Capital Litho, Inc. v. Rotary Forms Press, Inc.

A-4041-97T5 (N.J. Super. App. Div. 1999) (Unpublished)
  • Opinion Date: May 19, 1999

UCC; WARRANTIES—When a printing customer approves a proof, it is deemed to have approved all aspects of the proof, even text provided by a third party.

A printer undertook to print a quantity of six different checks for a printing broker. The checks had to be printed with a particular security code. The broker supplied the printer with all the specifications for the checks except for the security codes. Those codes were sent directly by a bank to the printer. The printer prepared proofs and sent them to the broker for approval. The broker returned the proofs with its approval, and the printer took the additional precaution of confirming the approval by telephone. Unfortunately, there was a security code error in the proofs for three of the checks ordered and that error was repeated in the printing run. The broker refused to pay for the checks and sued for return of its advance payment. The issue here was whether, as between themselves, the broker or the printer bore the responsibility for the code error. The broker, relying on the implied warranties prescribed by the Uniform Commercial Code, argued that the printer was responsible for the errors since it breached the warranties of merchantability and fitness for use. The Court found the UCC warranties to be beside the point. In its view, the printer would have been exclusively liable for the error but for the broker’s approval of the proofs. It concluded, as a matter of contract between the parties, the fact that the printer had received the codes directly from the bank did not alter the fact of the broker’s liability. The printer’s request for proof approval clearly extended to the imprinted codes. The broker was clearly on notice that the checks would be printed in the exact form that it had approved. By simply approving the proofs in their entirety, the broker was chargeable with knowledge that any error in the codes would be perpetuated and, moreover, perpetuated by its own act of neglect.