D.P. Technology Corp. v. Sherwood Tool, Inc.
13 U.C.C. Rep. Serv. 2d (West) 686, 1990 U.S. Dist. LEXIS 16230, 751 F. Supp. 1038 (1990)
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Rule of Law:
Under Connecticut law interpreting U.C.C. § 2-601, a buyer may not reject specially manufactured goods due to a minor delay in delivery unless the nonconformity is substantial and causes damage to the buyer.
Facts:
- On January 24, 1989, Sherwood Tool, Inc. entered into a written contract with D.P. Technology to purchase a computer system specifically designed for Sherwood.
- The contract stipulated a delivery period of ten to twelve weeks, with a final deadline of April 18, 1989.
- D.P. Technology delivered the software component of the system on April 12, 1989, within the contractual timeframe.
- D.P. Technology delivered the hardware component on May 4, 1989, sixteen days after the delivery deadline.
- On May 9, 1989, Sherwood returned the entire computer system to D.P. Technology.
- Sherwood refused to make payment for the system.
Procedural Posture:
- D.P. Technology filed a breach of contract lawsuit against Sherwood Tool, Inc. in the U.S. District Court for the District of Connecticut, based on diversity jurisdiction.
- Sherwood filed a motion to dismiss for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6).
- Sherwood argued that D.P. Technology's own complaint showed it breached the contract by delivering the goods late, thereby justifying Sherwood's rejection of the goods.
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Issue:
Does a 16-day delay in the delivery of specially manufactured goods justify rejection by the buyer as a matter of law under Connecticut's interpretation of U.C.C. § 2-601?
Opinions:
Majority - Nevas, District Judge
No. A minor delay in the delivery of specially manufactured goods does not automatically justify rejection by the buyer; rather, Connecticut law requires that the nonconformity be substantial. The defendant's argument for dismissal relies on the 'perfect tender rule' of U.C.C. § 2-601, which allows a buyer to reject goods if they 'fail in any respect to conform to the contract.' While many jurisdictions strictly apply this rule, the court predicts the Connecticut Supreme Court would follow the reasoning of a state appellate court in Franklin Quilting Co. v. Orfaly, which held that § 2-601 requires a 'substantial nonconformity' to justify rejection. This interpretation mitigates the harshness of the perfect tender rule, particularly in cases involving specially manufactured goods where a seller's loss from rejection would be great and the buyer suffers no damage from an insubstantial delay. The rejection of specially made goods for a minor, non-prejudicial delay is arguably not in good faith. Therefore, whether the 16-day delay constituted a substantial nonconformity is a question of fact that must be determined at trial, not on a motion to dismiss.
Analysis:
This decision represents a significant judicial gloss on the U.C.C.'s 'perfect tender rule,' aligning Connecticut with a minority of jurisdictions that temper the rule's harshness. By requiring a 'substantial nonconformity' for rejection, particularly for specially manufactured goods, the court effectively imports a materiality standard from general contract law into the sale of goods. This precedent makes it more difficult for buyers to use trivial defects, such as a minor delivery delay, as a pretext for escaping an unfavorable contract. Consequently, sellers of custom goods gain protection, but litigation may become more complex as courts must engage in a fact-intensive inquiry to determine if a breach is 'substantial.'
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