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Weighpak Systems, Inc. v. Lioni Latticini, Inc.

2006 WL 1932572 (N.J. Super. App. Div. 2006) (Unpublished)

CONTRACTS; UCC; REJECTION — The buyer’s failure to pay an invoice might be considered an implied rejection of goods when applying revocation of acceptance, but there must be some facts by which court could draw this inference for such a rejection to be effective under the Uniform Commercial Code.

One company designed, manufactured, and installed packaging equipment. Another company was a manufacturer, wholesaler, and retailer of cheese products, primarily mozzarella cheese. The packaging equipment company sold conveyer equipment to the cheese company for use in its cheese processing business. The cheese company expressly required that the equipment, particularly the motor that powered the conveyor system, had to operate in wet conditions. The contract provided a twelve-month equipment warranty for normal use and service, but disclaimed implied and express warranties of merchantability and fitness for a particular purpose. The contract also required the cheese company to return any part that it believed to be defective. Under the contract, if the packaging equipment company agreed that the part was defective and was covered by the one-year warranty, the cheese company was to buy and receive credit for a replacement part.

The equipment was installed. Subsequently three service calls were made. The first concerned “transfer number two” and was resolved that day. Another service call was made to perform an adjustment. The last call required adjustments to various parts of the system.

The packaging equipment company filed a complaint, seeking the balance due under the contract. The lower court granted the packaging equipment company’s motion for summary judgment, observing that the cheese company did not contest that the contract contained a disclaimer of the warranty of merchantability and fitness for a particular purpose. The lower court also noted that the cheese company recognized the need to return a defective part for replacement.

The cheese company claimed the conveyor system didn’t work in wet conditions. In its opposition to the packaging company’s motion for summary judgment, the cheese company submitted a certification from an employee familiar with the equipment. The employee asserted that the equipment was not of merchantable quality and was not fit for its intended use. He also asserted that the cheese company was required to incur expenses to repair or correct the material and design provided by the packaging equipment company, even though the cheese company never expressly rejected the equipment supplied by the packaging equipment company. What the cheese company did was to express its dissatisfaction by refusing to pay the balance due on the contract.

On appeal, the cheese company argued that its actions could be considered an implied rejection of the goods or an implied revocation of acceptance. The Appellate Division reasoned that might have been the case, but there were no facts before the lower court from which it could have drawn this inference. Other than the employee’s assertions that the replacement motor parts should have been provided to the cheese company at no cost, the employee provided no details of any loss or expenses incurred by the cheese company. Further, the Court noted that the employee did not specify the expenses incurred or append documents to his certification pertaining to these expenses. Thus, it concluded that the employee’s statements were wholly conclusory and could not serve as a basis to establish a genuine issue of material fact.

Accordingly, the Appellate Division affirmed the judgment of the lower court granting the packaging equipment company’s motion for summary judgment.


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