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Millington Quarry, Inc. v. Manzo Contracting Co., Inc.

A-3331-96T1 (N.J. Super. App. Div. 1998) (Unpublished)

UCC; STATUTE OF LIMITATIONS—The four year statute of limitations in UCC Article 2 does not start again when a buyer acknowledges the correctness of the amount stated to be due on a statement from its seller.

A manufacturer sold goods to a contractor and sought to recover the balance due. The motion judge held that the complaint was barred by the 4 year statute of limitations under the Uniform Commercial Code. On appeal, the manufacturer argued that the statute was inapplicable because the contractor acknowledged its debt in writing before expiration of the statute of limitations. Specifically, the manufacturer sent a letter to the contractor listing the balance, and the contractor returned the letter after checking off a box stating that the amount listed was correct. The manufacturer claimed this acknowledgment supported an implication of a promise to pay, thus taking its cause of action outside the statute of limitations. The manufacturer also claimed the acknowledgment equitably estopped the contractor from asserting the statute of limitations as a defense because it lulled the manufacturer into reasonably believing the claim would be settled without the need for litigation.

The Appellate Division held that the UCC applied because there was a sale of goods between merchants and that the accrual of the cause of action was either the date the invoice for the sale of the goods was issued, the date the goods were sold, or the time at which the contractor made its last payment on the balance due. Regardless of when the cause of action accrued, the Court concluded that the complaint was clearly filed beyond the 4 year statutory period. The Court stated that the current tendency is in favor of the statute of limitations and against construction of a statement as an acknowledgment or promise which avoids the statute. The Court further held that the acknowledgment was not really signed by the “party chargeable thereby,” as required by N.J.S. 2A:14-24, since it was executed by an office manager and not a corporate officer with power to bind the contractor or to make a promise to pay immediately or on demand. The Court also held that the verification letter could not reasonably be deemed an acknowledgment of debt. Finding no unconscionable conduct by the contractor and no evidence to support the manufacturer’s claim that the contractor made assurances regarding payment, the Appellate Division concluded that the contractor should not be equitably estopped from relying on the statute of limitations.


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