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Nederlandse Draadindustrie NDI B.V. v. Grand Pre-Stressed Corp. - 466 F. Supp. 846 (E.D.N.Y. 1979)

Rule:

In determining whether a contract is divisible or entire, the controlling element is the intent of the parties, to be determined in light of the language employed by the parties and the circumstances existing at the time of contracting. Though divisibility of performance may be one indication that the parties intended the contract to be divisible, such a finding of intent need not follow where other circumstances suggest a contrary intention. Thus, the question is essentially one of fact, and no uniform formula has been devised to resolve all questions of contract divisibility.

Facts:

Plaintiff, Nederlandse Draadindustrie NDI B.V. ("NDI"), is a Dutch manufacturer of steel strand ("strand"), and defendant, Grand Pre-Stressed Corporation ("Grand"), is a domestic manufacturer of pre-stressed concrete, of which strand is a component. In this diversity action, NDI seeks damages in the amount of $ 263,069, together with interest and costs for breach of a contract for the sale of approximately 1180 metric tons of steel strand to Grand. The sum claimed represents deficiencies allegedly due both for strand (a) delivered by NDI and accepted by Grand and (b) contracted for but which was rejected by Grand and was either sold to third parties or not produced at all. Grand denies liability under either claim and asserts a counterclaim in the amount of $ 1,275.  The case was tried without a jury, two witnesses being called by NDI and none by Grand.

Issue:

In this breach of contract action, was steel strand manufacturer NDI entitled to recover amounts due for strand accepted by purchaser Grand but for which no payment had been made?

Answer:

Yes

Conclusion:

The District Court found for NDI. NDI was entitled to recover amounts due for strand accepted by Grand but for which no payment had been made. Grand made no showing that any of this tendered and accepted strand was defective or that it notified NDI of a non-conformity in the tender at any time, much less within a reasonable time as N.Y. U.C.C. Law § 607(3) required. In the absence of such a showing, a defendant is obligated to pay "at the contract rate" for the accepted goods. Accordingly, Grand waived any objections that it might have asserted had they been timely raised. Moreover, the contract was intended to be entire, and Grand’s refusal to accept further shipments was a breach of its obligations under the contract. Accordingly, NDI is entitled to recover lost profit damages on all strand provided for by the contract but not accepted by Grand. Lost profit damages were calculated under N.Y. U.C.C. Law § 2-708(2).

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