Transamerica Oil Corp: Case Analysis

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The History of Procedure

Transamerica Oil Corporation drills and completes wells. Through an advertisement in the trade journals placed by Baker International Corporation, they purchased Injection Packers, which later failed to function as intended. Hence, they sued. In this case, the defendants Lynes, Ince, and Baker International appealed the decision made by the District Court of Kansas in the United States. The jury ruled in favor of Plaintiff Transamerica Oil Corporation who recovered damages due to breach of express warranty.


Transamerica Oil Corporation in the Kansas Uniform Commercial Code succeeded in attaining damages against Baker International Corporation. The defendants appealed against the decision of the jury. Transamerica Oil Corporation was to receive compensation for damages. At the time of business, the company was in need of packers. These are devices fitted in an oil or gas well to separate one layer from the other. This prevents water entry to ensure that production is efficient. The company’s President Harold Brown saw an advertisement in a trade journal by Baker International. It was on “Production Injection Packers”. He was interested in cutting down costs in cementing and casing and he thus phoned Lynes Company and spoke with the salesperson. The sales representative sent Harold more adverts and descriptive information, which stated that for enduring completion devices in open good holes, he could use Production Injection Packer.

Lynes representative directed Harold to Baker’s District Manager whom he telephoned and told that he had an interest in acquiring Production Injection Packer. This was in lieu of cementing and covering process. The challenge is the essence of the conversation the two had. Harold testified Spencer’s firm confirmation that the Production Injection Packers would work as publicly advertised. Meanwhile, Spencer testified that his response was “l think they would befit the job”. Transamerica Oil Corporation, in six shipments, procured ten Production Injection Packers from the defendant’s company. Baker International Company sent invoices containing a disclaimer note on their back stating that the materials were free of any defects and working errors. Hence, they disclaimed any other express or implied warranties. Each of the invoices also purposed to refuse any remedy or credit to substitutes or defective units.

Later, because of the failure of the Packers to perform, the plaintiff filed a suit against Baker International Company. The plaintiff based her assertion on the breach of the direct warranty only. She also opposed the claim on the implied warranty. The jury awarded the plaintiff close to Two Hundred Thousand Dollars. This amount was more than the cost of the Packers. Hence, the jury’s decision was not just and fair. They thus filed an appeal with the High Court.


However, for actions under the Kansas Uniform Commercial Code, the Statute of Limitations is four years. Incase sec. 60-512 applies in the case at hand; assertions of the plaintiff are restricted. However, if sec. 84-2-725 takes effect the plaintiff’s claim is judicious. Invalidating the Jury’s decision, application of appropriate Statute of Limitations of remedies to warranties and implied terms in invoices associated with shipped merchandise is required.

According to the Kansas Laws, the creation of an express warranty takes place in the following situation:

  1. When a seller makes a promise to a buyer and the promise becomes the basis of the purchase bargain. It is an express warranty that the goods must conform to the promise made. Otherwise, the seller will be in breach of the sales contract.
  2. When the description of the goods becomes the point of the bargain of an agreement, then “it is of an express warranty that the goods will fit the description”.

According to the defendants, Spencer’s statements as well as the description of the Production Packers in the adverts was an expression of an opinion. Therefore, it cannot constitute an express warranty. It would be inappropriate for the plaintiff to rely on the advert as an express warranty. However, if the jury was to believe Harold’s testimony of Spencer’s assurance on the Production Packers, this evidence is enough of express warranty.

The advertisement in question explains the reliance of the plaintiff on the defendants’ express warranty. Under Kansas law, a party to a case may not disown a straightforward warranty. This is because sec 84-2-316(1) states that words or actions that are deemed to negate this will be construed, wherever rational, as reliable with each other but to extrinsic evidence, as limitation is out of order to the extent to which the construction is unreasonable.

The Kansas Uniform Commercial Code states that this law protects buyers from sellers who seek to include clauses in sales contract that exclude all implied or express warranties. This may protect their interests in the purchase of merchandise.

The plaintiff’s invoices contained written statements indicating the defendant’s intention to disclaim an express guarantee, which is unlawful. The only exception to disclaiming an express warranty is when there is the oral form of a contract. Section 84-2-202 explains the issue of whether the document in writing is the intended final document by both parties. If the writings are the final agreement, prior arrangements cannot discard its terms and conditions. Therefore, a question arises as to whether the parties intended the invoices to represent their final sale agreement.

Answers or Holdings

Yes, we hold that judgment of the court be reversed and remanded. This is because the use defense should have presented to the jury more information on the operating grounds upon which the two companies function. Judgment based on the rules and regulations used in consumable trade settings rather than on a commercial setting resulted to the misinterpretation of the terms and conditions of the sale.

Reasoning and Disposition

The high court agreed that the District Court ruled properly that the invoices were not fully integrated contracts upon which the defendants, Lynes, Ince and Baker International Company could rely on. In the facts of this case, there is no evidence of unconscionable intent by the seller disclaimer. This is because they are both operating in the same industry. Hence, none was disadvantaged economically. The court thus ruled that the disclaimer was unconscionable as this was a commercial setting as opposed to a consumer setting.

It was erroneous to leave out the trial court from the limitations held in the invoices. The court agreed with the District’s Jury decision of ruling out the invoices signed by other employees. However, it does take note that the Company’s President did sign one of the invoices, thus making the invoices relevant on the court’s decision. The court erred, as it did not instruct the jury on existence of its usage in the oil and gas industry. This is an agreement entered into by contracting parties, who were present as the limitations were unconscionable. In the case of Transamerica Oil Corporation v. Baker International Corporation, the Jury should have reversed and remanded the decision.

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