Reference no: EM131386774

Bishop Logging Company is a large, family-owned logging contractor formed in the low country of South Carolina. Bishop Logging has traditionally harvested pine timber. However, Bishop Logging began investigating the feasibility of a fully mechanized hardwood swamp logging operation when its main customer, Stone Container Corporation, decided to expand hardwood production.

In anticipating an increased demand for hardwood in conjunction with the operation of a new paper machine, Stone Container requested that Bishop Logging harvest and supply hardwood for processing at its mill. In South Carolina, most suitable hardwood is located deep in the swamplands. Because of the high accident risk in the swamp, Bishop Logging did not want to harvest hardwood by the conventional method of manual felling of trees.

Because Bishop Logging had already been successful in its totally mechanized pine logging operation, it began a search for improved methods of hardwood swamp logging centered on mechanizing the process in order to reduce labor, minimize personal injury and insurance costs, and improve efficiency and productivity. Bishop Logging ultimately purchased several pieces of John Deere equipment to make up the system. The gross sales price of the machinery was $608,899. All the equipment came with a written John Deere ‘‘New Equipment Warranty,'' whereby John Deere agreed only to repair or replace the equipment during the warranty period and did not warrant the suitability of the equipment. In the ‘‘New Equipment Warranty,'' John Deere expressly provided:

(a) John Deere would repair or replace parts that were defective in material or workmanship;

(b) a disclaimer of any express warranties or implied warranties of merchantability or fitness for a particular purpose;

(c) an exclusion of all incidental or consequential damages; and

(d) no authority for the dealer to make any representations, promises, modifications, or limitations of John Deere's written warranty.

Hoping to sell more equipment if the Bishop Logging system was successful, however, John Deere agreed to assume part of the risk of the new enterprise by extending its standard equipment warranties notwithstanding the unusual use and modifications to the equipment.

Soon after being placed in operation in the swamp, the machinery began to experience numerous mechanical problems. John Deere made more than $110,000 in warranty repairs on the equipment.

However, Bishop Logging contended the swamp logging system failed to operate as represented by John Deere and, as a result, it suffered a substantial financial loss. What, if any, remedies is Bishop entitled to receive? Explain.