Indiana Law Review


The Warranty of Sperm: A Modest Proposal to Increase
the Accountability of Sperm Banks and Physicians in the

Performance of Artificial Insemination Procedures

Anita M. Hodgson*

Introduction

An estimated ten percent to twenty percent of all couples of repro-
ductive age are incapable of traditional procreation. 1 For many of these
couples, artificial insemination has made the miracle of childbirth and
the joy of parenthood a welcome reality. For others, including Fred and

Julia Skolnick, the procedure has been less gratifying. 2

In March of 1985, Fred Skolnick contracted with a Manhattan sperm

bank to deposit and store sperm after learning he had a form of cancer

which ultimately would affect his ability to father children. The following

year, Fred's wife Julia was artificially inseminated after deciding that a

child would bond her forever to the memory of her dying husband. Shortly
after the child's birth, however, Julia began to doubt that her husband

was the child's biological father. Her suspicions were later confirmed by

tests revealing that the child was biracial; both Fred and Julia are Cau-

casian.

Motivated in part by the "unbearable" racial taunting which followed

the sperm mix-up, Julia brought a negligence action against her gynecologist

and the sperm bank alleging that she had been inseminated with the

wrong sperm. 3 Although the Skolnick record was sealed from the public

in October of 1989,4 the case raised several novel issues with regard to

* J.D. Candidate, 1993, Indiana University School of Law—Indianapolis; B.A.,
1990, Indiana University.

1. Judith Lynn Bick Rice, Note, The Need for Statutes Regulating Artificial In-

semination by Donors, 46 Ohio St. L.J., 1055, 1056-57 (1985). See also Kathryn Venturatos

Lorio, Alternative Means of Reproduction: Virgin Territory for Legislation, 44 La. L. Rev.

1641 (1984) (approximately 17% of all couples of reproductive age are medically infertile).
2. See Edward A. Adams, Sperm Donor Suit Raises Novel Tort Issues, N.Y. L.J.,

March 8, 1991, at 1; Robin Schatz, New Questions in Sperm Case; Semen Sample Found
in Office, Newsday (N.Y.), April 22, 1990, at 4 [hereinafter New Questions]; Robin Schatz,
Woman Settles Sperm Bank Case, Newsday (N.Y.), July 31, 1991, at 13 [hereinafter Woman
Settles]; Ronald Sullivan, Mother Accuses Sperm Bank of a Mixup, N.Y. Times, March 9,
1990, at A16 [hereinafter Mother Accuses]; Ronald Sullivan, Sperm Mix-up Is Settled, N.Y.
Times, Aug. 1, 1991, at B4 [hereinafter Mix-up Is Settled].

3. Mother Accuses, supra note 2, at A 16.
4. Id.



358 INDIANA LAW REVIEW [Vol. 26:357

the liability of physicians and sperm banks which remain unexplored

today.

While the notable absence of litigation arising from improper artificial

insemination may signify that the procedure has been remarkably trouble-
free over the past quarter-century, it is more likely that the lack of

precedent is attributable to quiet, out-of-court settlements designed to

prevent anxious consumers from discovering the risks involved in the

procedure. The Skolnick case is a perfect illustration of the latter prop-

osition. A recent edition of New York Newsday reported that Julia's
attending physician paid a no-fault settlement of approximately $300,000,

and the sperm bank purchased its no-fault label from Skolnick for one-

third of that amount.5

Despite the fact that justice ultimately was served in the Skolnick

case, the no-fault settlement nevertheless is disturbing in light of the results

of an investigation of the sperm bank following the Skolnick complaint.

During that investigation, officials shockingly discovered that some of

Fred Skolnick's sperm was still preserved in the storage tank, even though

Julia was no longer a sperm recipient.6 Investigating officials also attempted

to locate sperm samples of three random donors in the bank's storage

tank. In one instance, the officials found it "impossible* ' to locate the

sample.7 In the other two cases, the officials found it impossible to identify

the sperm samples intended for specific recipients because the numerical

identification system utilized by the sperm bank did not comply with

suggested guidelines and was highly inefficient.8 According to the inves-

tigators, the sperm bank's labeling method also was inadequate in that

the paper shipping tags used to identify the storage goblets were likely

to disintegrate in the liquid nitrogen utilized in freezing sperm, thus

requiring the lab technicians to examine the identification numbers affixed

to the sperm viles located inside the goblets. The investigators concluded

that once a vile is removed from its goblet for identification purposes,

"great concentration" by the technician is required to return the vile to

its proper goblet in order to avoid a donor mix-up.9

In light of these findings, one might wonder how often donor mix-
ups actually occur. One might surmise that even if donor mix-ups were
prevalent, they often would go completely undetected in cases in which

the mix-ups were not as obvious as the biracial mix-up in the Skolnick

case.

5. Woman Settles, supra note 2, at 13.
6. New Questions, supra note 2, at 4.
7. Id.

8. Id.

9. Id.



1993] WARRANTY OF SPERM 359

In addition to donor mix-ups, a second major risk assumed by artificial

insemination patients involves the health and well-being of the sperm

recipients and their potential offspring. Only three states—California,
Florida, and Indiana—have enacted legislation going beyond the required
testing of sperm donors for the HIV virus. 10 Thus, prospective parents

10. 1991 Cal. Adv. Legis. Serv. 801 (Deering); Fla. Stat. ch. 381.6105 (1990); Ind.

Code § 16-8-7.5-6 (1988).
Although the legislation in California and Indiana provides a specific list of the tests

which must be performed before the sperm may be used, no state has statutorily imposed

regulations sufficient to meet the recommended guidelines of the American Fertility Society.

New Guidelines for the Use of Semen Donor Insemination: 1990, Am. Fertility Soc'y
Guide, Vol. 53, No. 3 (Supp. 1990). The American Fertility Society suggests a four-step

process for the selection and screening of donors with regard to potential diseases.

I. The first step is historical screening for purposes of excluding the following potential

donors: 1. Men in AIDS risk groups: (a) any homosexual contact in the last eight years,
(b) intravenous drug users, (c) sexual partners of persons in AIDS risk groups, and (d)
donors from geographic areas where sex ratio of AIDS patients is close to 1:1; 2. Men
having more than one sexual partner within six months; 3. Men with evidence of STD
within last six months: (a) dysuria, (b) urethral discharge, (c) genital ulcer, (d) hepatitis,

and (e) sexual partner with frequent episodes of trichomonas; and 4. Men with any past
history of: (a) genital herpes, (b) genital warts, and (c) chronic hepatitis;

II. If the potential donor is not excluded through historical screening, the second step

is blood testing for CMV serology;
III. If the CMV serology is negative, the third step is a physical examination which

includes: 1. Genital examination for (a) urethral discharge, (b) genital warts, and (c) genital

ulcers; 2. Urethral cultures for: (a) Neisseria gonorrhoeae, (b) chlamydia trachomatis, (c)

mycoplasma hominis [optional], (d) trichomonas vaginalis loptional], and (e) white blood

cell count [optional]; 3. Blood testing for: (a) hepatitis-B surface antigen and core antibody,

(b) HIV [If test is negative, semen samples may be collected and prepared for cry©preservation.
The donor should be tested again in 180 days for HIV and the specimen released only if
the results are negative.], (c) serologic test for syphilis, and (d) serum antibody test for

CMV; and
IV. If the donor is not excluded through the physical examination, rescreening and

surveillance should be conducted at least every 6 months. If the donor shows signs of STD,

he should be discontinued. Any evident STD transmission should be traced to the donor
and his recipients. Id. at 6-75.

In addition to disease testing, the American Fertility Society also recommends a four-

step genetic screening process.

I. The donor should be generally healthy and, as determined by the use of state-of-

the-art tests, should not have or carry: (a) any nontrivial malformation of complex causes,

(b) any nontrivial Mendelian disorder, (c) any familial disease with known or reliably indicated

major genetic component, (d) an autosomal recessive gene for any disease known to be

prevalent in the donor's ethnic background for which heterozygosity can be detected, (e) a

chromosomal rearrangement that may result in unbalanced gametes, (f) the donor should

be young, and (g) the donor should be Rh-negative if the prospective mother is;

11. The donor's parents and offspring should be free of: (a) nontrivial malformations,

(b) nontrivial disorders, showing Mendelian inheritance as to autosomal dominant or x-linked

disorders, autosomal dominant inheritance with reduced penetrance, or autosomal recessive

inheritance, and (c) a chromosomal rearrangement or imbalance if other than a proven



360 INDIANA LAW REVIEW [Vol. 26:357

are understandably concerned about genetic birth defects and the trans-

mission of sexual diseases in cases of anonymous sperm donation. Although
the risk of defects and disease could be reduced significantly through

more extensive donor screening procedures, such precautionary measures

often are omitted by sperm banks and physicians because the additional

time and cost involved are economically prohibitive. 11

In sperm banks which do not automatically perform extensive screening

of anonymous donors, in-depth testing could cost the donee an additional

$800 to $900. 12 Although this additional cost might appear excessive, it

arguably is a small price to pay relative to the enormous cost of caring

for a genetically defective or diseased child. Moreover, because the artificial

insemination procedure assists in the creation of human life, there clearly
is a need for increased moral accountability and legal liability where

economizing results in the creation of low-cost, low-quality human off-
spring.

Uniform legislation specifically governing the artificial insemination

process theoretically could supply an adequate remedy to these problems,

but practically speaking, the legislative process is too slow and enforcement

too rare to provide the needed swift, effective solution. 13 An alternate

trisomy, unless the donor has a normal karyotype;

III. Major psychoses, epileptic disorders, juvenile mellitus, and early coronary heart

disease should be considered as causes for rejection; and

IV. A permanent record designed to maintain confidentiality should be maintained. It
should include the genetic workup and other nonidentifying information and should be made

available on request, on an anonymous basis, to the recipient and/or any resulting offspring.

Id. at 8-9S.

11. Lorio, supra note 1, at 1652 n.51.

12. Interview with Evan E. Follas, General Manager of Follas Laboratories Inc.,

Indianapolis (Nov. 12, 1991).

13. As one author stated,

The implications of the incomplete legal regulation of [artificial insemination by

donor] and of the absence of a clear, comprehensive framework for societal policy

dealing with new reproductive technologies for the future are important. The issues

are too complex, too divisive for us to expect clear-cut resolutions in a short

period. The issues must undergo a process of identification, clarification, and

consideration that will take time. Prolonging the process will be the impact of

the era of technological, cultural, and legal transition and the social debate over

the underlying value issues. As a result, it is likely that slow, piecemeal progress

through legislation, primarily, and through litigation, on occasion, will continue.

This slowness is not much consolation for those engaged in developing and using
these new technologies, but it represents a more accurate view of what the law

is and how public policy develops . . . For the foreseeable future, we must live
with large areas of legal uncertainty, while working to shape the growth and

development of legal policy in these areas.

Joseph M. Healey, Jr., Legal Regulation of Artificial Insemination and the New Reproductive
Technologies: The Search for Clarification Continues, in Genetics and the Law III 139,



1993] WARRANTY OF SPERM 361

system is needed to hold physicians and sperm banks more accountable

for their actions and to better compensate disappointed donees. Applying

warranty law to the sale of sperm would fulfill this need by economically

compelling sperm banks and physicians to be more scrupulous in their

endeavors to create human life.
This Note specifically addresses whether Article 2 of the Uniform

Commercial Code (U.C.C.), which regulates the sale of goods, can and
should be applied to sperm transactions. To demonstrate the need for
warranty law in this area, Section I of this Note addresses the shortcomings

of negligence as an alternative theory of recovery. Section II advocates

the replacement of the outdated * 'service* ' characterization of human tissue
transactions with a more accurate

'

'vendor-buyer' ' sales analysis. To lend
precedential support to the sperm warranty argument, Section III discusses

the liability of commercial blood banks for breach of implied warranty

and illustrates how the warranty of sperm likewise has been statutorily
implemented in some states. Finally, Section IV briefly concludes this

Note by emphasizing the benefits which inevitably would accrue if com-

mercial sperm banks and physicians were bound by the express and implied

warranty provisions of the Uniform Commercial Code.

I. Breach of Warranty as a Necessary Theory of Recovery for
Injured Donees

A common reaction to sperm warranty as a cause of action is that
it is entirely unnecessary. After all, negligence is seemingly the most logical

theory of recovery in actions for improper artificial insemination. Although

there is little, if any, precedent directly on point, speculation surrounding

the Skolnick case indicates that there are significant limitations on neg-

ligence which may preclude injured donees from recovering at trial. 14 For
instance, in those states such as New York which do not recognize theories
of joint liability in negligence actions, the donee must prove that either

the physician or the sperm bank was responsible for the injury. 15 This

evidentiary burden makes recovery virtually impossible in the many in-
stances in which record-keeping and semen processing procedures are

143-44 (1985) (emphasis added).

See also Rice, supra note 1, at 1073 n.197. Rice suggests that legislation in the area

of artificial insemination may be difficult to enact because of the negative stigma which the

public often attaches to the subject. Id. More specifically, legislators are forced to choose

between the introduction of bills proposing extensive regulation of the process which will

inevitably be poorly received and bills which are very general in nature which are more

likely to meet with approval. Id.

14. See Adams, supra note 2, at 1.

15. Id.



362 INDIANA LAW REVIEW [Vol. 26:357

grossly inadequate both in the doctor's laboratory and in the sperm bank. 16

Additionally, there is some question as to what specific duty, if any,

is owed by the physician and sperm bank to the potential child and
prospective parents. In many instances, it is likely that the recipient is
led to believe that no duty of care is owed or that, even if a duty of
care is owed and subsequently breached, no recovery is possible. 17 Fur-

16. See New Questions, supra note 2, at 4. See generally Lorio, supra note 1 (discussing
the need for better regulation and structure of the artificial insemination process).

17. This conclusion is supported by the required signing of standard consent and

disclaimer forms releasing both the physician and the sperm bank of any legal liability

resulting from improper artificial insemination.

The following is an excerpt from an actual physician release form:

We release Dr. from any and all liability and responsibility of any nature
whatsoever which may result from the complications of childbirth or delivery or
from the birth of an infant or infants abnormal in any respect, or from the

heredity or hereditary tendencies of such issue, or from any other adverse con-

sequences which may arise in connection with or as a result of the artificial

insemination herein contemplated. We shall refrain from bringing legal action of
any kind, and refrain from aiding or abetting anyone else in bringing legal action

for or on account of any matter or thing which might arise out of the artificial

insemination herein contemplated. We shall indemnify Dr. for attorney's
fees, court costs, damages, judgments, or any other losses or expenses incurred

by him or for which he may be responsible with respect to any claim, legal action,
or defense thereto, arising out of the artificial insemination herein contemplated

including any claim of or legal action brought by the child or children resulting

from the artificial insemination.

Unpublished consent form provided by a local sperm bank.

In addition to signing the physician release form, the recipient must also sign a form

releasing the sperm bank from all legal liability. The following is an excerpt from a sperm

bank release form:

We understand that [said sperm bank] does not warrant or guarantee the qual-
ifications of said donor, and that in determining whether the donor meets the

aforesaid qualifications of [said sperm bank] or any of its employees shall be

required to make only such investigations of and concerning such donor as shall

in the sole discretion of [said sperm bank] or any of its employees seem reasonably

necessary. We further covenant and agree to forever refrain from instituting,
pressing or in any way aiding any claim, demand, cause of action for damages,

cost, loss of services, expense of compensation for or on account of or hereafter

arising out of the premises hereinabove set forth. We further promise and agree
to indemnify and save harmless [said sperm bank] and any of its employees from

loss and/or expenses incurred by them in connection with the defense of payment

of any claim or action arising out of the aforesaid premises or agreements herein

contained. [Said sperm bank], whenever used herein, shall include all physicians

and other personnel who perform services for us on behalf of [said sperm bank].

This agreement shall be binding upon ourselves, and each of use, our assigns,

heirs, executors, and administrators.

Unpublished consent form provided by a local sperm bank.

In light of the legally binding appearance of these agreements and the patent disincentive



1993] WARRANTY OF SPERM 363

thermore, while several states have recently enacted or proposed legislation

mandating the testing of sperm donors for the HIV virus, 18 only three
states require that donors meet additional medical standards in order to

donate sperm. 19 Absent significant legislation in the remaining forty-seven

states, the additional screening of sperm donors for genetic disorders and

diseases in these states arguably is optional, thereby releasing the sperm

bank and attending physician from liability if the donation of contaminated

or defective sperm results in the birth or abortion of genetically defective

or diseased offspring.

On the other hand, it is possible that the lack of statutory provisions
has left the door wide open to the imposition of liability, thereby dis-

couraging cautious physicians from actively participating in the procedure.20

Despite the real possibility of a negligence suit, the artificial insemination

procedure is still quite popular. 21 At least one physician speculates that

the willingness of physicians to perform the procedure without first having

tested the donor for genetic defects or diseases is attributable to the routine

use of medical students as sperm donors. 22 Because medical students are

generally "men who realize the importance of certain family genetic details
and know what information is crucial to the safety of their sperm, . . .
[the] process spares the expense of performing a series of expensive tests

on every donor.
"23

Notwithstanding the reliability and integrity of medical students in

general, donor screening is absolutely imperative whether the donor is a

to bring suit embodied in the indemnification clauses, it is possible that injured donees will

forego any legal claims because, on the basis of the disclaimer provisions, litigation would

prove to be both costly and futile. However, this reaction would appear to be a misconception

because several courts have held that exculpatory clauses of this nature are unenforceable.

See Bernard D. Hirsch, J.D., Parenthood by Proxy, 249 JAMA 2251, 2252 (1983).
18. 1991 Cal. Adv. Legis. Serv. 801 (Deering); Del. Code Ann. tit. 16, § 2801

(1990); Fla. Stat. ch. 381.6105 (1990); III. Rev. Stat. ch. 127, para. 55.45 (1989); Ind.

Code § 16-8-7.5-14 (1988); La. Rev. Stat. Ann. 40:1062.1 (West 1990); Md. Health-Gen.
Code Ann. § 18-334 (1990); Mont. Code Ann. § 50-16-1008 (1991); N.C. Gen. Stat. §
130A-148 (1990); Ohio Rev. Code Ann. 3701.246 (Baldwin 1991); Okla. Stat. tit. 63, §
2151.1 (1990); R.I. Gen. Laws § 23-1-38 (1987); W. Va. Code § 16-3C-2 (1991); Wis. Stat.
§ 146.025 (1987).

19. See supra note 10 and accompanying text.

20. But see Rice, supra note 1, at 1070 (The Article notes a decrease in the performance

of the artificial insemination procedure as a result of the enactment of the Ohio Paternity

Act which statutorily opened the door to legal liability. This decrease, which became apparent

only after the enactment of the statute, strengthens the argument that, absent legislation,

sperm banks and physicians are not subject to legal liability for improper artificial insem-

ination.).

21. See Rice, supra note 1, at 1070 n.168.

22. Id. at 1075 n.211. See also Lorio, supra note 1, at 1651 n.48 (confirming the

frequent use of medical students, graduate students and professionals as sperm donors).

23. Lorio, supra note 1, at 1651 n.48.



364 INDIANA LAW REVIEW [Vol. 26:357

genetic physicist or a panhandler. In either instance, the man may un-
knowingly be the carrier of a genetic disorder or sexual disease. If testing

for such a condition is not performed, it is the recipient and potential

human offspring who ultimately will suffer. Once the defect or disease
is passed on by a donor to a donee or an innocent child, it is difficult

to compensate for the pain, suffering, and embarrassment resulting from

the injury.

Because negligence is not a sure-fire theory of recovery,24 it is probable

that in the past, physicians and sperm banks have pressured victims into

accepting out-of-court settlements in order to protect their professional

reputations and avoid the large judgments of sympathetic juries. 25 Although

settlement does ensure at least minimal compensation for injured donees,

it has done little to compel affirmative action by physicians and sperm

banks to avoid similar claims in the future.26

The expeditious enactment of statutes regulating the artificial insem-

ination process is highly unlikely. 27 Therefore, economic incentives must

be used to exact the measures necessary to decrease the incidence of

improper artificial insemination. By applying Article 2 of the U.C.C. to
sperm transactions, the economic stakes for failure to pre-screen donors

will invariably increase because the "strict liability* ' aspect of the claim

will virtually guarantee recovery for injured donees. (However, an exception

to the U.C.C. will be necessary where the medical disorder could not

have been detected with available technology. 28) Thus, the warranty of

sperm would not only serve to compensate disappointed donees when

problems arise, but it would also compel preventive measures to ensure

that fewer donees are injured in the future.

II. Sperm Transactions as "Sales'' Rather than "Services"

Any valid claim for breach of warranty under the U.C.C. requires

24. See supra notes 14-17 and accompanying text.

25. See, e.g., Woman Settles, supra note 2, at 13; Mix-up is Settled, supra note 2,
at B4.

26. The following warning was published in the Journal of the American Medical

Association in 1983:

Physicians have an ethical and legal responsibility to use caution and scientific

screening techniques in the selection of donors of semen for artificial insemination.

Relying on the verbal representations of donors as to their health, without any

medical screening, is precarious. The donor should be checked for genetic defects

and inheritable diseases.

Hirsch, supra note 17. Despite this warning, some sperm banks still do not engage in

extensive donor screening, Interview with Evan Follas, supra note 12, and absent legislation

or economic compulsion, it is likely that the safeguards afforded by donor screening will

continue to be overlooked by these sperm banks in the future.

27. See supra note 13 and accompanying text.

28. See infra pp. 46-49.



1993] WARRANTY OF SPERM 365

an initial showing that the disputed transaction constitutes a "sale" pur-

suant to section 2-106(1) of the U.C.C. According to this section, "a

'sale* consists in the passing of title from the seller to the buyer for a

price." 29 Even if these elements exist, a problem arises where the elements

of a service also are present, because services are not governed by the

U.C.C.30 The determinative test in these situations is one of predominance. 31

If the transaction is predominately a service and the sale of goods is

incidental, the U.C.C. will not apply; if a service is incidental to the sale

of goods, the U.C.C. will apply.32

There are three possible types of sperm transactions involved in the

artificial insemination process. First, there is the donor/sperm bank trans-

action in which the donor provides the sperm bank with a vile of semen

and receives monetary consideration in return. 33 Although the donor per-

forms a service in extracting the semen, it arguably is not the service of

extraction for which the donor receives compensation. 34 Therefore, the

service is incidental to the sale of the sperm, so the U.C.C. should apply.

The second type of sperm transaction involves the sperm bank and

the attending physician. In this transaction, the sperm bank procures and

stores the sperm, eventually passing it on to the donee's physician in

exchange for monetary consideration.35 No service elements are present
here, so the U.C.C. clearly should apply.

29. U.C.C. § 2-106(1) (1990).

30. 1 Samuel Williston, Williston on Sales 94 (4th ed. 1973), noted in David E.

Chapman, Note Retailing Human Organs Under the Uniform Commercial Code, 16 J.
Marshall L. Rev. 393, 408 (1983).

31. Williston, supra note 30, at 103-04.

32. Id.

33. The normal rate of compensation for sperm donors is $50 per donation, but

payment does not begin until the donor has successfully completed the screening process.

Donors generally are asked to donate for one to two years, at least once, but not more

than twice a week. Interview with Evan Follas, supra note 12.

34. Theoretically, the money which the donor receives is compensation for the time,

energy, and discomfort involved in the act of donating. Office of Technology Assessment,

New Developments in Biotechnology: Ownership of Human Tissue and Cells 56 (1987)
[hereinafter New Developments!. Under this rationale, it follows that a donor should be
paid for every donation, regardless of whether the sperm subsequently is determined to be

salable, since the time, effort, and discomfort involved in the process arguably is present

regardless of the purposes and results of the donation. However, in those instances where

the sperm bank engages in extensive donor screening, the donor often is required to provide

several semen samples for testing purposes without compensation. Interview with Evan Follas,

supra note 12. It is only after the donor has successfully completed the donor screening

process that he is compensated for his efforts. Id. As one man put it, the sperm which is
stored during the quarantine period (for AIDS testing) is "an investment." Id. When the
sperm finally is released for sale, "return on the investment" is forthcoming. Id. Because,

in practice, donors are not compensated unless their sperm is sold, it is clear that the service

of extraction is incidental to the sale of the sperm, so the U.C.C. should apply.

35. Although some sperm banks will sell directly to recipients, it is more common



366 INDIANA LAW REVIEW [Vol. 26:357

The third and final type of sperm transaction occurs when the physician
inseminates the donee with the sperm in exchange for monetary payment.

In this case, the payment covers both the sale of the sperm and the

insemination procedure. This transaction includes service elements sufficient

to warrant application of the predominance test.36 Considering that the

motivation of the donee is to receive the sperm rather than medical care

or treatment, a strong argument can be made that the medical service
provided by the physician is merely incidental to the sale of the sperm.

This argument is bolstered by an increased incidence of self-insemination, 37

which illustrates that while a physician's services are not required for

successful artificial insemination, the acquisition of sperm is absolutely

imperative. Because the medical service is incidental to the sale in this

transaction, the U.C.C. should apply to this transaction as well.

Unfortunately, the reasons for applying the U.C.C. to sperm trans-

actions may be undermined by a line of cases and state statutes universally
characterizing human tissue transactions as "services' ' rather than "sales."38

This characterization is perhaps best explained as a well-intended legal

fiction concocted by concerned judges and legislators as a pretextual vehicle

for furthering various social policies. These policies include limiting legal

liability in the medical community in cases of defective blood transfusions

and organ transplants, preventing the sale of human organs for monetary
gain, and protecting potential human life by eliminating the sale of human
fetal tissue. Because the policy considerations underlying the "service"

characterization arguably do not apply to sperm transactions, an injured

donee might circumvent the fatal "service" characterization by distin-

guishing sperm transactions from other human tissue transactions so that
U.C.C. may be applied. The grounds for distinguishing sperm from other
human organs and tissues are discussed at length in the remainder of this
section.

for the sperm bank to sell to physicians and fertility clinics. Interview with Evan Follas,

supra note 12. The physician or clinic will then resell the sperm to the recipient in conjunction

with the insemination procedure. Id. The average cost for a vile of "good" sperm is between

$110 and $120. Id.

36. See supra notes 29-32 and accompanying text.

37. Norman Frost, M.D., M.P.H., Regulating Genetic Technology: Values in Conflict,
in Genetics and the Law III 15-17 (1985).

38. Alaska Stat. § 45.02.316 (1991); Ark. Code Ann. § 4-2-316 (Michie 1991);
Conn. Gen. Stat. § 19a-280 (1990); Del Code Ann. tit. 6, § 2-316 (1990); Fla. Stat. ch.

672.316 (1990); Ga. Code Ann. § 11-12-316 (Michie 1991); Ind. Code § 16-8-7-2 (1990);
Mass. Ann. Laws ch. 106, § 2-316 (Law. Co-op. 1991); Mich. Comp. Laws § 333.9121

(1991); Mo. Rev. Stat. § 431.069 (1990); Nev. Rev. Stat. Ann. § 460.010 (Michie 1989);
N.C. Gen. Stat. § 130A-410 (1990); N.D. Cent. Code § 41-02-33 (1991); Or. Rev. Stat.

§ 97.300 (1989); S.C. Code Ann. § 44-43-10 (Law. Co-op. 1990); Tenn. Code Ann. § 47-

2-316 (1991); Tex. Bus. & Com. Code Ann. § 2.316 (West 1991); Wyo. Stat. § 34.1-2-
316 (1991). See also New Developments, supra note 34, at 76.



1993] WARRANTY OF SPERM 367

A. Distinguishing Blood Transactions

The landmark case establishing the sale/service distinction for human

blood transactions is Perlmutter v. Beth David Hospital?9 In Perlmutter,

the plaintiff sought to recover for injuries resulting from a transfusion

of "bad" blood, claiming that the hospital's furnishing of the bad blood

was a breach of the implied warranties of merchantability and fitness

under the New York Sales Act.40 The New York Court of Appeals rejected
this claim, holding that the plaintiff failed to state a cause of action for

breach of implied warranty.41 The court reasoned that the transaction

between the hospital and the patient was predominately an agreement for

the services of care and treatment.42 Because the sale of blood was incidental

to the services rendered, the Sales Act's warranties did not apply.

This rationale was criticized vehemently in Judge FroessePs dissenting

opinion.43 Judge Froessel argued that the plaintiff was not suing the

hospital "for the service of injecting the blood into her bloodstream, but

simply for the sale of 'bad' blood for a separate valuable consideration,

over and above the consideration she was paying for room and board
and the usual hospital facilities . . . and services."44

Although the Perlmutter decision technically rested on a valid appli-

cation of warranty law, it is evident that the court's stringent sale/service

distinction was predicated primarily on the fear of imposing strict legal

liability on the medical community. This conclusion is supported by the

majority opinion, which states in relevant part:

If, however, the court were to stamp as a sale the supplying of

blood — or the furnishing of other medical aid — it would mean
that the hospital, no matter how careful, no matter that the
disease-producing potential in the blood could not be discovered,

would be held responsible, virtually as an insurer, if anything

were to happen to the patient as a result of "bad" blood.45

Although strict liability for contaminated blood was a threat when

Perlmutter was decided in 1954, technological advances have since made
it possible to detect various disease-causing agents in human blood and
tissue samples.46 With modern safeguards in place, the strict liability concern

39. 123 N.E.2d 792, reh'g denied, 125 N.E.2d 869 (1954).

40. Id. at 793.

41. Id. at 794.

42. Id.

43. Id. at 795-%.

44. Id. at 7%.

45. Id. at 795.

46. See, e.g., Chapman, supra note 30, at 406 n.83 (discussing the discovery of a

hepatitis vaccine which had the potential to drastically reduce the incidence of defective

blood transfusions); see also American Association of Blood Banks, Technical Manual

(1990); John A. Koepke, Laboratory Hematology (Churchill Livingstone 1984).



368 INDIANA LAW REVIEW [Vol. 26:357

should have diminished greatly. However, even if strict liability is still a

concern due to certain defects which are impossible to detect, one effective

solution is an "undetectable defect" affirmative defense to strict products

liability.
47 The "undetectable defect'' exception would operate in a manner

similar to section 402A of the Restatement (Second) of Torts:

[S]hould the product be one which cannot be made absolutely
safe, but is nevertheless essential to human health, and if its use
is prescribed by a physician who is made fully aware of the risk
of harm, but who, in his sound judgment, believes that taking

the risk is justified, then the fact that there is an undetectable

defect in a certain percentage of the product will not result in a

breach of warranty.48

This "undetectable defect" concept was recently expanded and codified

in a 1987 Idaho statute which provides that "a paid blood, organ or

tissue donor, or a blood, organ or tissue bank operated for profit" may
be held liable under the implied warranties of merchantability, except that

"the implied warranties of merchantability and fitness for a particular

purpose shall not be applicable as to a defect that cannot be detected or

removed by reasonable use of standard established scientific procedures

or techniques."49

Having provided a safeguard for undetectable defects, it seems that

there is no valid reason for insisting on a sale/service distinction to shield

the medical community from legal liability. 50 Even so, it is still possible

to create a public policy exception for physicians and hospitals acting to

promote the public welfare by concluding that it is the blood bank (not

the hospital or attending physician) which holds itself out as a merchant

47. See Joseph E. Dugas, Jr., M.D., Note, Implied Warranty in Sale of Blood, 17

Loy. L. Rev. 229, 231 (1970-71).

48. Restatement (Second) of Torts 402A cmt. (K), cited in Dugas, supra note 47,

at 231-32.

49. Idaho Code § 39-3702 (emphasis added). See also Iowa Code Ann. § 142A.8
(West 1989) ("[AJny person or entity that renders such service warrants only under this

section that due care has been exercised and that acceptable professional standards of care

in providing such service according to the current state of the medical arts have been

followed"); S.D. Codified Laws Ann. § 57A-2-315.1 (1991), which provides:
The implied warranties of merchantability and fitness shall not be applicable, so

far as the transmission of certain infectious diseases . . . which diseases and reactions

cannot be detected by standard testing are concerned, to a contract for the sale

of human blood, blood components, or other human tissue or organs from a
blood bank or reservoir of such other tissues or organs.

50. See, e.g., Cunningham v. MacNeal Memorial Hosp., 266 N.E.2d 897 (111. 1970)

(holding a hospital strictly liable for providing bad blood as part of the services for which

it charged). This decision was later overruled by an Illinois statute which expanded the

Perlmutter "service" characterization to tissues and organs.



1993] WARRANTY OF SPERM 369

having specialized knowledge and skill with respect to the sale of the

blood.

Under the U.C.C., once it is determined that the disputed transaction

is a "sale" within the terms of section 2-106(1), the seller of the goods

must be deemed a merchant pursuant to section 2-104(1) in order for the

implied warranty of merchantability to apply. In addition, the buyer must

rely on the seller's knowledge and skill in order for the implied warranty

of fitness to apply. U.C.C. section 2-104(1) provides:

'Merchant* means a person who deals in goods of the kind or
otherwise by his occupation holds himself out as having knowledge

or skill to the practices or goods involved in the transaction or

to whom such knowledge or skill may be attributed by his em-
ployment of an agent or broker or other intermediary who by
his occupation holds himself out as having such knowledge or

skill.
51

Under this definition, the commercial blood bank is arguably the merchant

which markets its knowledge and skill with respect to the blood, and the

hospital and attending physician are merely consumers whose specialized

knowledge and skill lie in the area of transfusion rather than blood

testing.
52 Thus, the implied warranty of merchantability would not apply

against the physician or hospital.

This "knowledge and skill" distinction, which clearly applies to com-

mercial bipod transactions, has even greater application to sperm bank/

physician transactions in which the attending physician would most likely

have specialized training in the performance of the artificial insemination

procedure. However, it may not have the training and resources to screen
the sperm donor for genetic defects and diseases. In fact, it is generally

the sperm bank, not the physician, that selects and screens donors; the

physician usually has little or no contact with the donor. 53 Once the

51. U.C.C. § 2-104 (1990). The 'merchant' definition is supplemented by U.C.C.

section 2-104 cmt. 2 which states in relevant part:

[I]n Section 2-314 on the warranty of merchantability, such warranty is implied

only 'if the seller is a merchant with respect to goods of that kind.' Obviously

this qualification restricts the implied warranty to a much smaller group than

everyone who is engaged in business and requires a professional status as to
particular kinds of goods.

52. In this respect, the detection of defects and diseases in the blood purchased from

the blood bank can be said to lie outside the "mercantile capacity" of the hospital and

physician, just as the U.C.C. suggests that buying fishing tackle for his own use lies outside
the "mercantile capacity" of a lawyer or bank president. U.C.C. § 2-104 cmt. 2. This

analogy presumably holds true regardless of whether the lawyer and bank president are

world-class fisherman or mere dabblers in the sport.

53. Interview with Evan Follas, supra note 12.



370 INDIANA LAW REVIEW [Vol. 26:357

physician has explained the sperm procurement procedure to the donee,

the donee will not be able to "reasonably rely" on the physician's knowl-

edge and skill with respect to the quality of the sperm, so the implied

warranty of fitness will not apply against the physician.

Having established that the commercial sperm bank is a merchant

with specialized knowledge and skill with respect to the sale of the sperm,

the implied warranties of merchantability and fitness attach to the sale

against the commercial sperm bank. Thus, an injured donee could invoke

the operable form of U.C.C. section 2-318 as a third party beneficiary

and recover for injuries by showing that "it [was] reasonable to expect

that [she] may use, consume or be affected by the goods and [she was]
injured by the breach of warranty."54 The benefit of this section is that

it eliminates the need for direct privity between the seller and the beneficiary

of the goods.55 Therefore, the injured donee would be able to bring a

direct action for breach of warranty against the sperm bank whose warranty

extends to her through the sale of the unmerchantable sperm to the

hospital or attending physician.

Unfortunately, the Perlmutter court failed to recognize either the

"undetectable defect" affirmative defense or the "acting as a merchant"

rationale when it determined that there was no liability in the context of

defective blood transactions. In effect, the court allowed the blood bank

to shield itself from legal liability by using the hospital as a "middleman,"

so that the predominating services of the hospital and attending physician

would bar any claim for breach of warranty. Thus, the sale/service

distinction designed to protect the medical community actually operated

to benefit the commercial blood bank, which presumably yielded higher

profits from monies which otherwise would have been allocated to donor

testing had the Sales Act warranties applied.

Addressing the inequities resulting from the shielding of commercial

blood banks under the Perlmutter sale/service distinction is a long line

of cases holding that a plaintiff can state a valid cause of action for

54. The primary shortcoming of the third party beneficiary argument is that it might

fail in those jurisdictions which have adopted U.C.C. section 2-318 Alternative A. This

alternative limits recovery to "any natural person who is in the family or household of his

buyer or who is a guest in his home," thereby making recovery by the injured donee more
difficult. U.C.C. § 2-218 Alternative A (1990). However, U.C.C. section 2-318 Comment
3 provides:

The first alternative expressly includes as beneficiaries within its provisions the

family, household and guests of the purchaser. Beyond this, the section in this

form is neutral and is not intended to enlarge or restrict the developing case law

on whether the seller's warranties, given to his buyer who resells, extend to other

persons in the distributive chain.

(emphasis added).

55. U.C.C. § 2-318 cmt. 2 (1990).



1993J WARRANTY OF SPERM 371

breach of implied warranty against a blood bank.56 These cases are

discussed further in Section III, where commercial blood banks are anal-

ogized to commercial sperm banks in order to lend precedential support

to the sperm warranty argument.

Despite the recognition of implied warranty recovery by those courts

rejecting Per/mutter, other courts are compelled to follow state statutes

which codify the outdated Perlmutter sale/service doctrine. 57 In these states,

the only way for an injured donee to circumvent the Perlmutter doctrine

is for the court to reject the statute as impermissibly broad or vague or

to explicitly distinguish sperm transactions from other human tissue trans-
actions so that the statutes will not be interpreted to preclude the warranty

of sperm.

In Gottsdanker v. Cutter Laboratories™ a plaintiff successfully cir-

cumvented such a statute by arguing that the contaminated poliomyelitis

vaccine which caused his injury was intended for human consumption
just as food is intended for human consumption. The plaintiff insisted
that if a consumer of contaminated food could recover from the man-

ufacturer under warranty law, then the same rule should apply to the

manufacturer of the polio vaccine.59 Notwithstanding the fact that the

vaccine was developed from a culture which included human blood, the
court in Gottsdanker accepted the plaintiff's argument, disregarding the

literal wording of the applicable California statute, which provided in

relevant part:

[T]he procurement, processing, distribution or use of whole blood,

plasma, blood products, and blood derivatives for the purpose

of injecting or transfusing the same or any of them into the

human body shall be construed to be, and is declared to be, for
all purposes whatsoever, the rendition of service by each and

every person, firm or corporation participating therein and shall

not be construed to be, and is declared not to be, a sale of such

whole blood, plasma, blood products or blood derivatives for any

purpose or purposes whatsoever.60

56. White v. Sarasota County Pub. Hosp. Bd., 206 So. 2d 19 (Fla. Dist. Ct. App.

1968), cert, denied, 211 So. 2d 215 (Fla. 1968); Russell v. Community Blood Bank, 196

So. 2d 115 (Fla. 1967); Hoder v. Sayet, 196 So. 2d 205 (Fla. Dist. Ct. App. 1967); Hoffman

v. Misericordia Hosp., 267 A.2d 867 (Penn. 1970).

57. See statutes cited supra note 38.

58. 6 Cal. Rptr. 320 (Cal. Ct. App. 1960).

59. This human consumption analogy has also been applied to blood. See, e.g.,

Russell v. Community Blood Bank, Inc., 196 So. 2d 115, 118 (Fla. 1967) (holding that

blood is a commodity "intended for human consumption" and that the supplier of the

blood is liable without fault for injuries caused by any defects in the blood).

60. Gottsdanker, 6 Cal. Rptr. at 324 (quoting Cal. Health & Safety Code § 1623
(West 1955) (emphasis added).



372 INDIANA LAW REVIEW [Vol. 26:357

Although the Gottsdanker court was aware that the applicable statute was

a codification of the Perlmutter doctrine, it nevertheless rejected a literal

interpretation of the statute, finding that it "strain[ed] construction un-

reasonably.
"6I

In sperm transactions, an analogy can be drawn between defective

sperm and the defective polio vaccine in that both products are intended

for "human consumption. " Just as the plaintiff in Gottsdanker convinced
the court that codification of the Perlmutter doctrine "strained construction

unreasonably' ' thereby leading the court to reject the statute in favor of

the injured consumer, so too could the injured donee in a defective sperm

case convince a court to disregard the literal wording of a warranty-

limiting statute extending the Perlmutter doctrine to organs and other

human tissues.
In arguing that the warranty-limiting statute does not apply to sperm,

the injured donee can supplement his "human consumption' ' argument
by emphasizing specific flaws or loopholes in the structure and wording

of the statute. For example, South Carolina's warranty-limiting statute

provides:

The implied warranties of merchantability and fitness shall not

be applicable to a contract for the sale, procurement, processing,

distribution, or use of human tissues such as corneas, bones or
organs, whole blood, plasma, blood products or blood derivatives.

Such human tissues, whole blood, plasma, blood products or
blood derivatives shall not be considered commodities subject to

sale or barter and the transplanting, injection, transfusion or other

transfer of such substances into the human body shall be con-
sidered a medical service. 62

By focusing on the legislature's failure to list sperm as one of the specific
tissues within the scope of the statute, the injured donee can argue that

the omission was intentional, thereby indicating that the statute does not

apply to sperm transactions.

If the "human consumption" analogy fails and the court rejects the
"intentional omission" argument, the injured donee has an even stronger

argument that the Perlmutter doctrine does not apply to sperm transactions

because the "life-or-death" need for medical aid which exists with regard

to blood transfusions is not present in the context of artificial insemination.

Since no life-threatening condition exists, the public interest in the medical

service is not so great as to outweigh the need for donor screening. Thus,

there is no need for the fictional characterization of the sperm transaction

61. Id. at 325.

62. S.C. Code Ann. § 44-43-10 (Law. Co-op. 1976) (emphasis added).



1993] WARRANTY OF SPERM 373

as a service rather than a sale, and the implied warranties of merchantability

and fitness should apply. If the court accepts this argument, the plaintiff

is likely to prevail if he is able to convince the court that sperm transactions

also can be distinguished from other organ and tissue transactions governed

by the warranty-limiting statute.

B. Distinguishing Organ Transactions

The increased rate of successful organ transplantation over the past

two decades has prompted an ever-increasing demand for human organs.63

One of the more controversial legal issues today is whether human organs
can and should be bought and sold on the open market to meet this

demand.64 With the passage of the National Organ Transplant Act (Trans-

plant Act)65 in 1984, Congress resolved this issue by prohibiting the sale

of human organs for subsequent transplantation.66 The effect of this Act
was to deny basic property rights in the human body.67

Despite the severe restrictions imposed by the Transplant Act, the

Act is not all-inclusive or overly broad. Significantly, the Transplant Act

provides that "ftjhe term 'human organ* is not intended to include re-

plenishable tissues such as blood or sperm."6* The theory behind this

distinction is twofold. First, bodily tissues and fluids, including blood and

sperm, have historically been viewed as commodities acceptable for sale. 69

Second, because of the replenishable nature of blood and sperm, there

is no serious threat to human life involved in the donation process, thus
making if much safer and more acceptable than the donation of vital
human organs. 70

Although sperm can be distinguished adequately from other human
organs and tissues on the basis of replenishability alone, there are several

policy considerations underlying the Transplant Act which are indispensable

in determining the efficacy of human organ sales which do not apply to

63. Chapman, supra note 30, at 395-95.

64. See generally Chapman, supra note 30 (advocating the sale and warranty of

human organs as merchantable products); Note, The Sale of Human Body Parts, 72 Mich.
L. Rev. 1182 (1974) (emphasizing the shortcomings of the Uniform Anatomical Gift Act

and the failure of altruistic donations to meet the high demand for human organs).
65. National Organ Transplant Act, Pub. L. No. 98-507, 98 Stat. 2342 (1984) (codified

as amended at 42 U.S.C. §§ 273-74 (1988 & Supp. II 1990)).
66. Jennifer Lavoie, Note, Ownership of Human Tissue: Life After Moore v. Regents

of the Univ. of Cal, 75 Va. L. Rev. 1363, 1372 (1989).

67. Id.

68. Id.

69. Roy Hardiman, Comment, Toward the Right of Commerciality: Recognizing

Property Rights in the Commercial Value of Human Tissue, 34 UCLA L. Rev. 207, 221
n.68 (1986).

70. Lavoie, supra note 66, at 1372 n.72.



374 INDIANA LAW REVIEW [Vol. 26:357

the sale of sperm. These distinctions support the argument that state

statutes precluding the warranty of human organs should not be construed
to prohibit the warranty of sperm. 71 Among the factors which distinguish
sperm donation from organ donation are: (1) the adverse effects which

a market system would have on organ donation, (2) the "moral aversion"
associated with the sale of human body parts, and (3) the possibility of
improper pressures and motivations in the purchase and sale of human
organs.72

With regard to the potential adverse market effects involved in com-

mercialized human organ donation, at least three major concerns are
present: (1) a decrease in charitable donations, (2) an increase in the

donation of defective organs, and (3) competitive bidding between potential

donees.73 Since sperm donation, for the most part, has been successfully

commercialized, these concerns largely have been eliminated.

First, unlike blood and organ donation, sperm donation traditionally

has been a compensated activity.74 Therefore, charitable sperm donations

presumably were not sacrificed when commercial sperm banks went into
business. Second, with regard to the donation of defective body parts,

sperm is easily distinguished from human organs in that the sperm donation
process is much simpler, less intrusive, and less expensive, making the
cumulative economic costs of defective sperm donation quite low in com-

parison to the potential costs of defective organ donation.75 Moreover,

the life-threatening need which often accompanies organ transplantation

is not present in the artificial insemination process. 76 There is more time

for extensive screening to detect genetic defects and diseases in sperm

donors, thus reducing the use of defective donations. In this respect, the

potential social costs of defective sperm donation are much lower than
the potential social costs of defective organ donation.77 Finally, the "com-

71. See statutes cited supra note 38.

72. Hardiman, supra note 69, at 236.

73. Id. at 237.

74. According to American Fertility Society Guidelines, "Payment to donors . . .

should not be such that the monetary incentive is the primary factor in donating sperm."

However, in reality, money—not altruism—is the ultimate motivation for sperm donors.
Interview with Evan Follas, supra note 12.

75. While extensive genetic screening of sperm donors costs between $800 and $900

and the general rate of compensation for sperm donors is $50 per donation, there are no

additional costs involved in the procurement of sperm. Interview with Evan Follas, supra

note 12. The procurement of organs, however, necessarily involves enormous medical fees

because surgical removal of the donated organ is required. Thus, the combined costs of

donor screening, organ removal, and donor compensation inherent in the organ donation

process would be astronomical in comparison to the relatively low costs of sperm donation.

76. See supra text accompanying note 70.

77. Because the possibility of a defective organ donation and its concomitant social



1993] WARRANTY OF SPERM 375

petitive bidding' * argument for precluding the sale of human organs in
order to prevent unfair market competition has absolutely no application

to the sale of sperm. Because "preferred* ' donors can, and often do,

donate their sperm frequently, competitive bidding due to limited resources

is not a legitimate concern for sperm recipients.78

The second major concern associated with the sale of human organs
is moral aversion. One author has speculated that individuals often are
reluctant to place a price on human body parts and consequently are
offended by the concept of commercialized human organ sales. 79 Not-
withstanding the merits of this concern in the context of human organ
donation, sperm donations bring an average price of $50 in the sperm

banking industry. Moreover, while the sale of sperm arguably is less

offensive than the sale of organs because semen is nonvital and naturally

excreted, distinguishing sperm from human organs on the basis of the
nature and practice of sperm donation is unnecessary since the barter and

sale of more vital human body parts is actually commonplace in the
medical research community.80 In fact, a 1986 study reveals the existence

of approximately 350 biotechnology companies nationwide working to

develop multibillion dollar diagnostic and therapeutic products, most of
which are derived from human tissues. 81 However, if current practice is
followed, everyone involved in the biotechnology industry will profit from

the sale of human body parts, except for the donors.82 With a multibillion

costs was one of the reasons for prohibiting the sale of human organs, it follows that
extensive donor screening should be compelled in the area of artificial insemination in order

to prevent the donation of defective sperm, thereby reducing the number of genetically

defective or diseased offspring who will be born as a result of the artificial insemination
process.

78. See supra note 36. In fact, sperm donors who donate regularly can earn between
$2600 and $5200 per year, Interview with Evan Follas, supra note 12, and there is so much

repeat donation that incest and a subsequent weakening of the gene pool are issues addressed

by many critics of the artificial insemination process. See Lorio, supra note 1, at 1652 n.57

(stating that physicians at Tulane limit the use of a single donor to one to three pregnancies);

New Guidelines for the Use of Semen Donor Insemination: 1990, Am. Fertility Soc'y
Guide, Vol. 53, No. 3 (Supp. 1990) (stating that "the danger of an increase in consanguinity

over that which occurs in the general population is essentially nil if the limit is set at 10

pregnancies per donor").

79. Hardiman, supra note 69, at 240.

80. Interview with Evan Follas, supra note 12. See also note 74.

81. Lavoie, supra note 65, at 1364. See also Hardiman, supra note 69, at 221

(discussing a woman who earned "$200 a week, together with $25,000 cash, 1000 shares
of stock, and the use of a car" in exchange for regular donation of her blood which

contained a rare antibody and a graduate student who received $150 in exchange for 10
grams of nonregenerative thigh muscle).

82. Hardiman, supra note 69, at 228. See also Moore v. Regents of the Univ. of

Cal., 793 P.2d 494, 495 (Cal. 1990) (allowing a physician to profit at his patient's expense

by holding that extension of conversion law to a patient's removed cells would "hinder

research by restricting access to necessary raw materials").



376 INDIANA LAW REVIEW [Vol. 26:357

dollar industry already in place, it is obvious that moral aversion has not

been sufficient to preclude the exploitation of human body parts for
monetary gain. Therefore, it is anomalous to argue that moral aversion

is a valid reason for proscribing just compensation to the donors.

The third major reason for prohibiting the sale of human organs for
subsequent transplantation is the possibility of improper pressures and

motivations in the sale of human body parts. This objection is premised
on the belief "that the poor will be encouraged to donate organs for the

rich and that risks of death for pecuniary profit are unacceptable."83

Though the merits of this argument could be debated extensively,84 it is
sufficient for the purposes of distinguishing sperm sales from organ sales

to simply note that there is no risk of death or injury involved in the

act of sperm donation and that compensated sperm donation is, in fact,

an accepted practice.

In demonstrating the differences between sperm sales and organ sales,

a great deal of emphasis has been placed on the commercialized sale of

sperm as it exists in practice today. However, it is only when this practice
is recognized in theory by replacing the outdated "service* ' characterization

with a more accurate "vendor/buyer" sales analysis that the warranty of

sperm will be possible. 85 Having distinguished sperm transactions from

human blood and organ transactions, the final step in circumventing the
outdated Perlmutter "service" characterization is to distinguish sperm from

other human tissue transactions by showing that the policy reasons for
prohibiting the sale and warranty of human tissues are not applicable to
the sale and warranty of sperm.

C. Distinguishing Other Tissue Transactions

1. Tissue Transactions Which Threaten Human Life.—In April of
1988, the Reagan Administration enjoined the United States National

Institute of Health from performing experiments involving human fetal
tissue until the government could carefully study the legal, ethical, and

medical consequences of fetal tissue donation and use. 86 The ban on the

use of fetal tissue was based on the notion that various federal and state

83. Hardiman, supra note 69, at 239.

84. See, e.g., Lloyd R. Cohen, Increasing the Supply of Transplant Organs: The

Virtues of a Futures Market, 58 Geo. Wash. L. Rev. 1 (1989); Thomas H. Murray, On
the Human Body as Property: The Meaning of Embodiment, Markets, and the Meaning
of Strangers, 20 U. Mich. J.L. Ref. 1055 (1987); Margaret Jane Radin, Market-Inalienability,

100 Harv. L. Rev. 1849 (1987); Theodore Silver, The Case for a Post-Mortem Organ Draft

and Proposed Model Organ Draft Act, 68 B.U. L. Rev. 681 (1988).
85. See supra pp. 14-18.

86. Ania M. Frankowska, Fetal Tissue Transplants: A Proposal to Amend the Uniform
Anatomical Gift Act, 1989 U. III. L. Rev. 1095-% (1989).



1993] WARRANTY OF SPERM 377

laws regulating the use of aborted fetuses provided "improper incentives

that may encourage a woman to get pregnant for the sole purpose of
aborting the fetus ... or to abort a fetus she otherwise would carry to

term."87 Subsequent investigations of the "fetal tissue market" yielded

the following results: (1) experts prefer electively aborted fetuses to spon-

taneously aborted fetuses because the tissue is generally healthier; (2)

dangerous hysterectomies are preferred to safer forms of abortion such

as dilation and evacuation, because the type of abortion procedure em-

ployed greatly affects the condition of the fetal tissue; and (3) carefully

timed abortions are preferable to natural abortions, because there is some

evidence that the use of fetal tissue to cure various diseases is directly

linked to the nature of the fetus at specific stages of development.88

On the basis of these findings, President Reagan sought to enforce
the government's interest in protecting the lives of the mother and fetus

by signing an amendment to the National Organ Transplant Act prohibiting
the sale of human fetal tissue and organs for subsequent transplantation
and prohibiting the transfer of fetal tissue and organs in interstate com-

merce. 89 President Reagan's amendment to the Transplant Act was later

supplemented by the Bush Administration, which imposed an indefinite

extension on the ban on federally funded research involving fetal tissue. 90

These federal limitations on the sale of fetal tissue legitimize, in part,

those state statutes which explicitly refuse to recognize the sale and warranty

of "human tissue." 91 However, for the purpose of distinguishing sperm
transactions from fetal tissue transactions, it is essential to note that the

federal government did not find it necessary to restrict the sale of re-

plenishable tissues such as blood and sperm.92 This explicit omission was

most likely due to the fact that a state's interest in protecting human life
does not arise in the context of sperm transactions. Therefore, unless

87. Id. at 1096.

88. Id. at 1098

89. Id. at 1104. In its original state, the term "organ" as defined by the National

Organ Transplant Act did not include tissue. Id.

90. Id. at 1096. The actions taken by the Bush and Reagan Administrations were

sharply criticized by prominent physicians and researchers, id. at 1096 n.17, because human

fetal transplantation has proven to be effective in treating diabetes and immunodeficiency

diseases and, with more research, could prove helpful in treating other diseases such as

Parkinson's disease, Alzheimer's disease, Huntington's disease, hemophilia, strokes, and some

forms of cancer. Id. at 1095. In voicing his opposition to the ban on fetal tissue, one

physician was quoted as saying, "This ban interferes with research, with new knowledge

that is going to save lives of fetuses, babies, and adults as well." Id. at 1096 n.17. Despite

the need for medical research involving human fetal tissue, the government has not yet lifted

its ban on the use of fetal tissue in federally funded research projects.

91. See statutes cited supra note 38.

92. See supra note 89 and accompanying text.



378 INDIANA LAW REVIEW [Vol. 26:357

there is an additional legitimate governmental interest which would be

furthered by prohibiting the sale and warranty of sperm, the term "human
tissue" as it appears in restrictive state statutes should not be interpreted

as including sperm.

2. Tissue Transactions Which Hinder Medical Research.—Another
governmental interest served by precluding the sale of human tissue is
the pressing need for medical research involving tissue which historically

has been donated or discarded rather than sold. The need for medical

research recently was addressed in Moore v. Regents of the University of
California,

9* a. 1990 California case challenging the non-consensual use of

a patient's surgically removed tissue for commercial research purposes on

the theory of conversion.

In Moore, the trial court sustained the defendants' demurrers to a

claim for conversion,94 but the California Court of Appeal reversed, holding

that the cause of action for conversion was valid because an individual

has a tangible property right in his tissue.95 The appellate court decision

prompted a great deal of controversy in the medical research community.

Consequently, the California Supreme Court reversed the decision despite

"the seeming injustice in a result that denies a plaintiff a claim for

conversion of his body tissue, yet permits defendants to retain the fruits

thereof."96 In holding that the patient did not retain an ownership interest

in his cells following their removal, the court stated:

Research on human cells plays a critical role in medical research.
This is so because researchers are increasingly able to isolate

naturally occurring, medically useful biological substances and to

produce useful quantities of such substances through genetic en-

gineering . . . The extension of conversion law into this area

would hinder research by restricting access to the necessary raw

materials.91

93. 793 P.2d 479, 495 (Cal. 1990) [hereinafter Moore //]. In this case, a patient
sued his physician and two biotechnology firms for using his tissue to develop a profitable

patented cell line without his informed consent. After the patient's spleen had been removed,

he made approximately 12 follow-up visits from his home in Seattle to his doctor's office
in Los Angeles for additional blood work. Although the patient believed that these visits

were treatment-related, the actual purpose of the visits was to enhance the physician's research

in the development of a cell line derived from the patient's tissue.

94. Moore v. Regents of the Univ. of Cal., 249 Cal. Rptr. 494, 502 (Cal. Ct. App.

1988) [hereinafter Moore /].
95. Id. at 503-04. In its holding, the appellate court did not decide whether the

transfer of human tissue should be gift-based or market-based but instead left that decision

to future controversies on a case-by-case basis. Id. at 504.

96. Moore II, 793 P.2d at 498.

97. Id. at 494 (emphasis added).



1993] WARRANTY OF SPERM 379

On the basis of this holding, it is clear that the pressing need for
medical research was a key factor in the California Supreme Court's

determination that the sale of surgically removed human tissue is not
legally permissible. This judicial decision also legitimates, in part, those

state statutes which refuse to recognize the sale and warranty of human
tissue.

98 However, it is essential to note that the court in Moore explicitly
stated, "While we do not purport to hold that excised cells can never

be property for any purpose whatsoever ... we conclude that the use
of excised human cells in medical research does not amount to a con-
version.

,," Thus, it can be inferred that while the sale of human tissue
for research is not legally permitted, the sale of human tissue for other
purposes may be permissible. Because the sale of sperm does not hinder
medical research and does not obstruct enforcement of any other legitimate

governmental interest, it appears that the sale of sperm would fall into

the Moore court's category of legally permissible tissue sales.

D. Summary: Replacing the Outdated "Service" Characterization with

a More Accurate "Vendor/Buyer" Sales Analysis

The foregoing section of this Note illustrated that the universal char-

acterization of human tissue transactions as "services" rather than "sales"
is far from accurate. Although it may be socially desirable to keep this
legal fiction intact in those instances where an underlying governmental

interest would be furthered by precluding the sale and warranty of certain

human drgans and tissues, it is neither logical nor prudent to persist in
characterizing human sperm transactions as "services" when sperm is
legally bought and sold on a daily basis without issue. As one Florida
court stated, it is a "distortion to take what is at least arguably, a sale,

twist it into the shape of a service, and then employ this transformed

material in erecting the framework of a major policy decision." 100

The legal acknowledgment that sperm transactions are, in fact, "sales"

would ultimately prove to be in society's best interest, because the warranty

of sperm under the U.C.C.'s vendor/buyer sales analysis would serve as

a means of regulating the practice of artificial insemination where legislation

thus far has failed. To illustrate how the U.C.C. would apply to sperm
sales and to lend precedential support to the sperm warranty argument,

the following section analogizes commercial sperm banks to commercial

blood banks which previously have been held liable for breach of implied

warranties.

98. See statutes cited supra note 38.

99. Moore II, 793 P.2d at 493 (emphasis added).
100. Russell v. Community Blood Bank, Inc., 185 So. 2d 749, 752 (Fla. Dist. Ct.

App. 1966) modified, 196 So. 2d 115 (Fla. 1967).



380 INDIANA LAW REVIEW [Vol. 26:357

III. Lending Support to the Sperm Warranty Argument

A. The Commercial Blood Bank Precedent

In response to the inequitable shield of immunity which resulted from

the Perlmutter characterization of blood transactions as * 'services' ' rather

than "sales," several cases have held that the transfer of blood from a

commercial blood bank to a hospital or patient for consideration is actually

a "sale" rather than a "service." 101 This more accurate characterization

consequently allowed an injured plaintiff to state a valid cause of action

against a commercial blood bank for breach of implied warranty.

One of the landmark cases in this area is Russell v. Community Blood
Bank, Inc.. 102 In Russell, the plaintiff contracted serum hepatitis following

a blood transfusion supplied by a commercial blood bank and later sued

the blood bank for breach of the implied warranties of fitness and

merchantability. The trial court dismissed the complaint because other

jurisdictions had characterized blood transactions as "services" rather than

"sales," and absent a sale, implied warranties do not apply. 103 In reversing

this decision, the District Court of Appeal of Florida, Second District,

held that a plaintiff can state a cause of action against a blood bank

for breach of implied warranty. 104 However, the district court limited

recovery to those injuries caused by defects which could have been detected

or removed with available technology. 105 The Supreme Court of Florida

affirmed the decision of the district court in part, but held that the court's

ruling on the detection issue was premature. 106 In arriving at its decision

to affirm, the Supreme Court of Florida recognized the need to limit

legal liability in the medical profession, but the Court also found that

there is "a distinction between a suit against a blood bank as opposed

to a hospital, despite existing authority to the contrary." 107

In a concurring opinion, Justice Roberts found:

A transaction whereby a blood bank, which is engaged in the
business of collecting and distributing blood, transfers title to the

commodity to a patient for a consideration is unquestionably a

'sale,' whether tested by the law in effect at the time of the

transaction ... or by the new Uniform Commercial Code. 108

101. See supra note 56 and accompanying text.

102. 185 So. 2d 749 (Fla. Dist. Ct. App. 1966), modified, 196 So. 2d 115 (Fla. 1967).

103. 185 So. 2d at 750.

104. Id. at 755.

105. Id.

106. 196 So. 2d at 118.

107. 185 So. 2d at 752.

108. 196 So. 2d at 118 (Roberts, J., concurring).



1993] WARRANTY OF SPERM 381

The concurring opinion in Russell was later echoed by the majority opinion

in Carter v. Inter-Faith Hospital of Queens, 109 a 1969 New York case
which held that a commercial blood transaction is a "sale" pursuant to

section 2-314 of the U.C.C. and that a commercial blood bank clearly

is a
*

'merchant" with respect to the sale of the blood, so the implied

warranties of merchantability and fitness attach to the sale. 110

Unlike the courts in Russell and Carter, some courts were reluctant

to apply the U.C.C. to commercial blood transactions because technology

had not advanced to the point that the hepatitis strain could be completely

avoided.m As one author put it:

Up to the time of the Carter decision, the courts . . . had to
balance the social interest for the safety of the individual with

the interests of the hospital and blood bank (in light of the

absence of an adequate test to determine the presence of hepatitis

in the blood) and the interests of the general public in assuring

the ready availability of blood for medical treatments. 112

Although the scales previously had tipped in favor of the hospital and

commercial blood bank, the author noted a series of changes which took

place around the time of the Carter decision in 1969 that would greatly

affect the liability of commercial blood banks in the future. 113 Among
the factors which the author predicted would be considered by courts

after Carter were: (1) the belief that the party best able to bear the risk

of loss should do so, (2) the fact that liability insurance to protect hospitals

and commercial blood banks was increasingly available, and (3) the fact

that a new test to determine the presence of the hepatitis virus had been

formulated. 114

In analyzing the predictions of this author, it is interesting to note

the suggestion that the availability of a test to determine the presence of

the hepatitis virus would have a profound impact on future decisions.

Both before and after the Carter decision, a recurrent issue in the long

line of commercial blood bank cases has been the appropriateness and

desirability of applying strict liability under the U.C.C. to commercial

blood transactions absent medical technology to detect defects in blood

samples. For instance, the district court in Russell found it necessary to

offset the lack of medical technology by limiting recovery under implied

109. 304 N.Y.S.2d 97, 100-01 (1969).

110. Id. at 100-01.

111. See, e.g., Magrine v. Krasnica, 227 A.2d 539, 545 (N.J. Super. 1967).

112. Note, Warranties — Blood Transfusions — Extension of Implied Warranties, 38
Fordham L. Rev. 830, 835 (1970).

113. Id.

114. Id.



382 INDIANA LAW REVIEW [Vol. 26:357

warranty to those injuries "caused by failure to detect or remove a

deleterious substance capable of detection or removal." 115 Upon reviewing
this decision, however, the Supreme Court of Florida held that the district

court had acted inappropriately in limiting recovery under implied warranty

law because the new rule contradicted the historical basis of strict liability
and could not be reconciled with those Florida cases which previously

had held that a seller's knowledge of a defect is irrelevant to his liability

for breach of implied warranty. 116

Despite the historical view of strict liability espoused by the Florida

Supreme Court, other courts have agreed with the Florida appellate court

insofar as it recognized the need to modify the traditional strict liability

rule.
117 In fact, one court went so far as to indicate that while the Perlmutter

"service" characterization may not be accurate, it is possible to rationalize
the doctrine solely on the ground that it precludes strict liability in those

instances where it is impossible to detect the hepatitis strain in blood

transfusions. 118

Nonetheless, given the modern advances in medical technology, it is

difficult to understand why some states continue to recognize the Perlmutter
"service" characterization with respect to commercial blood bank trans-

actions. As one physician stated after Perlmutter was rejected in Russell
and Carter, "It is hoped now that the shield of immunity once provided
by Perlmutter has been removed, that blood banks will exercise more

caution in the selection of donors and processing of blood to insure a

higher degree of safety to the patient receiving the blood as a transfu-

sion." 119 Because application of the U.C.C. almost certainly would compel

commercial blood banks to exercise greater care in testing blood products

to ensure consumer safety, it seems regressive that several states have

statutorily reinstated the "shield of immunity" provided by the Perlmutter

doctrine. 120

Notwithstanding the merits of this argument, given the immediate life-

saving need for blood and its quick deterioration rate, there is some

validity for applying Perlmutter as a shield when there is not sufficient
time to test the blood for defects. Also, because it is essential to account

for the interests of the public in guaranteeing the availability of blood

for medical treatment, it may be too great a risk to hold commercial
blood banks strictly liable for defects when there is a possibility that such

115. Russell v. Community Blood Bank, Inc., 185 So. 2d 749, 755 (Fla. Dist. Ct.

App. 1966), modified, 196 So. 2d 115 (Fla. 1967).

116. 196 So. 2d at 119.

117. See, e.g., Magrine v. Krasnica, 227 A.2d 539, 545 (N.J. Super. 1967).

118. Id.

119. Dugas, supra note 47, at 237.

120. See supra pp. 18-24.



1993] WARRANTY OF SPERM 383

liability would drive blood banks out of business and leave the public

without the blood which they desperately need. 121

However, as Section III of this Note makes clear, 122 sperm transactions

can be distinguished from other human organ and tissue transactions on
the grounds that the sale of sperm is not detrimental to any underlying

governmental interest, such as assuring that adequate blood supplies are

available to the public, or protecting potential organ and tissue donors

from any bodily harm which might result from the sale of their body

parts. Moreover, eliminating the fictional Perlmutter doctrine with regard

to commercial sperm transactions would be in society's best interest because

the warranty of sperm under the U.C.C. would serve as a means of

regulating the practice of artificial insemination where legislation has failed.

Having demonstrated how warranty law operates in the context of
commercial blood transactions, it is necessary to illustrate how it would
operate in the context of sperm transactions.

B. The Application of Warranty Law to the Sale of Sperm

Despite significant advances in medical technology over the past quar-

ter-century, the detection and prevention of genetic defects and diseases

is not one hundred percent. Therefore, the debate over the desirability

of applying strict liability to commercial blood transactions will inevitably

arise in the context of commercial sperm transactions as well. Although

there are
r

a variety of tests capable of detecting many diseases and genetic
defects in sperm donors, a child could still be born with a defect or

disease despite every possible precaution on the part of the sperm bank

and physician. Thus, if strict liability in its traditional form were applied

to commercial sperm transactions, the result would be a virtual "warranty

on human life." Because of the moral and ethical opposition which
necessarily would follow such a proposition, modification of strict liability

is in order.

Modification of implied warranty law previously had been suggested

in the closely related area of commercial blood transactions, but the

proposed modification ultimately was rejected because it contravened the

historical basis of liability without regard to fault. 123 While the urgent

need for the testing of blood products to ensure consumer safety has

since been answered statutorily, there is still an immediate need for

regulation in the area of artificial insemination which has not been met

121. But see statutes cited supra note 18 (mandating AIDS testing for blood and
semen, with civil and criminal penalties for noncompliance).

122. See supra pp. 18-39.

123. See supra notes 115-16 and accompanying text.



384 INDIANA LAW REVIEW [Vol. 26:357

sufficiently through legislation, 124 but which could be met through a

modified application of implied warranty law. Despite the need for stability

and predictability in the law, it seems counterproductive and inherently

unjust to prohibit such a vital change on historical grounds alone. While

it may be desirable to insist on liability without regard to fault in most
sales transactions, the sale of sperm presents a unique problem in that

its application, without modification, necessarily implies the possibility of

commercially guaranteeing the quality of human life. In order to circumvent
such a problem, public policy dictates the need for a carefully defined

exception to strict liability in the context of sperm sales.

The most logical response to the need for modification is the rati-

fication of the approach of the Florida appellate court in Russell. The

Russell court suggested that recovery under implied warranty should be

limited only to those injuries "caused by failure to detect or remove a

deleterious substance capable of detection or removal." 125 The imposition

of such a standard presumably would not be detrimental to those sperm

banks which thoroughly screen their donors before using their sperm, but

it inevitably would compel those sperm banks which do not currently test

for defects and diseases to cautiously screen their prospective donors in

the future in order to avoid liability under the implied warranties of

fitness and merchantability.

A 1987 Idaho statute also supports the sperm warranty argument and
illustrates how the strict liability exception might be applied in practice. 126

The Idaho statute provides that "a paid blood, organ or tissue donor,

or a blood, organ or tissue bank operated for profit* ' may be held liable
under the implied warranties of merchantability, except that "the implied

warranties of merchantability and fitness for a particular purpose shall

not be applicable as to a defect that cannot be detected or removed by

reasonable use of standard established scientific procedures or tech-

niques.* U27

The enactment of similar statutes by those states which currently

preclude the sale and warranty of sperm certainly would compensate for

the current lack of regulation in the area of artificial insemination. Un-

fortunately, few states have followed Idaho's lead in applying the implied

warranties of merchantability and fitness to sperm transactions. 128 Because

the enactment of such statutes would not involve the development of an

124. See supra note 13.

125. Russell v. Community Blood Bank, Inc., 185 So. 2d 749, 755 (Fla. Dist. Ct.

App. 1966), modified, 196 So. 2d 115 (Fla. 1967).

126. Idaho Code § 39-3702 (1987).
127. Id. (emphasis added).

128. However, two states which have enacted statutes similar to Idaho's are Iowa and

South Dakota. See statutes cited supra note 49.



1993] WARRANTY OF SPERM 385

entire body of comprehensive legislation dealing with controversial methods

of new reproductive technology, it is likely that legislators will be more

apt to ratify a broad implied warranty provision similar to the one recently

adopted in Idaho long before they are able to agree on a specific body

of regulations dealing exclusively with the artificial insemination process. 129

Moreover, even if legislation governing the artificial insemination proc-

ess is enacted in the near future, application of warranty law remains a

crucial regulatory device whereby severe economic sanctions may be levied
against sperm banks and physicians for failure to comply with specific

state regulations where their noncompliance causes the injury of a donee

or a donee's child. In this sense, the warranty of sperm will prevent those

transgressions of the law which otherwise would be economically efficient. 130

IV. Conclusion

As medical technology advances, more and more infertile couples are
able to procreate using various methods of artificial reproduction. Un-

fortunately, in the area of artificial insemination, practitioners in most

states are allowed to forego precautionary measures which would signif-

icantly reduce the risk of donor mix-ups, diseases, and birth defects because

uniform professional standards regulating the industry have not yet been

adopted. Given the controversy surrounding the propriety of artificial

reproduction, an expeditious legislative solution to this problem is not

likely to be forthcoming. Therefore, an alternate mechanism is needed to

increase-trie accountability of physicians and sperm banks under the current

system.

Applying Article 2 of the Uniform Commercial Code to sperm trans-
actions would meet this need by providing economic disincentives sufficient

129. See supra note 13.

130. The following is a brief outline of how the U.C.C. would operate in the context
of commercial sperm transactions.

Step 1: Establish that the sperm transaction is a "sale" pursuant to U.C.C. section

2- 106(a). See supra pp. 14-18.

Step 2: Establish that the sperm bank is a "merchant" with respect to the sale of the

sperm pursuant to U.C.C. section 2-104(1). See supra pp. 21-23.

Step 3: (A) If the injury is the result of a donor mix-up, state a claim for breach of

express warranty pursuant to U.C.C. section 2-313. See supra pp. 1-4.

or (B) If the injury is the result of a genetic defect or disease which could have been

detected with available medical technology, state a claim for breach of the implied warranties

of merchantability and fitness pursuant to U.C.C. section 2-314 and 2-315.

Step 4: If a physician or hospital acted as an intermediary in the transaction between

the sperm bank and the patient, and there is a statutory provision shielding the medical

community from legal liability in the jurisdiction in which the action is brought, establish

that the injured plaintiff is entitled to recover directly from the sperm bank as a third party

beneficiary pursuant to U.C.C. section 2-318. See supra pp. 23-24.



386 INDIANA LAW REVIEW [Vol. 26:357

to compel preventative measures in the industry. It is hoped that the

benefits and safeguards proposed in this Note will incite state legislators

to act—both by adopting the guidelines suggested by the American Fertility
Society specifically regulating the practice of artificial insemination and

by characterizing sperm transactions as "sales" rather than "services" so

that liability for improper artificial insemination will attach under warranty

law.