BILL NUMBER: SB 1017	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Huff

                        FEBRUARY 10, 2010

   An act to amend Section 2715 of the Commercial Code, relating to
commercial transactions.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1017, as introduced, Huff. Sale of goods: breach: damages.
   Existing law governs commercial contracts for the sale of goods
and specifies damages that a buyer is entitled to recover upon a
seller's breach, including incidental and consequential damages.
Consequential damages include any loss resulting from requirements
and needs of which the seller had reason to know and that could not
be prevented by the buyer through obtaining substitute goods, and
injury to person or property proximately resulting from any breach of
warranty.
   This bill would provide that a seller is only liable for
consequential damages to a buyer in an action for breach of warranty
alleging that a product is defective if the seller is (1) the
manufacturer of the product, (2) exercised substantial control over
that aspect or aspects of the design, testing, manufacture,
packaging, or labeling of the product, (3) altered or modified the
product and that action was a substantial factor in causing the harm,
or (4) had actual or constructive knowledge of the defect as
specified.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 2715 of the Commercial Code is amended to read:

   2715.  (1) Incidental damages resulting from the seller's breach
include expenses reasonably incurred in inspection, receipt,
transportation and care and custody of goods rightfully rejected, any
commercially reasonable charges, expenses or commissions in
connection with effecting cover  ,  and any other reasonable
expense incident to the delay or other breach.
   (2) Consequential damages resulting from the seller's breach
include
   (a) Any loss resulting from general or particular requirements and
needs of which the seller at the time of contracting had reason to
know and which could not reasonably be prevented by cover or
otherwise; and
   (b) Injury to person or property proximately resulting from any
breach of warranty. 
   (c) (i) In any action by a buyer for breach of warranty alleging
that a product is defective, a seller other than the manufacturer of
that product shall not be liable for consequential damages under this
subdivision unless any of the following apply:  
   (A) The seller exercised substantial control over that aspect or
aspects of the design, testing, manufacture, packaging, or labeling
of the product that caused the harm for which recovery of
consequential damages is sought.  
   (B) The seller altered or modified the product, and the alteration
or modification was a substantial factor in causing the harm for
which recovery of consequential damages is sought.  
   (C) The seller had actual or constructive knowledge of the
defective condition of the product at the time the seller sold the
product to the buyer.  
   (ii) It is the intent of the Legislature in enacting this
paragraph (c) that a seller who is not actively negligent with
respect to a product, but is instead a mere conduit of the product,
shall not be liable for consequential damages under this subdivision
(2).