National Knitting Co. v. Bouton & Germain Co.

Wisconsin Supreme Court
141 Wis. 63, 1909 Wisc. LEXIS 202, 123 N.W. 624 (1909)
ELI5:

Rule of Law:

A contract for the sale of multiple goods with individual prices is generally considered severable, allowing a seller to recover payment for the portion of goods delivered, unless the contract's express terms or surrounding circumstances clearly show the parties intended to make the contract entire.


Facts:

  • A buyer placed an order for a list of merchandise from a seller.
  • The order specified a separate price for each individual article.
  • The seller accepted the order, thereby forming a contract.
  • The seller delivered only a portion of the articles ordered and failed to deliver the remaining items.

Procedural Posture:

  • The seller sued the buyer in a trial court to recover the purchase price for the goods that had been delivered.
  • The trial court entered a judgment in favor of the seller.
  • The buyer, as appellant, appealed the judgment to the state's highest court, with the seller as appellee.

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Issue:

Is a contract for the sale of multiple goods, with a specified price for each item, a severable contract allowing the seller to recover payment for the goods delivered, even if the seller fails to deliver all the goods ordered?


Opinions:

Majority - Winslow, C. J.

Yes. A contract for the sale of multiple goods with individual prices is severable. The central question in determining if a contract is entire or severable is the intention of the parties. While factors like the severability of the subject matter and unit-based pricing are helpful indicators, they are not conclusive. For a standard bill of goods, courts will presume the contract is severable, allowing the vendor to receive payment for goods delivered while the vendee receives compensation for any damages from the non-delivery. A contract will only be held as entire if its express terms or necessary implications, viewed in light of the surrounding circumstances, show that the parties intended to make performance of the whole a condition of payment, such as when all items are required for a single, specific purpose.



Analysis:

This decision establishes a strong, commercially practical presumption in favor of severability for contracts involving the sale of multiple goods. It shifts the burden to the party arguing for entirety to show that the parties clearly intended an all-or-nothing agreement. This approach promotes fairness and economic efficiency by preventing a buyer from being unjustly enriched by retaining goods without payment due to a minor breach, while still preserving the buyer's right to sue for damages for the incomplete performance. The ruling clarifies that the analysis is not mechanical but is a holistic inquiry into the parties' intent, contrasting general merchandise sales with project-specific contracts where completeness is essential.

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