32 N.J. 358, 161 A.2d 69 (1960)
In May 1955, Claus H. Henningsen purchased a new 1955 Plymouth Plaza Club Sedan from Bloomfield Motors, Inc., an authorized De Soto and Plymouth dealer for Chrysler Corporation.1
Mr. Henningsen intended the car as a Mother's Day gift for his wife, Helen Henningsen, and communicated that intention to the dealer.2 He alone signed a one-page printed purchase-order form.3 The reverse side contained, in fine six-point script type, a warranty clause limiting the manufacturer's obligation to replacement of defective parts within ninety days or four thousand miles and disclaiming all other warranties, express or implied.4 The front of the form contained two even smaller paragraphs directing attention to the back-side conditions.5 The form was a standardized document prepared by the manufacturer and used by all its dealers.6 No one called the fine-print provisions to Mr. Henningsen's attention, and he did not read them.7
The car was delivered on May 9, 1955, after the dealer performed the items listed in Chrysler's New Car Preparation Service Guide.8 On May 19, 1955, while Mrs. Henningsen was driving north on Route 36 in Highlands, New Jersey, at twenty to twenty-two miles per hour on a smooth, paved highway, she heard a loud noise from the front of the car. The steering wheel spun in her hands and the vehicle veered sharply into a highway sign and brick wall.9 The car had been driven only 468 miles, had required no servicing, and had exhibited no unusual behavior before the accident.10
An insurance appraiser with eleven years of experience examined the wrecked vehicle and concluded that something in the steering mechanism from the wheel down to the front wheels had broken or dropped off.11 Plaintiffs also presented expert testimony that the steering failure resulted from a latent manufacturing defect that could not have been discovered by reasonable inspection.12 The negligence counts against both defendants were dismissed at trial.13 The case was submitted to the jury solely on the implied-warranty claims.14
The jury returned verdicts for both plaintiffs against Chrysler Corporation and Bloomfield Motors, Inc.15 Defendants appealed and plaintiffs cross-appealed from the dismissal of the negligence claim.16 The Supreme Court of New Jersey certified the matter directly before consideration by the Appellate Division.17
Whether an automobile manufacturer is subject to an implied warranty of merchantability that runs directly to the ultimate purchaser despite the absence of privity of contract?18
Under modern marketing conditions, when a manufacturer puts a new automobile in the stream of trade and promotes its purchase by the public, an implied warranty that it is reasonably suitable for use as such accompanies it into the hands of the ultimate purchaser.19
Yes. The established facts demonstrate that Chrysler Corporation manufactured the 1955 Plymouth and placed it into the stream of trade through its authorized dealer network.20 Claus Henningsen purchased the vehicle from Bloomfield Motors, Inc. as an ultimate consumer after the manufacturer had promoted the product to the public.21 The rule applies directly because the manufacturer knew and intended that the car would reach users such as the Henningsens, eliminating any requirement of privity between Chrysler and the purchaser.
The manufacturer is subject to an implied warranty of merchantability that runs directly to the ultimate purchaser despite the absence of privity of contract.22
Whether standardized disclaimer and limitation-of-liability clauses contained in a manufacturer's purchase-order form are enforceable to exclude or limit the implied warranty of merchantability?23
Standardized disclaimer and limitation-of-liability clauses in a manufacturer's purchase-order form are unenforceable when they are imposed upon the buyer through gross inequality of bargaining power and are inimical to the public good.24
No. The established facts show that the purchase-order form was a standardized document prepared by Chrysler and used by all its dealers.25 It contained fine six-point script type on the reverse side that limited liability to replacement of defective parts within ninety days or four thousand miles while disclaiming all other warranties.26 Mr. Henningsen signed the form without the clauses being called to his attention and without reading them.27 The rule applies because the clauses represent a contract of adhesion that attempts to frustrate the implied warranty of merchantability in a transaction involving a dangerous instrumentality, rendering them void as against public policy.
Standardized disclaimer and limitation-of-liability clauses contained in a manufacturer's purchase-order form are not enforceable to exclude or limit the implied warranty of merchantability.28
Whether the purchaser's wife, who was injured while operating the vehicle, may recover damages for personal injuries under the implied warranty despite lack of privity with the manufacturer or dealer?29
An implied warranty of merchantability extends to the purchaser of the car, members of his family, and other persons occupying or using it with his consent when such use is within the reasonable contemplation of the parties to the warranty.30
Yes. The established facts establish that Mr. Henningsen purchased the car as a Mother's Day gift for his wife and communicated that intention to the dealer.31 Mrs. Henningsen was operating the vehicle with his consent when the steering mechanism failed and caused her injuries.32 The rule applies because she was a person whom the parties reasonably expected to use the automobile, placing her within the distributive chain protected by the warranty.
The purchaser's wife may recover damages for personal injuries under the implied warranty despite lack of privity with the manufacturer or dealer.33
Whether the evidence adduced at trial was sufficient to permit a jury to find that the automobile was defective when sold and that the defect caused the accident?34
Circumstantial evidence is sufficient to create a jury question on breach of the implied warranty of merchantability when the facts permit a reasonable inference that the product was defective when sold and that the defect caused the injury.35
Yes. The established facts show that the car operated normally for ten days and 468 miles with no servicing required before the accident.36 On a smooth highway at twenty to twenty-two miles per hour, the steering wheel suddenly spun and the car veered into a wall.37 An insurance appraiser with eleven years of experience concluded that something in the steering mechanism had broken or dropped off.38
Expert testimony indicated a latent manufacturing defect that could not have been discovered by reasonable inspection.39 The rule applies because these circumstances support a reasonable inference of defect at the time of sale that caused the accident, requiring submission to the jury.
The evidence adduced at trial was sufficient to permit a jury to find that the automobile was defective when sold and that the defect caused the accident.40
Whether an automobile dealer is subject to an implied warranty of merchantability to the purchaser that survives the manufacturer's standardized disclaimer clauses?41
An automobile dealer is subject to an implied warranty of merchantability to the purchaser that survives standardized disclaimer clauses when those clauses are void as against public policy.42
Yes. The established facts show that the actual contract of sale was between Claus Henningsen and Bloomfield Motors, Inc., which included a description of the car sold.43 The dealer used the manufacturer's standardized form containing the invalid disclaimer clauses.44 The rule applies because the dealer is part of the manufacturer's marketing network and the public policy invalidating the disclaimers binds the dealer as well, preserving the implied warranty of merchantability arising from the sale.
An automobile dealer is subject to an implied warranty of merchantability to the purchaser that survives the manufacturer's standardized disclaimer clauses.45