{ "id": 8526936, "name": "SHARRARD, McGEE & CO., P.A., Plaintiff v. SUZ'S SOFTWARE, INC., Defendant", "name_abbreviation": "Sharrard, McGee & Co. v. Suz's Software, Inc.", "decision_date": "1990-10-16", "docket_number": "No. 9018SC34", "first_page": "428", "last_page": "435", "citations": [ { "type": "official", "cite": "100 N.C. App. 428" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "205 S.E.2d 551", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1974, "pin_cites": [ { "page": "553" } ], "opinion_index": 0 }, { "cite": "21 N.C. App. 670", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8557295 ], "year": 1974, "pin_cites": [ { "page": "673" } ], "opinion_index": 0, "case_paths": [ "/nc-app/21/0670-01" ] }, { "cite": "236 S.E.2d 703", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1977, "opinion_index": 0 }, { "cite": "293 N.C. 160", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8561922, 8561865, 8561837, 8561902, 8561948 ], "year": 1977, "opinion_index": 0, "case_paths": [ "/nc/293/0160-04", "/nc/293/0160-02", "/nc/293/0160-01", "/nc/293/0160-03", "/nc/293/0160-05" ] }, { "cite": "234 S.E.2d 419", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1977, "pin_cites": [ { "page": "422-23" } ], "opinion_index": 0 }, { "cite": "33 N.C. App. 116", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8548175 ], "year": 1977, "pin_cites": [ { "page": "123" } ], "opinion_index": 0, "case_paths": [ "/nc-app/33/0116-01" ] }, { "cite": "117 S.E.2d 21", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1960, "pin_cites": [ { "page": "24" } ], "opinion_index": 0 }, { "cite": "253 N.C. 355", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8625319 ], "year": 1960, "pin_cites": [ { "page": "359" } ], "opinion_index": 0, "case_paths": [ "/nc/253/0355-01" ] }, { "cite": "355 S.E.2d 514", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1987, "opinion_index": 0 }, { "cite": "85 N.C. App. 567", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 12170170 ], "year": 1987, "opinion_index": 0, "case_paths": [ "/nc-app/85/0567-01" ] }, { "cite": "259 S.E.2d 552", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1979, "opinion_index": 0 }, { "cite": "298 N.C. 494", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8572813 ], "year": 1979, "opinion_index": 0, "case_paths": [ "/nc/298/0494-01" ] }, { "cite": "293 S.E.2d 405", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1982, "pin_cites": [ { "parenthetical": "whether there exists a requirement of privity or contractual relationship is not governed by the UCC, but by developing case law" } ], "opinion_index": 0 }, { "cite": "306 N.C. 435", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8571111 ], "year": 1982, "pin_cites": [ { "parenthetical": "whether there exists a requirement of privity or contractual relationship is not governed by the UCC, but by developing case law" } ], "opinion_index": 0, "case_paths": [ "/nc/306/0435-01" ] }, { "cite": "109 S.E. 378", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1921, "opinion_index": 0 }, { "cite": "182 N.C. 459", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8656331 ], "year": 1921, "opinion_index": 0, "case_paths": [ "/nc/182/0459-01" ] } ], "analysis": { "cardinality": 719, "char_count": 16184, "ocr_confidence": 0.768, "pagerank": { "raw": 1.1809625319194143e-07, "percentile": 0.5886291054034425 }, "sha256": "5371cbb8ff69c0d34c905a30135624934be6fe68a56f813cb674210c1885ef4c", "simhash": "1:61395103446bfce4", "word_count": 2628 }, "last_updated": "2023-07-14T14:37:10.855162+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges Wells and Eagles concur." ], "parties": [ "SHARRARD, McGEE & CO., P.A., Plaintiff v. SUZ\u2019S SOFTWARE, INC., Defendant" ], "opinions": [ { "text": "LEWIS, Judge.\nThis case involves the following issues: (1) whether plaintiff was assigned its right to sue defendant pursuant to G.S. \u00a7 25-2-210; (2) whether any express warranties existed between plaintiffs assignor and defendant; (3) whether any implied warranties under G.S. \u00a7 25-2-314 and \u00a7 25-2-315 were breached; and (4) whether plaintiff, as assignee, justifiably revoked acceptance of the goods involved pursuant to G.S. \u00a7 25-2-608 and whether the revocation occurred within a reasonable time after the assignor discovered nonconformities in the goods delivered. At a trial by the court, all of these issues were resolved in favor of the plaintiff and defendant appeals. The court made the following findings of fact:\nIn October 1985, plaintiff Sharrard, McGee and Co., P.A. (\u201cSharrard\u201d), an accountant firm, was in the business of assisting in the computerization of their clients\u2019 accounting systems. One of these clients was Guilford Plumbing Supply, Inc. (\u201cGPS\u201d), a plumbing wholesale distributor.\nOn 7 and 9 October 1985, plaintiffs employees met and negotiated with an employee of defendant, Suz\u2019s Software, Inc. Defendant demonstrated and recommended a general business computer system for the use of plaintiff\u2019s client.\nOn 7 November 1985, Joseph Craycroft, president of defendant corporation, wrote a letter guaranteeing their programming. On 18 November 1985, a computer purchased by the plaintiff was installed at GPS by Mike Joubert, an employee of defendant.\nOn 22 November 1985, Joubert told GPS employees that the computer program, as customized by defendant, would accomplish the goals GPS had set for a computer accounting system. He also informed the plaintiff that this customized program would be included in the guarantee contained in the 7 November 1985 letter from Craycroft to plaintiff.\nOn 9 January 1986, Joubert completed the programming and on 17 January provided GPS employees an instruction manual.\nOn 26 March 1986, the plaintiff paid $8,320.77 to the defendant for the software system and the printer, the money having been provided by GPS.\nShortly thereafter, the system proved to have a number of defects; it failed to consistently and accurately reflect the exact amount of tax; it placed the \u201cdescription\u201d in the item number column on invoices; it erroneously portrayed unit prices, and erroneously computed state and local taxes. GPS assigned all rights which GPS had against the defendant to the plaintiff for consideration.\nBy letter dated 9 December 1987, Sharrard revoked acceptance and demanded a refund of the purchase price from the defendant. Defendant refused to comply with the demand and plaintiff filed suit.\nI. Did GPS validly assign all of its rights to the plaintiff!\nThe trial court found as a matter of law that GPS validly assigned its rights against the defendant to plaintiff pursuant to G.S. \u00a7 25-2-210. G.S. \u00a7 25-2-210 provides:\n(2) Unless otherwise agreed all rights of either seller or buyer can be assigned ... a right to damages for breach of the whole contract, or a right arising out of the assignor\u2019s due performance of his entire obligation can be assigned despite agreement otherwise.\nDefendant does not dispute the validity of this statute, instead it argues that G.S. \u00a7 25-2-210(2) is inapplicable because it is not a \u201cseller\u201d and GPS is not a \u201cbuyer\u201d in this transaction.\n\u201cBuyer\u201d and \u201cseller\u201d are defined in G.S. \u00a7 25-2-103(1).\n(a) \u201cBuyer\u201d means a person who buys or contracts to buy goods.\n(d) \u201cSeller\u201d means a person who sells or contracts to sell goods. . . .\nDefendant concedes that it was a \u201cseller\u201d as between it and Sharrard and Sharrard was a \u201cbuyer\u201d as to Suz\u2019s Software, but defendant argues that it is not a \u201cseller\u201d as to GPS and GPS is not a \u201cbuyer\u201d as to defendant. Essentially defendant is arguing that privity is required between the parties before either party can be labelled a \u201cbuyer\u201d or a \u201cseller\u201d and have a right to assign its contractual rights as provided in G.S. \u00a7 25-2-103(1). We note, however, that GPS\u2019s right to assign legal rights is not exclusively governed by the UCC. Even if GPS technically is not a \u201cbuyer\u201d under the UCC, as long as it has a valid claim for breach of contract against defendant, our common law will permit its assignment. High Point Casket Co. v. Wheeler, 182 N.C. 459, 109 S.E. 378 (1921). The real issue is not whether privity is required in order for GPS to assign its right to sue defendant to plaintiff pursuant to G.S. \u00a7 25-2-210, but whether GPS has any legally cognizable claim to assign at all.\nThe gravamen of plaintiff\u2019s action against defendant is for breach of express and implied warranties given by defendant to GPS. Defendant argues that it made no warranties at all, or in the alternative, that it only made limited warranties directly to Sharrard. Again, defendant contends that privity must have existed between it and GPS before GPS would have any right to sue defendant for breach of express and implied warranties.\nNorth Carolina\u2019s Uniform Commercial Code does not define \u201cprivity\u201d and there are no governing Code provisions dispositive of this issue. G.S. \u00a7 25-2-318 eliminates the need for privity when a natural person is suing to recover for personal injuries, but is silent as to whether privity is required in other contexts. We must therefore turn to case law to determine whether privity is required as between GPS and defendant and, if so, whether privity exists between these two parties. See Bernick v. Jurden, 306 N.C. 435, 293 S.E.2d 405 (1982) (whether there exists a requirement of privity or contractual relationship is not governed by the UCC, but by developing case law).\nPlaintiff has asserted, as GPS\u2019s assignee, a claim against defendant for breach of both express and implied warranties pursuant to G.S. \u00a7 25-2-314 and G.S. \u00a7 25-2-315. Privity is not required when the theory is breach of an express warranty. Kinlaw v. Long Mfg. N.C., Inc., 298 N.C. 494, 259 S.E.2d 552 (1979). \u201c[T]he absence of contractual privity no longer bars a direct claim by an ultimate purchaser against the manufacturer for breach of the manufacturer\u2019s express warranty which is directed to the purchaser.\u201d Id. G.S. Chapter 99B (products liability) expressly abrogates the privity requirement in certain claims based upon implied warranty. G.S. Chapter 99B-2(b). However, outside the exceptions created by G.S. Chapter 99B, the general rule is that privity is required to assert a claim for breach of an implied warranty involving only economic loss. See Holland v. Edgerton, 85 N.C. App. 567, 355 S.E.2d 514 (1987).\nSince privity is not required to assert a claim for breach of an express warranty, we will first examine whether an express warranty existed between GPS and defendant.\nII. Was there an Express Warranty between GPS and Defendant?\nG.S. \u00a7 25-2-313(l)(a) provides:\nExpress warranties by the seller are created as follows:\n(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.\nThe plaintiff argues that defendant gave GPS an express, unlimited warranty that became the basis of the bargain between GPS and defendant in a letter dated 7 November 1985. In that letter, Joe Craycroft, president of defendant corporation, stated, \u201cWe guarantee our programming with full return and refund privileges for the software and printer should our programming not perform as warranted.\u201d This letter was written to Hal Heavner, a CPA in plaintiff accounting firm. The letter specifically referenced plaintiff\u2019s \u201cplumbing distributor client.\u201d\nThe trial court found as a matter of law that this letter constituted an express warranty to GPS that the equipment would perform correctly. Defendant argues that it dealt only with plaintiff in the sale of the equipment, and that if there was any warranty it ran only to plaintiff and not GPS and did not encompass later modifications and additions made to the software system. We disagree.\nPlaintiff does not have to show privity between GPS and defendant. Instead, plaintiff must show that the warranty was \u201caddressed to the ultimate consumer or user.\u201d Wyatt v. Equipment Co., 253 N.C. 355, 359, 117 S.E.2d 21, 24 (1960). In the present case, defendant obviously knew that Sharrard was seeking to obtain computer software on behalf of GPS. The letter expressly references GPS. The equipment was neither purchased nor installed until after this letter was written. We agree with the trial judge that defendant made its express warranty to both plaintiff and GPS in order to induce both parties to go through with the purchase of its software system. Additionally, defendant provided GPS an instruction manual on 16 January 1986, which also expressly warranted that the programs written by the defendant were to supplement the general business system and that the integrated system would \u201cprovide a hard copy of invoices, sales and salesmen\u2019s reports, and sales and use tax reports.\u201d Installation of the integrated system was not complete until after this manual was given to GPS. Defendant concedes that the time of sale was not until the system was paid for in March, 1986. All of this evidence indicates that defendant\u2019s letter was intended to warrant its products to GPS and it was reasonable for GPS to rely upon defendant\u2019s representations. We affirm the trial court\u2019s conclusion that an express warranty existed between GPS and defendant.\nBecause GPS had a valid claim that it could assert by itself, plaintiff, as assignee, was entitled to assert its claim against defendant.\nBecause we affirm the trial court\u2019s conclusion that GPS had and validly assigned its right to recover for breach of the express warranty to plaintiff, we need not address the issues relating to plaintiff\u2019s claim for breach of implied warranties.\nIII. Plaintiffs Cross-Appeal\nPlaintiff cross-appeals the amount of the award of damages. The trial court awarded plaintiff $7,538.06, the value of the worthless computer system (less $782.71 for the printer). Plaintiff argues that it is entitled to recover an additional $1,129.05 for amounts paid to the defendant for services rendered to make the system workable. G.S. \u00a7 25-2-714 governs the amount of damages a buyer may recover for breach of a warranty:\n(1) Where the buyer has accepted goods and given notification ... he may recover as damages for any nonconformity of tender the loss resulting in the ordinary course of events from the seller\u2019s breach as determined in any manner which is reasonable.\n(2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.\n(3) In a proper case any incidental and consequential damages under the next section [G.S. \u00a7 25-2-715] may also be recovered.\nG.S. \u00a7 25-2-714(2). The value differential formula set out in subsection two applies absent a showing of \u201cspecial circumstances.\u201d Id. In the present case, plaintiff expended an additional $1,129.05 for attempts by the defendant to make the system work. The defendant argues that these damages represent special damages and must therefore be specifically pled or lost. However, plaintiff introduced evidence of these damages without objection at trial.\nN.C. Rule of Civil Procedure 15(b) provides:\n(b) Amendments to conform to the evidence \u2014 When issues not raised by the pleadings are tried by the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, either before or after judgment, but failure so to amend does not affect the result of the trial of these issues.\nG.S. 1A-1, Rule 15(b). Although the plaintiff failed to formally move to amend its complaint to allow recovery for damages involving special circumstances as under G.S. \u00a7 25-2-714(2), under the rule of \u201clitigation by consent,\u201d failure by defendant to object to the offered evidence permitted the trial judge to admit and consider the additional damages. See McRae v. Moore, 33 N.C. App. 116, 123, 234 S.E.2d 419, 422-23, disc. rev. denied, 293 N.C. 160, 236 S.E.2d 703 (1977). \u201cIf the defendant does not object, he is (except in certain unusual situations) viewed as having consented to admission of the evidence, and the pleadings are deemed amended to include the new issue.\u201d Hardison v. Williams, 21 N.C. App. 670, 673, 205 S.E.2d 551, 553 (1974).\nDefendant waived any objections based upon the propriety of considering this evidence for the purpose of awarding greater damages than those usually allowed under N.C.G.S. \u00a7 25-2-714. We reverse and remand this issue to the trial court with directions to award plaintiff an additional $1,129.05 for expenses incurred for unsuccessful repairs to the faulty computer system.\nIV. Conclusion\nThe defendant made an express warranty of its goods to GPS. GPS validly assigned its right to recover for breach of this warranty to plaintiff. Plaintiff was entitled to recover its general damages and an additional $1,129.05 for additional sums expended for attempts to make the software system work as warranted.\nAffirmed in part, reversed in part and remanded.\nJudges Wells and Eagles concur.", "type": "majority", "author": "LEWIS, Judge." } ], "attorneys": [ "Fisher, Fisher, Gayle, Clinard & Craig, P.A., hy John O. Craig, III and Robert G. Griffin, for plaintiff-appellee/cross-appellant.", "Brinson and Gullick, by Lynn G. Gullick, for defendant-appellant/cross-appellee." ], "corrections": "", "head_matter": "SHARRARD, McGEE & CO., P.A., Plaintiff v. SUZ\u2019S SOFTWARE, INC., Defendant\nNo. 9018SC34\n(Filed 16 October 1990)\n1. Assignments \u00a7 2 (NCI4th)\u2014 assignment of contract rights \u2014 assignor not buyer \u2014 UCC \u2014 common law\nEven if plaintiff\u2019s assignor was not technically a \u201cbuyer\u201d in a transaction with defendant so as to permit it to assign its contractual rights against defendant pursuant to N.C.G.S. \u00a7 25-2-103(1), the assignor\u2019s contractual rights were assignable under the common law.\nAm Jur 2d, Assignments \u00a7\u00a7 7, 27.\n2. Uniform Commercial Code \u00a7 11 (NCI3d>\u2014 express warranty \u2014 action for breach \u2014privity not required\nPrivity is not required to assert a claim for breach of express warranty.\nAm Jur 2d, Sales \u00a7\u00a7 718, 720.\n3. Uniform Commercial Code \u00a7 11 (NCI3d)\u2014 letter to accounting firm \u2014express warranty to firm\u2019s client\nA letter from defendant\u2019s president to an accounting firm purchasing a computer accounting system for a plumbing distributor which referenced the accounting firm\u2019s \u201cplumbing distributor client\u201d and guaranteed defendant\u2019s \u201cprogramming with full return and refund privileges for the software and printer should our programming not perform as warranted\u201d constituted an express warranty to both the accounting firm and its client in order to induce both to complete the purchase of a software system from defendant. Therefore, the plumbing distributor could validly assign its claim against defendant for breach of the express warranty.\nAm Jur 2d, Sales \u00a7\u00a7 377, 379.\n4. Uniform Commercial Code \u00a7 26 (NCI3d); Rules of Civil Procedure \u00a7 15.2 (NCI3d)\u2014 breach of express warranty \u2014 special damages \u2014 litigation by consent\nPlaintiff was entitled to recover for breach of express warranty of a computer system both its general damages and its special damages for additional sums expended for attempts by defendant to make the system work. Although plaintiff failed to plead damages involving special circumstances, the pleadings were deemed amended to include this issue where plaintiff introduced evidence of these damages without objection at trial and the parties thus tried this issue by implied consent. N.C.G.S. \u00a7 1A-1, Rule 15(b); N.C.G.S. \u00a7 25-2-714(2).\nAm Jur 2d, Sales \u00a7\u00a7 1280, 1297, 1351, 1374.\nAPPEAL by defendant from a judgment entered 21 August 1989 by Judge Howard R. Greeson, Jr. in Superior Court, GUILFORD County. Plaintiff cross-appeals. Heard in the Court of Appeals 28 August 1990.\nFisher, Fisher, Gayle, Clinard & Craig, P.A., hy John O. Craig, III and Robert G. Griffin, for plaintiff-appellee/cross-appellant.\nBrinson and Gullick, by Lynn G. Gullick, for defendant-appellant/cross-appellee." }, "file_name": "0428-01", "first_page_order": 460, "last_page_order": 467 }