News & Noteworthy

Authored - NJ Contract Law Update - The End of 'Dead Toes'
DECEMBER 18, 2013 | Windels Marx - Commercial Litigation

The December 28, 2012 Article in this series, "How to Violate an Express Warranty with Dead Toes", focused on Promotion in Motion v. Beech Nut Nutrition, at the District Court level. That case has now been decided by the Third Circuit; __ Fed.Appx. __, 2013 WL 5567761 (3d Cir. Oct. 10, 2013).

Simply stated, the Third Circuit affirmed both the District Court's pre-trial rulings (such as those mentioned in the above Article) and the jury's eventual award of over $2 million in favor of Beech-Nut and against PIM. The key issue remained whether the products were "fit for the purpose intended, merchantable and free from defect of material and workmanship" under the requisite warranties of the purchase orders.

As noted in the earlier Article, it was important to the Third Circuit that the purchase orders stated "that they were the only contract between the parties". The Third Circuit also held that earlier negotiations involving an unsigned contract would be irrelevant.

The Third Circuit decision reinforces these conclusions from the earlier Article:

  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.
  2. A party cannot expect to obtain relief in violation of the clear terms of the operative documents, especially in a commercial setting."

That decision also makes it clear that a party violating large-scale express warranties can expect to face significant money damages.

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 and now in its third edition. His updates on New Jersey contract law are based on 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.

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