Glenn Thurman, Inc. v. Moore Construction, Inc.
1997 WL 148800, 942 S.W. 2d 768, 1997 Tex. App. LEXIS 1608 (1997)
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Rule of Law:
In a contract for the sale of goods governed by the Uniform Commercial Code (UCC), the common law defense that a party's non-performance is excused by the other party's prior material breach is inapplicable; a buyer who accepts non-conforming goods must pay the contract price and is limited to seeking damages for breach of warranty.
Facts:
- Moore Construction, Inc. ('Moore') entered into a contract with Glenn Thurman, Inc. ('GTI') for the purchase of hot mix asphaltic concrete and prime coat.
- Moore used the materials to construct a parking lot for Walmart.
- After construction, Walmart informed Moore that the asphalt did not meet its specifications.
- Moore sent a letter to GTI requesting a 'correction of the defective pavement,' but GTI did not respond.
- Moore sent a second letter informing GTI it would repair the parking lot itself and seek damages for the repair costs.
- Moore proceeded to replace approximately one-third of the asphalt.
- Moore did not pay GTI for any of the asphalt, prime coat, or freight delivery.
Procedural Posture:
- Moore Construction, Inc. sued Glenn Thurman, Inc. in the trial court for breach of contract and violation of the Deceptive Trade Practices Act (DTPA).
- GTI filed a counterclaim against Moore for payment under the contract and for quantum meruit.
- At trial, a jury found in favor of Moore on its claims.
- On GTI's counterclaim, the jury found that Moore breached the contract by failing to pay but that this breach was 'excused' by GTI's prior breach of delivering non-conforming goods.
- The trial court entered judgment on the jury's verdict.
- GTI, as the Appellant, appealed the trial court's judgment to the Court of Appeals of Texas (an intermediate appellate court).
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Issue:
Does the common law defense of 'excuse' permit a buyer to refuse payment for goods due to the seller's prior breach in a contract governed by the Uniform Commercial Code (UCC)?
Opinions:
Majority - Holcomb, Justice.
No. The common law defense of 'excuse' is wholly inapplicable to a contract for the sale of goods governed by the UCC. The UCC displaces common law rules and provides a specific framework for such transactions. Under UCC § 2.607, a buyer must pay the contract rate for any goods accepted. Acceptance occurs under UCC § 2.606 if a buyer, after a reasonable opportunity to inspect, fails to make an effective rejection. A buyer's failure to reject non-conforming goods within a reasonable time and to seasonably notify the seller results in acceptance. Once goods are accepted, the buyer's remedy is not to withhold payment but to seek damages for breach of warranty under UCC § 2.714. In this case, Moore's actions constituted acceptance, and the burden was on Moore to plead and prove it had rightfully rejected the goods, which it failed to do. Therefore, the trial court erred by submitting a jury question on the common law defense of 'excuse,' as it is not a valid defense under the UCC.
Analysis:
This decision reinforces the principle that the Uniform Commercial Code (UCC) displaces common law contract doctrines in transactions for the sale of goods. It clarifies that a buyer's remedies for non-conforming goods are strictly governed by the UCC's procedural framework of acceptance, rejection, and revocation. The ruling serves as a crucial precedent, preventing buyers from simply withholding payment based on a seller's breach without first following the UCC's mandatory steps for rejecting goods. This maintains the distinct, predictable legal regime the UCC was designed to create for commercial transactions, separating it from the more flexible principles of common law.
