Schroeder v. Fageol Motors

John Schroeder (plaintiff) bought a used truck from Fageol Motors, Inc. (Fageol) (defendant) to be used in Schroeder’s business. The truck had less than 6,200 miles on it. Fageol assured Schroeder the truck was still under warranty and would be covered for the next 94,000 miles. After Schroeder signed a purchase order, Fageol gave Schroeder an owner book. The book contained warranties, disclaimers, and exclusionary clauses. One exclusionary clause was in normal-sized print and stated that the seller, Fageol, could not be held liable for special or consequential damages due to a breach of warranty. Fageol did not review the book with Schroeder or alert Schroeder of the book’s warranties, disclaimers, and exclusionary clauses. About four months later, the truck’s engine exploded. Schroeder contacted both Cummins Engine Company (Cummins) (defendant), which provided a separate warranty, and Fageol. However, neither Cummins nor Fageol was able to get the truck working properly. Schroeder sued Cummins and Fageol for breaching their warranties to fix the truck, seeking approximately $8,000 in repair costs that he had paid and $12,000 of business profits that he had lost due to the truck being out of service. Fageol argued that the book’s exclusionary clause meant Fageol could not be held responsible for consequential damages, like lost profits. The trial court found that the exclusionary clause did not apply because (1) Schroeder and Fageol had not negotiated the clause and (2) the clause had not been provided to Schroeder conspicuously. The court ruled that Cummins and Fageol had breached their warranties and awarded Schoeder his repair costs and lost profits. The Washington Court of Appeals affirmed. The Washington Supreme Court granted review.