Latham & Associates v. William Raveis Real Estate

Citation: Latham & Assocs., Inc. v. William Raveis Real Estate, Inc., 218 Conn. 297, 589 A.2d 337 (1991)(full-text)

Factual Background
William Raveis Real Estate sought computerized capacity to provide efficient interconnection between its own multiple offices and various bank with which it dealt. Latham & Assoc. undertook to provide two computer systems that would those needs but misrepresented the extent of its expertise in creating functioning computer systems. The parties entered into two contracts for the delivery of computer systems. Due to the dissatisfaction with the performance of the software tendered under both contracts, the purchaser did not fully pay license fees or software support charges for the mortgage system.

Latham & Assoc. (vendor) filed a complaint to recover the unpaid purchase price for computer hardware and software delivered to William Raveis Real Estate (purchaser). The purchaser claimed misrepresentation and breach of warranty and sought in a counterclaim to recover damages as well as the return of monies paid to the vendor. The Trial Court found the issues for the purchaser but limited the recovery to $81,500, representing a return of its payments for software.

Latham & Assoc. appealed to the Appellate Court, which was then transferred to the Supreme Court of Connecticut.

State Supreme Court Proceedings
Expert testimony is generally required “when the question involved goes beyond the field of the ordinary knowledge and experience of judges or jurors.” The Trial Court concluded expert testimony was not required because the purchaser’s burden of proof was attenuated by the virtue of trial court’s finding that the purchaser’s right to return of the software purchase price was grounded in the purchaser’s exercise of its right of rejection. Breach of express warranty for computer systems could be established without expert testimony to identify cause for system’s generation of inaccurate data, where the case was grounded in the buyer’s right of rejection, rather than revocation of acceptance. The purchaser did introduce some expert testimony about deficiencies in certain aspects of the software program and relied on representation by seller that include a promise of support services that inferentially encompassed some seller responsibility for the work product of the buyer’s employees. C.G.S.A § 42a-2-601.

To sustain its affirmative defense that the purchaser’s counterclaim was time barred, the vendor had to establish the purchaser’s noncompliance with the requirements of C.G.S.A § 42a-2-725. The vendor had the burden of proving the date on which “tender of delivery was made”. The vendor failed to satisfy this burden.

Execution of contract for a second computer system did not discharge obligations previously assumed by the seller in a contract for first system, despite merger clause in the second contract. C.G.S.A § 42a-2-202. Although the mortgage system contract contained a merger clause indicating that the written document was intended as a definitive integration of the agreement of the parties concerning the mortgage system, the trial court was entitled to find that the parties did not intend the execution of the mortgage system contract. The vendor’s assertion that an acceptance form signed by an employee of the purchaser constituted a waiver of all outstanding contract claims relating to the real estate system contract.

The vendor could not contend that the buyer was required to plead its complaint with the requirements for effective rejection, without objection, during trial. C.G.S.A. § 42a-2-602. Until the possibility of a cure had been exhausted, the purchase did not have the opportunity to make the final inspection that is the prerequisite to an implied rejection. Despite the execution of acceptance form by an employee of the buyer who had no authority to bind the buyer in this respect, the buyer never in fact accepted the software, and the buyer’s ultimate rejection and accompanying notification of the seller were seasonable.

Seller, by its representation that it would develop software system that would suitably meet buyer's demonstrated needs, gave express warranty that could be actionable despite restrictive clauses. Parol evidence about express warranties was admissible; despite contention that contract for computer system was a complete and exclusive integration of the agreement, where seller had misrepresented extent of its expertise in development of comparable computer systems. Misrepresentation undermines intentional adoption of integrated writing that is essential prerequisite to invocation of parol evidence rule.

The Connecticut Supreme Court held (1) breach of express warranty for computer systems could be established without expert testimony to identify cause for system’s generation of inaccurate; (2) statute of limitations had not run; (3) execution of contract for second computer system did not discharge obligations previously assumed by seller in contract for first system; (4) buyer’s rejection was seasonable; and (5) warranties were enforceable.