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Alloway v. General Marine Industries6/30/1997
s negligence would constitute a breach of the contractor's implied promise to construct the patio in a workmanlike manner").
An unresolved issue is whether the U.C.C. or tort law should apply when a defective product poses a serious risk to other property or persons, but has caused only economic loss to the product itself. In the present case, plaintiffs have not alleged that the defective seam in the boat posed such a risk. Hence, we do not resolve the issue.
In East River, the United States Supreme Court rejected cases that adopted intermediate positions, which attempted "to differentiate between 'the disappointed users . . . and the endangered ones'. . . and permit only the latter to sue in tort." 476 U.S. at 869-870, 106 S. Ct. at 2301, 90 L. Ed. 2d 865 (quoting Russell v. Ford Motor Co., 281 Ore. 587, 575 P. 2d 1383, 1387 (Or. 1978). The Court stated:
The intermediate positions, which essentially turn on the degree of risk, are too indeterminate to enable manufacturers easily to structure their business behavior. Nor do we find persuasive a distinction that rests on the manner in which the product is injured. We realize that the damage may be qualitative, occurring through gradual deterioration or internal breakage. Or it may be calamitous. But either way, since by definition no person or other property is damaged, the resulting loss is purely economic. Even when the harm to the product itself occurs through an abrupt, accident-like event, the resulting loss due to repair costs, decreased value, and lost profits is essentially the failure of the purchaser to receive the benefit of its bargain -- traditionally the core concern of contract law.
[Id. at 871, 106 S. Ct. at 2301-02, 90 L. Ed. 2d 865 (citations omitted).]
The Restatement implicitly adopts East River, but states " plausible argument can be made that products that are dangerous in these respects [i.e. discovery of the defect prevented harm from occurring or the only harm was to the product itself, but not to persons or other property] rather than merely ineffectual, should be governed by the rules governing products liability law." Restatement, (supra) , at ยง 21, comment d.
As previously indicated, in this case we do not resolve the issue whether tort or contract law applies to a product that poses a risk of causing personal injuries or property damage but has caused only economic loss to the product itself. See Spring Motors, (supra) , 98 N.J. at 578 (distinguishing "cases involving claims for actual or potential personal injuries"). Similarly, we do not reach the issue of the preclusion of a strict-liability claim when the parties are of unequal bargaining power, the product is a necessity, no alternative source for the product is readily available, and the purchaser cannot reasonably insure against consequential damages.
In addition to the right to recover under the U.C.C., victims of fraud or unconscionable conduct possess substantial rights to recover for common-law fraud or for violations of various state and federal statutes. The U.C.C. expressly provides that "unless displaced by the particular provisions of this Act, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy or other validating or invalidating cause shall supplement its provisions." See N.J.S.A. 12A:1-103. The New Jersey Products Liability Law (the "Law") is to the same effect. N.J.S.A. 2A:58C-1 to -11. Although the Law excludes physical damage to the product itself from the definition of "harm," N.J.S.A. 2A:58C-1b(2), the Legislature did not inte
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