Draft Systems, Inc. v. Rimar Manufacturing, Inc.

Draft Systems, Inc. (Draft) (plaintiff) made devices used for tapping beer kegs. Draft’s dispensing devices had two parts, a valve and a syphon tube. Draft entered a contract for the purchase of syphon tubes from Rimar Manufacturing, Inc. (Rimar) (defendant). The tubes were supposed to be made with nylon-11, but the tubes that Rimar delivered were actually made with nylon-6. When the tubes arrived, Draft checked them to be sure they were the correct size and quantity. Draft also looked at the product certification, which indicated that the tubes were made from nylon-11. Nylon-6 and nylon-11 can only be distinguished from one another with infrared. Draft became aware of the lower-grade nylon used in the syphon tubes after a number of beer distributors complained. The nylon-6 tubes absorbed more beer than nylon-11 tubes would have, causing the beer to go bad. Draft sued Rimar. The jury found that Rimar had breached both the warranty of merchantability and the warranty of fitness for a particular purpose. The jury awarded Draft about $400,000 in damages. The award included consequential damages, part of which was for the interest Draft had to pay on a loan it took out while repairing and replacing the defective dispensing devices. Rimar claimed that Draft was not entitled to consequential damages and especially not the interest. Specifically, Rimar argued that it did not know that the tubes could not be more absorbent than nylon-11 tubes would be. Rimar also argued that Draft should have found the nylon-6 problem during its inspection.