ga. 1997), aff'd, 137 F.3d 1356 (11th Cir. 1998).

O.C.G.A. § 11-2-318 extends warranty to natural persons in family or household of buyer reasonably using or affected by goods, who are injured or damaged by breach thereof. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

Section does not limit members of family covered to those living within buyer's household. - In O.C.G.A. § 11-2-318 , the words "family or household" do not, because stated in the alternative, limit members of family who may rely on implied warranty to those who live within household of buyer. Chastain v. Fuqua Indus., Inc., 156 Ga. App. 719 , 275 S.E.2d 679 (1980).

Nephew living next door. - Word "family" as used in O.C.G.A. § 11-2-318 includes nephew of purchaser who lived next door and not in owner's house. Chastain v. Fuqua Indus., Inc., 156 Ga. App. 719 , 275 S.E.2d 679 (1980).

"Family" and "household" have different meanings in O.C.G.A. § 11-2-318 . Chastain v. Fuqua Indus., Inc., 156 Ga. App. 719 , 275 S.E.2d 679 (1980).

"Guest in his home" has significance different from and independent of clause "person in household." Chastain v. Fuqua Indus., Inc., 156 Ga. App. 719 , 275 S.E.2d 679 (1980).

Person meeting briefly at buyer's home before embarking on trip. - Plaintiff was not a "guest in [the] home" of buyer where plaintiff and buyer met briefly at buyer's home before embarking on a fishing trip on buyer's boat, aboard which buyer's handgun accidentally discharged and injured plaintiff. Curlee v. Mock Enters., Inc., 173 Ga. App. 594 , 327 S.E.2d 736 (1985).

Warranty of personalty does not run with chattel to second or subsequent purchasers. Stewart v. Gainesville Glass Co., 131 Ga. App. 747 , 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578 , 212 S.E.2d 377 (1975).

Where the father of an injured child purchased a used motorcycle which caused the child's injuries several years after it was manufactured, plaintiffs were not the beneficiaries of any warranty, express or implied, arising from the manufacture of the motorcycle. Weatherby v. Honda Motor Co., 195 Ga. App. 169 , 393 S.E.2d 64 (1990).

Mere fact that one would benefit by performance of warranty does not make that person a third-party beneficiary. Stewart v. Gainesville Glass Co., 131 Ga. App. 747 , 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578 , 212 S.E.2d 377 (1975).

Cited in Wood v. Hub Motor Co., 110 Ga. App. 101 , 137 S.E.2d 674 (1964); Stovall & Co. v. Tate, 124 Ga. App. 605 , 184 S.E.2d 834 (1971); Chaffin v. Atlanta Coca-Cola Bottling Co., 127 Ga. App. 619 , 194 S.E.2d 513 (1972); Standard v. Meadors, 347 F. Supp. 908 (N.D. Ga. 1972); Dodge Trucks, Inc. v. Wilson, 140 Ga. App. 743 , 231 S.E.2d 818 (1976); Pierce v. Liberty Furn. Co., 141 Ga. App. 175 , 233 S.E.2d 33 (1977); GMC v. Davis, 141 Ga. App. 495 , 233 S.E.2d 825 (1977); Ford Motor Co. v. Carter, 239 Ga. 657 , 238 S.E.2d 361 (1977); Rhodes v. R.G. Indus., Inc., 173 Ga. App. 51 , 325 S.E.2d 465 (1984).

Employees of Buyer

Privity is not extended to employee of purchaser by O.C.G.A. § 11-2-318 . Beam v. Omark Indus., Inc., 143 Ga. App. 142 , 237 S.E.2d 607 (1977).

To extent that breach of implied warranty is a contract notion, plaintiff who is employee of purchaser rather than person in family or household of buyer or a guest in the purchaser's home may not rely on express or implied warranties of manufacturer, as there is no privity. Parzini v. Center Chem. Co., 134 Ga. App. 414 , 214 S.E.2d 700 , rev'd on other grounds, 234 Ga. 868 , 218 S.E.2d 580 (1975).

Employees of purchaser do not have privity with manufacturer. Watkins v. Barber-Colman Co., 625 F.2d 714 (5th Cir. 1980).

Employees of a purchaser simply do not have privity with the manufacturer and will not be allowed to institute action for breach of an implied warranty. Starling v. Seaboard Coast Line R.R., 533 F. Supp. 183 (S.D. Ga. 1982).

Class excepted by O.C.G.A. § 11-2-318 from horizontal privity requirement does not include employees of buyer. Weaver v. Ralston Motor Hotel, Inc., 135 Ga. App. 536 , 218 S.E.2d 260 (1975).

Employment as maid of buyer. - Plaintiff, employed as maid at time injury was sustained, does not fall into category of persons benefiting from implied warranty under O.C.G.A. § 11-2-318 . Verddier v. Neal Blun Co., 128 Ga. App. 321 , 196 S.E.2d 469 (1973).

Armed forces members injured by products purchased by federal government. - Member of armed forces injured by product purchased by federal government does not fall within ambit of O.C.G.A. § 11-2-318 . Miles v. Bell Helicopter Co., 385 F. Supp. 1029 (N.D. Ga. 1974).

Manufacturer's Liability

O.C.G.A. §§ 11-2-318 and 51-1-11 preclude extension of strict liability to parties other than the manufacturer. Ellis v. Rich's, Inc., 233 Ga. 573 , 212 S.E.2d 373 (1975).

Plaintiff must be purchaser. - For plaintiff to maintain action against manufacturer based on implied warranties, plaintiff must be a purchaser either directly from manufacturer or from some other person such as a wholesaler or retailer. Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969).

In a product liability action against the manufacturers of a boat and motor after a boating accident, where plaintiffs bought the boat from another consumer who in turn had purchased it from the original buyer who was in privity with the manufacturers, plaintiffs did not meet the required exceptions of O.C.G.A. § 11-2-318 . Davis v. Brunswick Corp., 854 F. Supp. 1574 (N.D. Ga. 1993).

Lack of privity between the manufacturer and user of exercise machine at a health club precluded an implied warranty claim against the manufacturer. Bodymaster Sports Indus., Inc. v. Wimberley, 232 Ga. App. 170 , 501 S.E.2d 556 (1998).

Extension of warranty through dealer. - Ordinarily, there is no implied warranty existing between manufacturer and purchaser of automobile when there is no privity between the two, yet where automobile manufacturer, through its authorized dealer, issues to purchaser a warranty by manufacturer to said purchaser, implied warranty statute becomes operative. Ford Motor Co. v. Lee, 137 Ga. App. 486 , 224 S.E.2d 168 , aff'd in part and rev'd in part on other grounds, 237 Ga. 554 , 229 S.E.2d 379 (1976).

Repeal of former Code 1933, § 96-307 does not negate effect of express warranties by manufacturer. - Repeal of former Code 1933, § 96-307 which provided implied warranty to ultimate consumer for whom product was intended does not mean that there can be no warranties if manufacturer or producer makes an express warranty to ultimate consumer, which is commonly done in the sale of a number of items, such as automobiles and household appliances. Evershine Prods., Inc. v. Schmitt, 130 Ga. App. 34 , 202 S.E.2d 228 (1973).

Second-hand goods. - When goods are sold by original purchaser to third party as used or second-hand goods, there is no implied warranty with respect to manufacturer or original seller. Even with respect to the original purchaser or second seller, absent special circumstances, "the rule is that there is no implied warranty as to the condition, fitness or quality of the article." GMC v. Halco Instruments, Inc., 124 Ga. App. 630 , 185 S.E.2d 619 (1971).

Pharmaceutical products. - Patient who died after taking medicine which a pharmaceutical manufacturer gave to the doctor and which the doctor gave to the patient was not entitled to an extension of any implied warranty existing between the manufacturer and the doctor, and the appellate court upheld the trial court's judgment dismissing claims the patient's spouse filed against the manufacturer, alleging breach of express and implied warranties, but reversed the trial court's judgment dismissing the husband's claims against the manufacturer alleging strict liability and negligent failure to warn. Bryant v. Hoffmann-La Roche, Inc., 262 Ga. App. 401 , 585 S.E.2d 723 (2003).

General Consideration

When title passes. - If contract requires or authorizes seller to send goods to buyer but does not require seller to deliver them at destination, title passes to buyer at the time and place of shipment, but if contract requires delivery at destination, title passes on tender there. Promech Corp. v. Brodhead-Garrett Co., 131 Ga. App. 314 , 205 S.E.2d 511 (1974).

Construction with other law. - After obtaining consent from the probate court to sell construction equipment an executrix's decedent secured with a promissory note, the executrix was entitled to summary judgment as to the tort claims alleged against the decedent's corporation, after the corporation wrongfully retained possession of said equipment, converted two certificates of deposit, and the decedent's liability on the notes was extinguished under a provision of a stock sales agreement; furthermore, evidence was presented that the corporation's failure to release the equipment prevented its sale to third parties and thereby constituted a breach of a duty to mitigate damages. Midway R.R. Constr. Co. v. Beck, 281 Ga. App. 412 , 636 S.E.2d 110 (2006).

Title did not pass to the shipper's customer upon delivery of goods to the carrier where it was agreed between all parties that the seller bore the expense, not of putting the goods in possession of the carrier, but rather of transporting the goods to the place of destination. Clark v. Messer Indus., Inc., 222 Ga. App. 606 , 475 S.E.2d 653 (1996).

Delivery, in exchange for promise to pay in future, without retained security interest. - Where defendant offered to pay in future for goods to be delivered presently, and seller agreed, delivered merchandise to defendant, and did not retain any security interest therein, there was a completed "sale" of the goods in question, and defendant had not only rightful possession of items, but title to them as well. Elliott v. State, 149 Ga. App. 579 , 254 S.E.2d 900 (1979).

Attempted reservation of title amounted to a security interest. - When the peanut growers completed the performance of the growers' duties under the growers' contracts with a peanut broker by delivering the growers' peanuts to a peanut company, title passed to the broker. The growers' attempted reservation of title amounted to a security interest. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374 , 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).

Customer's selection of goods and placing in shopping cart. - Where defendant owner of barbecue restaurant continued to purchase large quantities of cut meat from plaintiff market's meat case (thereby leaving the market's meat case empty for other customers) instead of special ordering required meat as requested by plaintiff, plaintiff prevented defendant from paying for meat when defendant again disregarded plaintiff's instructions, and defendant refused to leave the market premises without paying for the meat selected, title to the meat did not pass to the defendant at the time defendant selected it and placed it in defendant's cart so as to serve as a basis for allowing defendant to ignore plaintiff's demand that defendant leave, thereby violating a criminal statute (criminal trespass). Watson v. State, 190 Ga. App. 671 , 379 S.E.2d 811 (1989).

Delivery of automobile. - Where seller delivered possession of automobile to buyer and transaction was complete as between them even though compliance had not yet been made with recording and insurance statutes, buyer was "owner" of the automobile and buyer alone was liable to third party for injuries sustained in accident while buyer was driving automobile. American Mut. Fire Ins. Co. v. Cotton States Mut. Ins. Co., 149 Ga. App. 280 , 253 S.E.2d 825 (1979).

The evidence authorized the finding by the fact finder that, pursuant to the parties' understanding, the title to a motor vehicle passed to the buyer at the time the buyer received physical possession, with the seller holding the certificate as security only for the final payment of $50.00, which document was to be delivered at such time and place as the indebtedness was paid, and that, consequently, the sale was complete and the seller's uninsured motorist coverage on the vehicle was no longer in effect. Stone v. Nolan, 171 Ga. App. 644 , 320 S.E.2d 781 (1984).

Since there was no explicit agreement to the contrary, a used car dealer acquired title to a car and the right to sell the car to a third party when the car was delivered to the dealer for this purpose; the fact that the dealer did not obtain the certificate of title did not deprive the dealer of title in the car or prevent it from transferring title. Right Touch of Class, Inc. v. Superior Bank, FSB, 244 Ga. App. 473 , 536 S.E.2d 181 (2000); Mitchell Motors, Inc. v. Barnett, 249 Ga. App. 639 , 549 S.E.2d 445 (2001).

Evidence showed that a car dealership sold its interest in a car to the buyer before a collision since the father signed the purchase and financing documents relating to the car sale, a credit company financed the purchase in the buyer's name and paid the dealership the car's purchase price, and the buyer's daughter took possession of the vehicle, regardless of whether an application for a certificate of title was filed before or after the collision. West v. Village Ford-Mercury, Inc., 256 Ga. App. 18 , 567 S.E.2d 355 (2002).

O.C.G.A. § 11-2-401 creates, in favor of unpaid cash seller, unperfected interest which, though generally subject to a valid and perfected Article Nine security interest, may on some rare occasions provide relief to the aggrieved cash seller who can substantiate allegations either that a secured party acted in other than good faith or that one of the conditions described in O.C.G.A. 11-9-113 has been met. Dixie Bonded Whse. & Grain Co. v. Allstate Fin. Corp., 693 F. Supp. 1162 (M.D. Ga. 1988).

Perfected security interest had priority over attempted reservation of title. - Peanut growers' attempted reservation of title when the growers' delivered peanuts to a peanut company at a peanut broker's direction amounted to a security interest; however, the growers never perfected the growers' security interests. A cooperative bank's security interest in the peanuts was perfected, as the bank had filed financing statements and the security interest had attached so that the bank's perfected security interest had priority over the growers' unperfected security interests. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374 , 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).

Seller's failure to reserve title or obtain security interest. - Unpaid seller of cotton was an unsecured creditor with no standing to challenge a secured creditor's ownership rights in accounts receivable, where the seller failed to reserve title and did not obtain a security interest in the cotton or the accounts receivable before releasing possession and control of its goods. Graniteville Co. v. Bleckley Lumber Co., 944 F.2d 819 (11th Cir. 1991).

Seller's security interest not discharged by sale where buyer does not complete terms of sale. - The security interest of the mortgagee of a mobile home retail installment sales contract was not discharged by a sale to the mobile home dealer by the mortgagee following default by the purchasers where the mortgagee and the dealer agreed that the title to the mobile home was to be transferred to the dealer only after it had paid mortgagee for the mobile home, the dealer did not complete payment for the mobile home, and there was no transfer of the certificate of title or ownership interest to the dealer, nor was there need prior to the resale of the mobile home for the mortgagee to secure a new certificate of title. Sunnyland Employees' Fed. Credit Union v. Fort Wayne Mtg. Co., 182 Ga. App. 5 , 354 S.E.2d 645 (1987).

When owner estopped from asserting title to property sold by another. - Where one party sells property belonging to another, if latter received proceeds of sale with knowledge of fact that it is proceeds of sale of own property, the seller is estopped from asserting title to property against purchaser; if party to whom property belongs receives proceeds from sale of property in ignorance of fact that it is proceeds from sale of own property, seller is not estopped to assert title against purchaser, but may be required to account for money received. Stubbs v. Smith, 248 Ga. 768 , 285 S.E.2d 720 (1982).

Definition of "sale" used in drug prosecution. - There was no error, in a prosecution for trafficking in cocaine, in using the language contained in O.C.G.A. § 11-2-401(2) when giving the jury a definition of the word "sale." Quinn v. State, 171 Ga. App. 590 , 320 S.E.2d 827 (1984).

Sale of marijuana was completed when defendant caused marijuana to be delivered to undercover agent. Freeman v. State, 163 Ga. App. 71 , 292 S.E.2d 563 (1982).

Sale of marijuana not completed. - Offense of selling marijuana was not complete upon defendants' leading of undercover agents to the site of the marijuana since an agreed-upon weighing, loading, and delivering had not yet occurred; thus, the substantive trafficking offense did not merge with or extinguish the conspiracy-to-traffic offense. Meyers v. State, 174 Ga. App. 161 , 329 S.E.2d 293 (1985).

Factor's purchase of accounts receivable. - Factor's interest as a good faith purchaser of a cotton buyer's accounts receivable was superior to the interests asserted by unsecured aggrieved sellers, where the factor's actions with respect to the sellers could be characterized as nothing other than honesty in fact and good faith under Article Two of the UCC. Dixie Bonded Whse. & Grain Co. v. Allstate Fin. Corp., 755 F. Supp. 1543 (M.D. Ga.), aff'd, 944 F.2d 819 (11th Cir. 1991).

Legal title passed when goods tendered to third-party customer and bill of lading issued listing nonresident corporation as consignee. - Under O.C.G.A. § 11-2-401(2) , the nonresident corporation took legal title to goods when the manufacturer tendered those goods to a third-party customer at the manufacturer's Georgia facility and issued a bill of lading listing the nonresident corporation as the consignee. Taking physical possession of the goods was not necessary; the nonresident corporation took legal title to goods located in Georgia, and that was sufficient for purposes of "transacting business" under O.C.G.A. § 9-10-91(1) . Diamond Crystal Brands, Inc. v. Food Movers Int'l, 593 F.3d 1249 (11th Cir.), cert. denied, 131 S. Ct. 158 , 178 L. Ed. 2 d 39 (2010).

Cited in Wooden v. Michigan Nat'l Bank, 117 Ga. App. 852 , 162 S.E.2d 222 (1968); First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284 , 167 S.E.2d 190 (1969); First Nat'l Bank & Trust Co. v. McElmurray, 120 Ga. App. 134 , 169 S.E.2d 720 (1969); Marshall v. Universal C.I.T. Credit Corp., 121 Ga. App. 751 , 175 S.E.2d 84 (1970); Rockwin Corp. v. Kincaid, 124 Ga. App. 570 , 184 S.E.2d 509 (1971); Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325 , 185 S.E.2d 393 (1971); Giant Peanut & Grain Co. v. Long Mfg. Co., 129 Ga. App. 685 , 201 S.E.2d 26 (1973); International Harvester Credit Corp. v. Associates Fin. Servs. Co., 133 Ga. App. 488 , 211 S.E.2d 430 (1974); Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381 , 215 S.E.2d 10 (1975); McDuffie v. State, 135 Ga. App. 616 , 218 S.E.2d 320 (1975); Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975); Spurlock v. Commercial Banking Co., 138 Ga. App. 892 , 227 S.E.2d 790 (1976); Canal Ins. Co. v. P & J Truck Lines, 145 Ga. App. 545 , 244 S.E.2d 81 (1978); Johnson v. State, 154 Ga. App. 353 , 268 S.E.2d 406 (1980); Madewell v. Marietta Dodge, Inc., 506 F. Supp. 286 (N.D. Ga. 1980); Leader Nat'l Ins. Co. v. Smith, 162 Ga. App. 612 , 292 S.E.2d 456 (1982); Palmer v. State, 250 Ga. 219 , 297 S.E.2d 22 (1982); Robinson v. State, 164 Ga. App. 652 , 297 S.E.2d 751 (1982); Ansley Park Plumbing & Heating Co. v. Mikart, Inc., 9 Bankr. 144 (Bankr. N.D. Ga. 1981); Graniteville Co. v. Bleckley Lumber Co., 687 F. Supp. 589 (M.D. Ga. 1988); Cotton States Mut. Ins. Co. v. Gomez, 192 Ga. App. 76 , 383 S.E.2d 567 (1989); Mail Concepts, Inc. v. Foote & Davies, Inc., 200 Ga. App. 778 , 409 S.E.2d 567 (1991); Saffron, Inc. v. Macon Kraft, Inc., 134 Bankr. 62 (Bankr. M.D. Ga. 1991); Superior Bank, FSB v. Human Servs. Emples. Credit Union, 252 Ga. App. 489 , 556 S.E.2d 155 (2001); Edel v. Southtowne Motors of Newnan II, Inc., 338 Ga. App. 376 , 789 S.E.2d 224 (2016).

Rejection or Revocation of Acceptance

Election at time of delivery. - O.C.G.A. § 11-2-401(4) , which provides that a "rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller," pertains to an election a buyer may make at the time the goods are presented to the buyer for delivery. Tennessee-Virginia Constr. Co. v. Willingham, 117 Ga. App. 290 , 160 S.E.2d 444 (1968).

Return of automobile to dealer. - The plaintiffs obtained all the rights to an automobile originally held by the defendant when they purchased the automobile from the dealer to whom it had been entrusted. However, after returning the car to the dealer in hopes this would enable plaintiffs to obtain a proper certificate of title, the plaintiffs eventually agreed to give up their claim to the automobile in exchange for the dealer's promise to order them a new and different automobile. This subsequent agreement with the dealer revoked any right or title the plaintiffs had to the automobile in question and revested title back to the original owner, the defendant. Walker v. Castello, 187 Ga. App. 196 , 369 S.E.2d 527 (1988).

General Consideration

Editor's notes. - In light of the similarity of the provisions, decisions under former Code 1933, § 96-207 are included in the annotations for this section.

Subsection (2) and (3) applied only to the owner of the goods as the entruster. Superior Bank, FSB v. Human Servs. Emples. Credit Union, 252 Ga. App. 489 , 556 S.E.2d 155 (2001).

Exception to rule that seller can convey no greater title than possesses. - O.C.G.A. § 11-2-403 and former § 11-9-306 (see now O.C.G.A. §§ 11-9-102 and 11-9-315 ) provide precisely limited exception to common-law rule that seller can convey no greater title than seller has as to rights of an entrustor, because as between the seller and an innocent purchaser, it is entrustor whose act or omission enables wrongdoer to commit fraud. Commercial Credit Equip. Corp. v. Bates, 159 Ga. App. 910 , 285 S.E.2d 560 (1981).

Divestment of true owner's title. - Where owner of personal property gives another apparent right to sell such property by reason of having conferred upon the other indicia of title, a sale to an innocent purchaser divests true owner's title. Teague Ford Sales, Inc. v. Commercial Auto Loan Corp., 96 Ga. App. 129 , 99 S.E.2d 524 (1957) (decided under former § 96-207).

Special application of O.C.G.A. § 23-1-14 . - Rule that where owner has given to another such evidence of right to sell goods as, according to custom of trade or common understanding of the world, usually accompanies authority of disposal, or has given external indicia of the right of disposing of property, sale to an innocent purchaser divests true owner's title, is merely a special application of rule embodied in O.C.G.A. § 23-1-14 , that, when one of two innocent persons must suffer by act of third person, owner who put it in power of third person to inflict injury shall bear loss. Cook Motor Co. v. Richardson, 103 Ga. App. 129 , 118 S.E.2d 502 (1961) (decided under Code 1933, § 96-207).

Innocent purchaser protected. - The estoppel is based on justice of protecting an innocent purchaser against damage that would otherwise come to purchaser through original act of owner in making it possible for one, whether immediate or in succession, to appear as rightfully entitled to sell that for which innocent party parts with money or property. Morris v. Courts, 59 Ga. App. 666 , 1 S.E.2d 687 (1939) (decided under former § 96-207).

O.C.G.A. § 11-2-403(2) and (3) are applicable only to owners of goods. United Carolina Bank v. Sistrunk, 158 Ga. App. 107 , 279 S.E.2d 272 (1981).

Where plaintiff was not the owner of a mobile home, it could not be its entruster, and hence defendant's contention that the remedy provided by O.C.G.A. § 11-2-403(2) and (3) applied was without merit. Sunnyland Employees' Fed. Credit Union v. Fort Wayne Mtg. Co., 182 Ga. App. 5 , 354 S.E.2d 645 (1987).

Merchant. - O.C.G.A. § 11-2-403 requires, from an objective viewpoint, that the entruster know, or in the exercise of reasonable diligence should know, that the entrustor placed the goods with one who might appear to third persons to be a dealer in the type of goods in question, and where entrustor met entrustee at an auction bidding for the litigated tractor, agreed for entrustee to install equipment on tractor and visited entrustee's repair shop, entrustee could reasonably appear to be a merchant. Perez-Medina v. First Team Auction, Inc., 206 Ga. App. 719 , 426 S.E.2d 397 (1992).

Stolen property not included within section. - Georgia Court of Appeals held that stolen property was not within the ambit of O.C.G.A. § 11-2-403 . Cars v. W. Funding II, 349 Ga. App. 517 , 826 S.E.2d 370 (2019).

Cited in Charles S. Martin Distrib. Co. v. Banks, 111 Ga. App. 538 , 142 S.E.2d 309 (1965); First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284 , 167 S.E.2d 190 (1969); First Nat'l Bank & Trust Co. v. McElmurray, 120 Ga. App. 134 , 169 S.E.2d 720 (1969); Marshall v. Universal C.I.T. Credit Corp., 121 Ga. App. 751 , 175 S.E.2d 84 (1970); Greater S. Distrib. Co. v. Usry, 124 Ga. App. 525 , 184 S.E.2d 486 (1971); Rockwin Corp. v. Kincaid, 124 Ga. App. 570 , 184 S.E.2d 509 (1971); Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325 , 185 S.E.2d 393 (1971); International Harvester Credit Corp. v. Commercial Credit Equip. Corp., 125 Ga. App. 477 , 188 S.E.2d 110 (1972); Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975); Chastain-Roberts Co. v. Better Brands, Inc., 141 Ga. App. 186 , 233 S.E.2d 5 (1977); Sylvester Motor & Tractor Co. v. Farmers Bank, 153 Ga. App. 614 , 266 S.E.2d 293 (1980); Commercial Credit Equip. Corp. v. Bates, 154 Ga. App. 71 , 267 S.E.2d 469 (1980); McConnell v. Barrett, 154 Ga. App. 767 , 270 S.E.2d 13 (1980); Hanington v. Palmer, 103 Bankr. 348 (Bankr. M.D. Ga. 1989); First Nat'l Bank v. Proceeding Ayres Aviation Holdings, Inc. (In re Ayres Aviation Holdings, Inc.), 342 Bankr. 104 (Bankr. M.D. Ga. 2006).

Good Faith Purchaser for Value

Proof of ownership not required. - There is no requirement that a good faith purchaser for value receive a bill of sale or other proof of ownership before the purchaser can hold good title to a tractor. Brown v. Allen, 203 Ga. App. 894 , 418 S.E.2d 153 (1992).

One holding perfected security interest in after-acquired property. - Where seller did not perfect purchase money security interest, lien of security instrument previously perfected by filing held by plaintiff bank covering after-acquired property attached to property sold when it came into possession of buyer, even though at that time buyer had only voidable title, having paid with bad check, thus giving bank priority over the seller as a purchaser for value, provided bank had acted in good faith. Central Bank v. American Charms, Inc., 149 Ga. App. 218 , 253 S.E.2d 857 (1979).

Bank was a good faith purchaser for value of certain cars under the following circumstances: The proprietor of a used-car business maintained a special checking account with the bank; the proprietor purchased cars from a car auction company with checks drawn upon this account; the proprietor then executed a promissory note to the bank, which loaned the proprietor the purchase price and took a security interest in the car; the account became overdrawn and the bank refused to honor the checks made out to the auction company. Georgia Cas. & Sur. Co. v. Tennille Banking Co. (In re Smith), 51 Bankr. 904 (Bankr. M.D. Ga. 1985).

Dealer acquiring vehicle from forger. - Automobile dealer, who acquired a vehicle from a person who gave a forged check to its owner and then purported to "sell" the vehicle to the dealer, was a good faith purchaser for value. Charles Evans BMW, Inc. v. Williams, 196 Ga. App. 230 , 395 S.E.2d 650 (1990).

Because plaintiff cellular telephone trademark holder's packages contained terms and conditions inside and language on the outside of the packages that referenced those terms and conditions, there was a valid "shrink-wrap" contract between the holder and purchasers of the cell phones, and allegations that defendant competitor removed the phones from their original packaging and shipped the phones outside the United States sufficiently raised a reasonable expectation that discovery would reveal evidence that the competitor was aware of the terms and conditions, was afforded an opportunity to reject the terms and conditions, and failed to reject the terms and conditions, such that a breach of contract claim was plausible, and, because the allegations indicated a lack of good faith by the competitor, the bona fide purchaser for value and buyer in the ordinary course defenses under O.C.G.A. §§ 11-1-201 and 11-2-403(1)(a) were not available. Tracfone Wireless, Inc. v. Zip Wireless Prods., 716 F. Supp. 2d 1275 (N.D. Ga. 2010).

Thief cannot grant voidable title nor entrust. - Trial court erred in finding that the finance company was entitled to summary judgment under O.C.G.A. § 11-2-403 because a thief who took the car could neither grant a voidable title to the car nor entrust the car to any other entity to sell on a dealer's behalf since no agency was established. Cars v. W. Funding II, 349 Ga. App. 517 , 826 S.E.2d 370 (2019).

Buyer in Ordinary Course of Business

Plaintiffs in attachment proceedings. - Where plaintiffs in attachment proceedings are seeking refund of down payment after recission of contract, fact that debt is to be satisfied by execution sale of attached mobile home does not make them buyers in ordinary course of business. Troy Lumber Co. v. Williams, 124 Ga. App. 636 , 185 S.E.2d 580 (1971).

Security Interest

Security interest continues in collateral notwithstanding sale, exchange, or other disposition, unless authorized by secured party. Commercial Credit Equip. Corp. v. Bates, 159 Ga. App. 910 , 285 S.E.2d 560 (1981).

Priority of entruster's security interest. - Where financing statement giving notice of interest of entruster in office machines entrusted to a bankrupt was signed by debtor, incorporated a security agreement and adequately described collateral, and was filed prior to filing of a bank's financing statement covering inventory, equipment, furniture, and fixtures, the prior security interest must prevail. First Nat'l Bank & Trust Co. v. Olivetti Corp. of Am., 130 Ga. App. 896 , 204 S.E.2d 781 (1974).

Application

Placing automobile in hands of dealer. - Delivery of automobiles by plaintiff, under contract of sale, to one known by plaintiff to be a dealer in used automobiles in Georgia, without taking any security therefor, and with whom plaintiff had done business in a similar manner many times before, constituted such evidence of right to sell plaintiff's automobiles as according to custom of trade or common understanding of the world usually accompanies authority to dispose of them; plaintiff gave to dealer possession of the automobiles under external indicia of ownership, and dealer's subsequent sale to defendant divested plaintiff of title. Cook Motor Co. v. Richardson, 103 Ga. App. 129 , 118 S.E.2d 502 (1961).

Defendant, by placing automobile in hands of merchant dealing in automobiles, gives latter power to transfer all defendant's rights to plaintiff buyer in ordinary course of business, and any limitation defendant placed upon authority of merchant is of no moment and not material to the issues. Christopher v. McGehee, 124 Ga. App. 310 , 183 S.E.2d 624 , aff'd, 228 Ga. 466 , 186 S.E.2d 97 (1971).

Where the evidence showed that an automobile dealer entrusted a car to an automobile sales and leasing firm which was a merchant dealing in such goods, under O.C.G.A. § 11-2-403 the sales and leasing firm was empowered to transfer ownership interest in the car to a buyer in the ordinary course of business. Perimeter Ford, Inc. v. Edwards, 197 Ga. App. 747 , 399 S.E.2d 520 (1990).

Even though a car dealer did not intend to sell the car to another dealer and authorize it to sell the car to a third party until the latter dealer's check cleared, the facts supported the conclusion that the first dealer entrusted the car to the other dealer with the understanding that the latter would arrange for financing and sell the car to the third party, who, as a buyer in the ordinary course of business, obtained all of the first dealer's interest to the car. Right Touch of Class, Inc. v. Superior Bank, FSB, 244 Ga. App. 473 , 536 S.E.2d 181 (2000); Mitchell Motors, Inc. v. Barnett, 249 Ga. App. 639 , 549 S.E.2d 445 (2001).

In an action upon a consignment of a motor home between the consignors and a dealer, once a dealer transferred a motor home to the buyer other than by the creation of a security interest, whether the buyer obtained title to the motor home was governed by O.C.G.A. § 11-2-403(2) ; the fact that the dealer did not obtain a title certificate at the time of the consignment did not prevent it from transferring good title to the buyer. Smith v. Hardeman, 281 Ga. App. 402 , 636 S.E.2d 106 (2006).

Leaving purchased truck with dealer for modifications. - Where truck dealer sells same truck to two customers successively, first purchaser is estopped from asserting otherwise good claim to ownership against subsequent purchaser and possessor where the first purchaser allowed truck to stay under control of dealer after transaction so as to effect modifications of truck amounting to an "entrusting" or acquiescence under O.C.G.A. § 11-2-403 , giving the dealer power to transfer all rights in the truck. Simson v. Moon, 137 Ga. App. 82 , 222 S.E.2d 873 (1975), cert. dismissed, 236 Ga. 786 , 225 S.E.2d 314 (1976).

Automobile dealer "entrusted" cars to a leasing firm even though the vehicles were delivered directly to the firm's customers, where the delivery of the cars was simultaneous with the execution of lease agreements. Classic Cadillac v. World Omni Leasing, Inc., 199 Ga. App. 115 , 404 S.E.2d 452 (1991).

Authority of automobile broker. - O.C.G.A. § 11-2-403(2) was inapplicable to the sale of an automobile by an automobile broker where the automobile owner's son indicated acceptance of a lower selling price in a telephone conversation with a salesperson for the automobile broker; the broker was acting within its authority in selling the automobile. McDowell v. Owens, 170 Ga. App. 421 , 317 S.E.2d 275 (1984).

Title revoked upon return of automobile to dealer. - The plaintiffs obtained all the rights to an automobile originally held by the defendant when they purchased the automobile from the dealer to whom it had been entrusted. However, after returning the car to the dealer in hopes this would enable the dealer to obtain a proper certificate of title, the plaintiffs eventually agreed to give up their claim to the automobile in exchange for the dealer's promise to order them a new and different automobile. This subsequent agreement with the dealer revoked any right or title the plaintiffs had to the automobile in question and revested title back to the original owner, the defendant. Walker v. Castello, 187 Ga. App. 196 , 369 S.E.2d 527 (1988).

Dealer with title, but finance company in possession. - Trial court erred by denying a used car dealer's motion for summary judgment on the dealer's counterclaims for trover and conversion because the undisputed evidence showed that the dealer held the title to car but that the finance company was in possession and refused to return the car upon demand. Cars v. W. Funding II, 349 Ga. App. 517 , 826 S.E.2d 370 (2019).

Where car is purchased by check later found to be worthless, and where such car is put into possession of purchaser and is later sold by original purchaser to innocent purchaser for valuable consideration, trover will not lie for original seller to recover property. Gouldman-Taber Pontiac, Inc. v. Thomas, 96 Ga. App. 279 , 99 S.E.2d 711 (1957) (decided under former § 96-207).

Where, under contract of sale of automobiles, by terms of which payment was to be made in cash, vendor delivered possession of automobiles to vendee, accepted in payment a check or draft which later was found to be worthless, and where such vendee, being in possession of automobiles, later sold the same to an innocent purchaser for value, trover would not lie to aid the original seller in recovering the property from the possession of the second vendee. Cook Motor Co. v. Richardson, 103 Ga. App. 129 , 118 S.E.2d 502 (1961).

An insurer of a vehicle was not entitled to summary judgment on the insurer's claims of trover and conversion against a buyer as the buyer was a good faith purchaser for value who acquired good title to the car pursuant to the voidable title doctrine under O.C.G.A. § 11-2-403 , despite the fact that the check paid by the buyer's seller was later dishonored. Moreover, because the insurer stood in the shoes of the insured, it could have no greater right of recovery than that insured. Stein v. GEICO Indem. Ins. Co., 289 Ga. App. 739 , 658 S.E.2d 153 (2008).

Entrustment of stolen corn. - Plaintiff could not recover in trover and conversion from defendant grain elevator company for corn sold to defendant by plaintiff's manager, who had pocketed the proceeds, where the purchases were made in the ordinary course of business, and, since the allegedly stolen goods had been entrusted to the manager by plaintiff, the manager had the power to transfer all rights of the entruster to defendant. Locke v. Arabi Grain & Elevator Co., 197 Ga. App. 854 , 399 S.E.2d 705 (1990).

Purchase of stolen goods. - When items stolen from an electric company were sold to a supply company, the supply company was not entitled to summary judgment dismissing the electric company's conversion claim against it as a good faith purchaser for value, under O.C.G.A. § 11-2-403 , because the exception in that statute was designed to protect a purchaser acting in good faith, and whether the supply company or its principal were good faith purchasers was a jury question. Fed. Ins. Co. v. Westside Supply Co., 264 Ga. App. 240 , 590 S.E.2d 224 (2003).

Entrustment of auctioned tractor. - Auctioned tractor was entrusted despite the fact that it was placed in merchant's possession only for the purpose of installing equipment for plaintiff rather than for sale. Perez-Medina v. First Team Auction, Inc., 206 Ga. App. 719 , 426 S.E.2d 397 (1992).

Horses not included with farm. - Purchasers of a horse farm did not acquire title to horses as good faith purchasers for value, even though the horses were listed both on a security agreement as collateral for a loan the purchasers had made to the vendor and in the sales agreement for the farm, where the horses in question were awarded to the vendor's former partner as part of a judgment and the partner obtained the horses through levy on the judgment, so that the vendor had no title in the horses and had no legal right to sell what was not owned. Russell v. Lawrence, 234 Ga. App. 612 , 507 S.E.2d 161 (1998).

Delivered stock certificate bearing blank assignment and power of attorney. - Blank assignment and power of attorney endorsed on delivered stock certificate estops transferor from claiming any further interest or title in stock as against a bona fide transferee. This concept is based upon the principle that where an owner has given to another external indicia of right to dispose of property, a sale to an innocent purchaser divests true owner's title, and upon principle that when one of two innocent persons must suffer by act of a third person, the one who puts it in the power of the third person to inflict the injury shall bear the loss. Morris v. Courts, 59 Ga. App. 666 , 1 S.E.2d 687 (1939) (decided under former § 96-207).

Preexisting security interest in collateral. - Since O.C.G.A. § 11-2-403(2) would not give a buyer title free of a preexisting security interest, it did not alter the result reached by the trial court granting appellee lender's motion and request for a writ of possession of a machine against appellant corporation, a bona fide purchaser. Intermet Corp. v. Fin. Fed. Credit, Inc., 263 Ga. App. 622 , 588 S.E.2d 810 (2003).