Question

1) What is privity and how might it affect a negligence case against an attorney?

2) Give an example of the implied warranty of fitness for a particular purpose.

Answer 1

Ques 1)

Privity - Privity is the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty.

Affect on negligance case against an attorney  

For social policy reasons, courts have severely limited the class of persons who may sue an attorney for legal malpractice. The alternative, courts have often held, is chaos. After every case, no matter who wins, the losing party will sue both attorneys. There will be two legal malpractice cases for every regular case! The same is somewhat less true for other forms of professional malpractice. “Near privity” may suffice.

Lets under with a case study

  Silverboys, LLC v Skordas   2015 NY Slip Op 31711(U)
September 4, 2015 Supreme Court, New York County Docket Number: 653874/2014 Judge: Saliann Scarpulla is a recent example.

“The following allegations are drawn from the amended complaint. Silverboys is a Delaware limited liability company owned and managed by the Silvermans, and it “was created to acquire, own, and manage the [Silvermans’ property in the Bahamas].” On or about April 25, 2014, Henry Silverman signed a contract with Skordas, wherein “Skordas agreed to perform traditional architecture services” such as “coordinat[ing] all architectural, structural, MEP, and design drawings.” “Skordas promised to deliver costeffective, honest, and quality supervision and management of an estimated $8 million construction project that included extensive site work, renovation of an existing main residence, and construction of a guest house, pool, and staff residence.” Plaintiffs allege [* 1] Skordas is responsible for many construction defects, including using inappropriate or inferior materials, installing a “jail-like fence around the property,” constructing “a door to nowhere,” and for failing to maintain proper records or make plans for some of the materials purchased. In addition to acting as an architect, Plaintiffs allege that “Skordas agreed to act as the owner’s representative and the project manager.” Skordas’s alleged responsibilities included, among other things “managing the bidding process for all general contractors and subcontractors, supervising the construction and making regular visits to the construction site, handling all shipments of materials and their clearance through customs, and approving payments to all contractors and subcontractors.” In addition to claims of mismanagement, Plaintiffs allege that Skordas was dishonest during their relationship. One of the alleged incidents of dishonesty occurred on July 21, 2014 when “Silverboys transferred $27,907 to Mr. Skordas as a deposit for a Veyko railing and as full payment for 3 Velux America skylights.” Rather than distributing the funds to and placing the orders with the vendors, the Plaintiffs allege that Skordas, himself, retained the funds. ”

“Third, Skordas’s claim that he owed no duty to Karen Silverman and Silverboys because he did not have a contractual relationship with them is meritless. Tort liability may be found absent privity of contract where the relationship of the parties is “so close as to approach that of privity.” See Ossining Union Free Sch. Dist. v. Anderson LaRocca Anderson, 73 N.Y.2d 417, 424 (1989). Ossining references three factors in assessing liability under these circumstances: “(I) awareness that the [house] w[ as] to be used for a particular purpose or purposes; (2) reliance by a known party or parties in furtherance of that purpose; and (3) some conduct by the defendants linking them to the party or parties and evincing defendant’s understanding of their reliance.” See id. at 425 (citing Credit Alliance Corp. v. Andersen & Co., 65 N.Y.2d 536, 551 (1985)). Here, the Plaintiffs allege facts establishing a relationship approaching privity between Karen Silverman, Silverboys, and Skordas. The Plaintiffs sufficiently allege that the Silvermans hired Skordas specifically for the purpose of performing architectural services, that they relied on Skordas to complete quality construction of their home, and that Skordas knew that the Silvermans relied on him. Moreover, the complaint alleges 7 [* 7] that Silverboys, an LLC owned by the Silvermans “to acquire, own, and manage the Bahamian Property,” received invoices from Skordas and remitted funds to Skordas. For the foregoing reasons, Skordas’s motion to dismiss the claim for professional malpractice is denied. “

Ques 2)

The implied warranty for fitness for a particular purpose (which obviously differs from the ordinary purpose standard of the warranty of merchantability) applies when a buyer relies on the seller’s skill or judgment in choosing a product for a particular purpose and when the seller knows or should know the buyer’s purpose. For example, bicycle buyers explain how they need a bike that can handle a certain type of mountain terrain. In recommending a certain type of bike, the salesperson is held to an implied warranty of fitness for a particular purpose (of the bike’s ability to handle mountain terrain). If the bike cannot actually perform as expected, the implied warranty for fitness for a particular purpose has been breached, and the buyers could most likely return the bike.

This warranty may also be waived by a piece of writing that says “as is” or “with all faults,” though an oral waiver is insufficient. Refusal to examine the goods for defects waives any implied warranties, and a buyer who assumes a discovered and known risk is precluded from recovering damages resulting from such use. Although the seller may limit certain remedies that the buyer has for breach of warranty, the seller may not limit or exclude the buyer’s right to damages from injury or try to shorten the statute of limitations.