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Pausin Manufacturing Company v. Islip Transformer & Metal Co.

A-1776-96T3 (N.J. Super. App. Div. 1997) (Unpublished)

CONTRACTS; DEFAULTS; REMEDIES—To revoke a contract, the defects must substantially impair the value of the goods. If the defects are minor and curable, the only remedy is to reject the goods and give the seller an opportunity to cure.

A company contracted for the construction of parts for radar units. After testing, the company found that some of these parts cracked. Without advising the contractor of the number of parts that cracked or the full extent of the damage, and without offering the contractor an opportunity to cure the defects, the company revoked the contract. The contractor sued the company for breach of contract; the company counterclaimed for breach and violation of express and implied warranties. In awarding damages to the contractor, the trial judge determined that the company had no right to revoke the contract since the defects were minor and curable.

The Appellate Division stated that in order to revoke a contract, defects must substantially impair the value of the goods and not be merely trivial or easily correctable. The burden was on the company to establish valid revocation by demonstrating substantial impairment in the value of the goods. The Court affirmed the trial court’s decision that the defects were trivial and easily curable, as well as its rejection of the company’s assertion that there was substantial impairment in the value of the goods. The only remedy for the company was to reject the damaged goods and give the contractor an opportunity to cure. The Court also found the trial court’s calculation of damages to be a reasonable and fair assessment of the contractor’s lost profits.


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