SW Legal Educational Publishing

Industry Trade Usage Determines Damages When No Contract to the Contrary Produced
Description Appeals court affirmed that the seller of bottle-labeling equipment was correct in its assertion that, in a case where its equipment failed to operate as promised, a refund was the proper remedy. Since the parties lost the original contract, the court relied on trade usage, which was shown to be a refund, and did not include consequential damages suffered by the bottler.
Topic Sales
Key Words Damages, Trade Usage
C A S E   S U M M A R Y
Facts Serralles runs a rum bottling plant. Figgie agreed to provide bottle-labeling equipment for a specific style of bottles used by Serralles. However, despite constant adjustments and repairs for six months, the equipment did not work. Figgie refunded Serralles the purchase price and took back the equipment. Serralles demanded that Figgie pay for losses caused by the failure of the equipment to perform as expected and for the delay in getting working equipment in place. The trial court granted Figgie summary judgment. Serralles appealed.
Decision Affirmed. Under UCC 2-719 "parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC, or limit themselves to specified remedies in lieu of those provided by the UCC." Since the parties lost the original agreement, the court looked to the standard trade usage in such contracts, as provided by UCC 1-205. Experts testified that in the bottle-labeling industry, sellers "always limit the available remedies in the event of a breach to repair, replacement, or return, and specifically excluse consequential damages." Since Serralles offered no evidence to the contrary, Figgie's position is upheld.
Citation Figgie International, Inc. v. Sestileria Serralles, Inc., - F.3d - (1999 WL 635627, 4th Cir.)

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