Privity of Contract Necessary in Order to Claim Breach of Implied Warranties

All West Electronics, Inc. v. M-B-W, Inc., 75 Cal.Rptr.2d 509 (Cal. Ct. App. 5th Cir. 6/4/98). PRIVITY OF CONTRACT NECESSARY IN ORDER TO CLAIM BREACH OF IMPLIED WARRANTIES- California law states that (i) privity of contract (a direct contractual relationship between parties) is a prerequisite for recovery on a theory of breach of implied warranties of fitness and merchantability; and (ii) that there is no privity between the original seller and a subsequent purchaser who is in no way a party to the original sale.

Determining which parties are in privity can become complicated in leasing transactions and this case provides a couple of nice examples. In this case, plaintiff leased equipment from C&R who had purchased the equipment from defendant and subsequently assigned the lease to another company. After the equipment malfunctioned, plaintiff attempted to sue defendant for breach of implied warranties. The court held that plaintiff had no cause of action because there simply was no agreement between plaintiff and defendant to support a finding of privity.