The Supreme Court of New York County recently issued a decision in the case of M. Slavin and Sons v. Penny Port, LLC D/B/A Michael Jordan’s Steakhouse. This case is our first foray into the murky depths of a body of law known as the Uniform Commerce Code (or UCC) and thus it is highly fitting that the case hinges on a breach of contract dispute over fish.
Gourmands and dive-bar diners alike understand the significance of fish in high-end markets like New York City. Fish can be one of the most profitable food items for a restaurant – costing a few dollars per pound, when properly prepared and cooked diners are quite happy to pay $24 for a six to eight ounce fillet. However there are special issues that come with fish. It must be fresh. Major port cities like New York are at a special advantage, with numerous fish markets and providers. Fish must be cleaned, scaled, gutted, and portioned rapidly and economically because the wholesale price is for the entire fish, including inedible parts. Anthony Bourdain’s book Kitchen Confidential discusses these issues in detail (with particular focus on the New York City area) and mentions that a few percent differences in the wastage rate during the butchering of fish can make or break a restaurant. And of course it offers the valuable wisdom that as most fresh fish deliveries in NY are made on a Thursday so that the fish can make a maximum profit over the high-volume weekend, the one thing to avoid is ordering fish dishes on a Monday, where the leftover and otherwise unsold fish is often sold via a ‘special’ to get rid of it before it becomes unusable. As with any other valuable commodity, fish spawns breach of contract lawsuits.
Background of the Case
The plaintiff was one of the aforementioned wholesale fish suppliers, in the business of providing quality fish to high end restaurants like Michael Jordan’s Steakhouse, the defendant. The record shows that the two parties had an agreement whereby the defendant would purchase fish on credit from the plaintiff. In a five month period, the plaintiff made seventy-six separate deliveries of fresh fish to the restaurant. However, plaintiff alleges that defendant never actually paid for these fish. Plaintiff engaged a collection agency and defendant entered a payment plan, but did not pay off the approximately $74,000 still owed.
Defendant alleges that the fish were defective in quality, the wrong kind of fish, that invoices were for fish not actually delivered, and a whole laundry list of other allegations of wrongdoing by plaintiff.
Plaintiff alleges that defendant had ample time and opportunity to inspect the fish and never once raised a complaint with any fish over the seventy-six deliveries.
Analysis – the Uniform Commerce Code
New York, like all other states, has enacted Article II of the Uniform Commerce Code. The UCC is a special set of contractual rules governing transactions between merchants – people in the business of buying and selling goods. We can think of the UCC as covering a very small subset of the large sphere of contract law. The UCC only covers the sales of goods of at least a certain value, and it only covers transactions involving merchants. The UCC has special provisions not found in ordinary contract law specifically designed to facilitate the flow of commerce and to smooth out rough spots that may occur with clear rules.
At issue in this case was UCC 2-607: a buyer who “accepts goods” must pay for them. This was designed to cover situations where perhaps a delivery of goods contains slight irregularities, or perhaps some defective and some non defective items. The idea was that if the buyer noticed the irregularities but didn’t object that would be taken that the goods were ‘good enough’ for commercial purposes. Under UCC 2-607(b) an “acceptance” occurs when the buyer does not make a rejection of the goods, but has had a reasonable opportunity to inspect them. A reasonable opportunity does not mean that the buyer has actually, in fact, inspected the goods… it just means, as a merchant in the business of buying these goods, it is on the buyer to be proactive in inspecting the goods.
Here the court reasons that the defendant alleges the fish were defective in quality, yet did not introduce any admissible evidence as to that fact – presumably because any purported rejection was not made in a reasonable time. With a product that had a lifespan of a few days, waiting several months seemed inherently unreasonable. The court ruled that the defendant was guilty of a breach of contract under the UCC.
The UCC raises special issues with respect to contractual issues. It is important to retain counsel experienced in dealing with UCC issues – please don’t hesitate to contact our officefor a consultation.