Oregon Court binds Stucco manufacturer to warranty representations of its agent

This case involved a claim brought by the owners/developers of a hotel in Lincoln City, Oregon. During construction, an owner’s representative became concerned of rusting on the stucco system being installed. Construction was halted and a meeting was held between the owner’s representative, a representative of the general contractor, a representative of the stucco installer, and the “territory manager” for ChemRex, the manufacturer of the stucco system. During the meeting, the ChemRex territory manager stated the system was “bullet proof” against rust and a corrosion inhibitor could be installed that would provide protection. The territory manager asked the owner’s representative whether he was aware that he was given a 5 year warranty with the stucco system. The ChemRex territory manager later confirmed in writing on ChemRex letterhead that the system had a 5 year warranty.

After the stucco system failed and the owners’ sued ChemRex, ChemRex argued that the territory manager did not have authority to issue the warranty and that none existed. The Supreme Court of Oregon disagreed and held the branch manager had “apparent authority” to bind ChemRex based on his position as territory manager, his ability to process warranties and communicate with customers regarding warranties on ChemRex letterhead.

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