Oregon Case Law Update: Contextually Ambiguous Liability Waiver Does Not Limit Tort Liability

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Oregon Case Law Update: Contextually Ambiguous Liability Waiver Does Not Limit Tort Liability 

From the desk of Jack Levy: Many contracts contain limitations or waivers of liability, although lawyers and their clients often wonder whether these really work or how they can be made more effective.  Read on to discover a new roadmap showing which provisions do and do not work to limit a buyer’s tort remedies.

Claims Pointer: In this case arising out of the death of multiple dairy cows, the Oregon Court of Appeals held that a contractual limitation of liability was “contextually ambiguous” and therefore did not limit or preclude the plaintiffs’ tort claims. This case provides important insight into how to properly limit tort liability.

Kaste v. Land O’Lakes Purina Feed, LLC, 284 Or App 233 (March 21, 2017)

Neal and Nancy Kaste (“the Kastes”) operate a dairy farm.  They contracted with Land O’Lakes Purina Feed, LLC (“Land O’ Lakes”) to provide feed for their cows. The feed sickened several cows and killed others, causing the Kastes to incur veterinary expenses as well as business losses. The Kastes sued Land O’Lakes, alleging two contract claims—breach of contract and breach of warranty—and two tort claims—negligence and strict products liability. In Oregon, when the parties have a contract for the sale of goods, real estate or services, unless the contract contains an appropriate limitation of liability, the buyer can typically bring a separate tort claim (in addition to a breach of contract/warranty claim) when the loss involves bodily injury or property damages. The jury found for the Kastes on all of their claims, and the court gave them a judgment for a total of $750,000, allocating $89,197.73 to the contract and warranty claims, and the remaining $660,802.27 to the negligence and strict products liability claims.

Land O’Lakes appealed, arguing that the trial court should have dismissed the Kastes’ tort claims based on the...

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