Okla. Stat. tit. 12A § 2A-216
Okla. Stat. tit. 12A, § 2A-216
Oklahoma Code Comment
Privity. Section 2A-216 of the uniform version of Article 2A requires a legislature enacting Article 2A to choose one of three alternatives. Section 2A-216 abrogates any common law doctrine of privity in lease transactions to a greater or lesser extent dependent upon which alternative is selected. Privity essentially means that the plaintiff and defendant were participants in the lease transaction. Article 2A does not itself require privity between a plaintiff and a defendant with respect to a suit for breach of warranty in a lease. That requirement, if it exists, is a matter of common law outside of Article 2A. See 12A Oklahoma Statutes § 1-103. Thus the alternatives in § 2A-216 should be understood to express only a legislative declaration that any privity requirement will be abrogated to the extent of the alternative selected.
Selection is to be premised upon the degree to which privity, a doctrine created by the courts, has been abrogated by case law in the jurisdiction. Whether, if a less expansive alternative is selected on this basis, any privity requirement beyond that, whether one of so-called vertical or horizontal privity, should be retained is left to further judicial decision. Each of the less expansive alternatives (Alternatives A and B) expressly state this policy: "This section does not displace principles of law and equity that extend a warranty to or for the benefit of a lessee to other persons." Thus the same policy that, with respect to warranties in sales transactions, is articulated only in the Official Comment to UCC § 2-318, in Article 2A is articulated in the statute so that courts might have a clear direction. For an example of the difficulty Oklahoma courts experienced on this matter under 12A Oklahoma Statutes § 2-318, see, e.g., Moss v. Polyco, Inc., 522 P.2d 622, at 625 (Okla.1974). Section 83 of H.B. No. 1683, recognizing the issue exists for both Article 2A and Article 2 in Oklahoma, also amends 12A Oklahoma Statutes § 2-318 so as to make this point in the statute with respect to Article 2. See, as amended, 12A Oklahoma Statutes § 2-318(2).
Alternative A of uniform § 2A-216 extends the benefit of a warranty made to a lessee only to members of the family or household or guests in the home and only with respect to personal injury. For example, this alternative protects the spouse of the person who leased an automobile with defective steering resulting in personal injury, or who leased a television set with defective wiring that causes a bad electrical burn. However, suppose instead the lessee of the television took it to a friend's house to watch the Super Bowl and the friend was injured plugging it in. § 2A-216 Alternative A does not extend the warranty to the friend even though, if the friend came to the lessee's house and plugged in the set, the friend would be protected. It is submitted that to reach different here is not rational.
This situation thus emphasizes the point made previously that the alternative chosen does not preclude a more extensive abrogation of any privity requirement by subsequent case law development.
Alternative B of uniform § 2A-216 extends the benefit of warranty to any individual who could foreseeably be injured in person by breach of the warranty. Under Alternative B the friend in the example above is protected in any circumstance. Finally, uniform Alternative C corresponds to the coverage of strict liability in tort and extends to property damage. See Official Comment 3 to UCC § 2-318.
There is virtually no case law precedent in Oklahoma in lease transactions on which to base the choice to be made. Perhaps the best precedent that exists is the opinion of the court in Patty Precision v. Brown & Sharpe Manufacturing Co., 742 F.2d 1260 (10th Cir.1984). There the Tenth Circuit favorably discussed Old Albany Estates v. Highland Carpet Mills, 604 P.2d 849 (Okla.1979), where the Oklahoma court abrogated vertical privity in a sales transaction involving commercial parties and economic loss. That decision would suggest adoption of Alternative C of § 2A-216 and perhaps even amendment to it since the derivation of Alternative C from strict liability in tort might be thought to preclude the application of this alternative to commercial parties and economic loss unless there was a clear legislative direction. Ultimately, because the legislative schedule did not permit an extensive study, and to avoid a possible legislative battle on a peripheral point that could derail enactment of Article 2A, the choice made by the Oklahoma Legislature was to enact Alternative A of uniform § 2A-216 and rely on the statutory sentence, that the section does not displace principles of law and equity that extend a warranty to or for the benefit of a lessee to other persons, to signal the Oklahoma courts that they are able to further abrogate privity in lease transactions (as they have under a similar provision in sales transactions) if that abrogation is considered appropriate. The sentence also should signal Oklahoma courts that they are not foreclosed with respect to either vertical or horizontal privity. To avoid an adverse implication in the sales area, 12A Oklahoma Statutes § 2-318 similarly was amended to make it clear that the Old Albany case was not intended to be overruled by implication, and to expressly give the courts flexibility with respect to both vertical and horizontal privity issues in sales.
12A Oklahoma Statutes § 2-318 was finally amended by Section 83 of H.B. 1683 to elevate into the statute material from Official Comment 1 to UCC § 2-318 that makes it clear a person not in privity has no greater rights than a person who is in privity; that is, for example, if a seller disclaims a warranty, neither the buyer nor the beneficiary has any rights. Section 2A-216 already contains such a provision.
It might be noted that as a result of these amendments to Oklahoma's version of Article 2, that in addition to § 2A-209, given case law development, § 2-318 may be relevant with respect to a finance lease. To illustrate, suppose a person interested in acquiring a piece of equipment selects it from a seller and then arranges to have the equipment sold to a bank and then the bank lease it to him. Because of case law development under Article 2, the seller's warranty to the lessor could extend to the lessee in accordance with the Old Albany case. This would be the mandated statutory result under § 2A-209.
Strict Liability in Tort The Oklahoma courts have applied the doctrine of manufacturer's products liability (strict liability in tort) to leases of goods. See Dewberry v. LaFollette, 598 P.2d 241 (Okla.1979) and Coleman v. Hertz Corp., 534 P.2d 940 (Okla App.1975). It has taken some time for the Oklahoma courts to work out the relationship between strict liability and the law of sales, and even now the relationship is not entirely clear. What then should be the relationship between Article 2A and strict liability?
An argument could be made that merely by the enactment of Article 2A the application of strict liability to leases is foreclosed since the Oklahoma Legislature created a comprehensive statutory regulation of products liability in leasing transactions covers personal injury, property damage and economic 1088. Compare Cline v. Prowler Ind. of Maryland, 418 A.2d 968 (Del.1980). However, that per se argument is specifically rejected. See Official Comment to § 2A-216. Nonetheless, Article 2A itself does not speak to the issue, and the Oklahoma Legislature left the specifics of the relationship to be developed by the courts. Thus, in the future, some [overall thought must be given to the proper relationship between these two bodies of law in the decided cases. The 1991 amendments make no change here.