Sale of goods: breach of warranty: consequential damages.

Existing law governs commercial contracts for the sale of goods and specifies damages that a buyer is entitled to recover upon a seller's breach, including incidental and consequential damages. Consequential damages include any loss resulting from requirements and needs of which the seller had reason to know and that could not be prevented by the buyer through obtaining substitute goods, and injury to person or property proximately resulting from any breach of warranty. This bill would provide that a seller is only liable for consequential damages to a buyer in an action for breach of warranty alleging that a product is defective if the seller is (1) the manufacturer of the product, (2) exercised substantial control over that aspect or aspects of the design, testing, manufacture, packaging, or labeling of the product, (3) altered or modified the product and that action was a substantial factor in causing the harm, or (4) had actual or constructive knowledge of the defect as specified. The California Constitution authorizes the Governor to declare a fiscal emergency and to call the Legislature into special session for that purpose. The Governor issued a proclamation declaring a fiscal emergency, and calling a special session for this purpose, on January 8, 2010. This bill would state that it addresses the fiscal emergency declared by the Governor by proclamation issued on January 8, 2010, pursuant to the California Constitution.