News & Noteworthy

Authored - NJ Contract Law Update - How to Violate an Express Warranty With "Dead Toes"
DECEMBER 28, 2012 | Windels Marx - Commercial Litigation

Promotion in Motion, Inc. v. Beech-Nut Nutrition Corp., 2012 WL 715114 (D.N.J. 2012), involved allegedly-defective "gummy fruit snacks" named "Fruit Nibbles", manufactured by plaintiff "PIM". Leaving aside the procedural issues in the case, the facts were simple:

1. The Purchase Orders contained express warranties of quality, "fit[ness] for the purposes intended", and "merchantab[ility]".

2. The Purchase Orders stated that they "constitute[d] the entire agreement between the parties [unless modified in writing and signed by all parties]"1.

3. The gummy fruit snacks were alleged to be dramatically defective, with the following memorable descriptors:

  • A sampling of the complaints about Fruit Nibbles include: "powdery coating, dried out product, shriveled appearance, moldy and wilted appearance, fermented odor, terrible smell, hard texture, choking hazard, funny taste, sour odor, wrinkled, raisin-like appearance, bitter taste, bad smell, covered with mold, horrible smell, green white, and grey coating, looks like dead toes, old, nasty, discolored, crusty, gross, rotten, stale, dry, difficult to chew, spoiled smell, horrid smell, disgusting, waxy taste, caused stomach ache, vomiting, and diarrhea, etc." [emphasis added]

4. In light of these defects--alleged "complaints", but apparently accepted substantively by the Court--"at least some of the snacks...breached those express warranties and any such defective [snacks]...could be rejected by Beech-Nut and thereafter returned at [PIM's]2 risk and expense".

5. The Court indicated that these defects led Beech-Nut to "institute[] a national product withdrawal of all PIM-manufactured Fruit Nibbles."

6. PIM claimed (in a procedurally-belated fashion) that Beech-Nut breached the Purchase Orders by not making the required payments. However, in addition to the procedural (litigation) defect found by the Court, the Court's implicit rationale may have been that because the warranties were breached to the degree noted, a materially breaching party cannot enforce an agreement. See Nolan v. Lee Ho, 120 N.J. 465, 472 (1990).

7. The Court's Opinion does not reflect any argument by PIM that the non-payment was disproportionate to the percentage of goods deemed defective; perhaps because defectiveness in this context (foodstuffs) ostensibly required recall of all items, as opposed to other types of goods that potentially could have been used in part, if only part was defective.

8. Accordingly "the court dismissed PIM's Complaint in its entirety, including its breach of contract claim, [b]ecause PIM [did] not allege that Beech-Nut breached the terms of the Purchase Orders, and those are the only enforceable contracts between the parties."

Lessons of PIM

The lessons of PIM include the following:

  1. Even under the Uniform Commercial Code, Purchase Orders may have qualities of an express integration, precluding variation from their terms in light of, essentially, the parol evidence rule.3
  2. A party cannot expect to obtain relief in violation of the clear terms of the operative documents, especially in a commercial setting.

Of course, it is possible that other issues could have been raised in PIM, depending upon the facts. For example, the argument could have been advanced that a later agreement was reached, intending to supersede the Purchase Orders, that would somehow be enforceable4; or that an estoppel arose due to later conduct. The intersection between the common law and the UCC in this regard would have to be examined, in the event of such allegations.

Contact & Legal Disclaimer

Clark Alpert is the author of Guide to New Jersey Contract Law, published by the New Jersey Institute for Continuing Legal Education, originally published in 2007 and updated in November 2011. His updates on New Jersey contract law are based in recent issues and practical methods for addressing similar situations in your practice or business. They are not intended to serve as legal advice. Clark welcomes your questions and comments.

1 Brackets as in the original.
2 See prior footnote.
3 See Alpert, Guide to New Jersey Contract Law pp. 93-106 (NJICLE 2d Ed. 2011).
4 See my prior Article, "The Written Contract Is As Clear As Day--And It Was Reaffirmed In Writing--But It Can't Be Enforced", August 23, 2012.

Windels Marx helps you harness opportunity and mitigate risk with a team that provides your business with the service, quality and value essential to a trusted relationship.