E. Air Lines, Inc. v. McDonnell Douglas Corp.

532 F.2d 957 (5th Cir. 1976)

 

RULE:

It is not enough under U.C.C. § 2-607 that a seller has knowledge of the facts constituting a nonconforming tender; he must also be informed that the buyer considers him to be in breach of the contract. The Uniform Commercial Code's notice requirement, then, is applicable to delivery delays as well as other breaches.

FACTS:

A corporation entered into a contract with an airline manufacturer in which the airline manufacturer contractually agreed to make 100 jet planes to assist in the corporation's technological conversion. Conflict arose when the transfer of the commercial planes commenced several years after the agreed upon delivery time. Specifically, the corporation brought collective breach of contract actions against the airline manufacturer asserting that it was entitled to substantial damages. A jury trial progressed, and the airline manufacturer was found without any reasonable excuse for the delay. On appeal with the United States Court of Appeals for the Fifth Circuit, the airline manufacturer challenged the decision, asserting that the Defense Production Act of 1950 (DPA), allowed it a late delivery where national security was prioritized.

ISSUE:

Was late delivery of aircraft, asserted to be due to national security issues, breach of a sale of goods contract?

ANSWER:

No

CONCLUSION:

The Court held that a new trial was warranted because the district court improperly omitted explanations of the DPA and evidence of appellee's failure to give notice of the breached contracts. The court reversed the judgment and ordered a new trial.

 

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