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Fabric Panel Flap Breach of Contract and The UCC

Fabric Panel Flap Breach of Contract and The UCC

The Appellate Division of the Supreme Court of New York, third department recently heard an appeal in the case of Accent Commercial Furniture v. P. Schneider & Associates. This case, involving the delivery and installation of decorative wall panels underlines some of the pettiness of the human condition and the bizarre lengths people will often go to in order to torture logic. It also illustrates how most courts are not very sympathetic to parties who it feels are wasting its time.

Background of the Case

The defendant, P. Schneider & Associates (PSA) desired to do some decoration of their new office. In September 2010, PSA retained Accent via oral contract to deliver and install some furniture as well as decorative, fabric covered wall panels. Defendant wanted this work to be finished by the end of October, 2010. When the wall panels arrived, the defendant realized that the manufacturer (not the plaintiff) had made a mistake and used the ‘incorrect’ fabric – considering the amount of acrimony that ensued over fabric, it is rather unfortunate that the record does not show pictures of these panels.

At any rate, the correct panels arrived in late December 2010 and the plaintiff installed them a short time later. On January 4, 2011, plaintiff submitted its bill for the work, less the down payment defendant had already made. Defendant did not make any payments, and a year later plaintiff sued for breach of contract. Defendant counterclaimed, alleging that plaintiff had breached the contract re: delivery date, and generated attendant damages.

The confusingly named Supreme Court granted plaintiff’s motion for summary judgment, and dismissed defendant’s counterclaim. Defendant then made the interesting decision to appeal the Supreme Court’s decision to the Third Department of The Appellate Division.

Analysis

The Appellate Division stated that the Uniform Commerce Code (UCC) as enacted in New York applied to the case. The UCC applies only to contracts for the sale of goods over a statutory amount, typically $500 or more.

Very interestingly, defendant admitted that an oral contract existed for the wall panels. According to the Statute of Frauds, oral contracts for the sale of goods over $500 are not enforceable. However according to UCC 2-201(3)(b), if the accused party admits that the contract existed, it is an exception to the Statute of Frauds, and is enforceable. With this important threshold matter out of the way, the court then proceeded to demolish the defendant.

Essentially, the defendant got the correct wall panels in December 2010. Under the UCC this was an ‘acceptance of the goods’ – there was no effort to reject or return them. Thus, the defendant must pay the contract price of these goods. However, also under the UCC, the defendant is entitled to an offset for any damages caused by the plaintiff’s breach of any material terms of the contract.

For the sake of argument, the court assumed that the delivery delay was a breach of a material contract term. Also under the UCC, the defendant had a duty to ‘mitigate’ or ‘cover’ damages. This is a common concept, premised on acting to reduce the harm. This is also where the court seemed to lose patience with the defendant.

The court stated that plaintiff offered to install the first shipment of wall panels, and then remove them and install the correct ones when they arrived at no additional cost. Defendant did not agree to this. In addition, defendant could not provide any evidence of how they were actually harmed by incorrect fabric. Because of this, by definition, they could not demonstrate how they had taken steps to mitigate this damage. Reading between the lines, the court probably felt that defendant was simply coming up with a trumped-up excuse not to pay for the wall panels. The court affirmed the lower court’s grant of summary judgment to plaintiff.

If you have questions about breach of contract, please don’t hesitate to contact our officefor a consultation.

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