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Gulf Chemical and Metallurgical Corp. v. Sylvan Chemical Corp.

Decided: February 5, 1973.

GULF CHEMICAL AND METALLURGICAL CORPORATION, A TEXAS CORPORATION, PLAINTIFF,
v.
SYLVAN CHEMICAL CORPORATION, A NEW JERSEY CORPORATION, DEFENDANT



Van Tassel, J.d.c., Temporarily Assigned.

Van Tassel

This action is brought by plaintiff Gulf Chemical and Metallurgical Corp. against defendant Sylvan Chemical Corp. for breach of a contract for goods sold and delivered. Defendant counterclaims, alleging a breach by the seller and nondelivery of two installments.

In its complaint plaintiff alleges that defendant owes it the full purchase price of the goods delivered. Defendant's answer alleges that the goods were nonconforming; that the purchase price of the goods was the subject of a modification by the parties, and that plaintiff is estopped from claiming the full amount because the quality of the goods did not meet the original specifications.

It is clear that the contract in question is an installment contract as defined by N.J.S.A. 12A:2-612(1), which states:

An "installment contract" is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause "each delivery is a separate contract" or its equivalent.

It is undisputed that this action arose as a result of a series of negotiations culminating in one contract which contemplated the delivery of the goods in three separate lots to be separately accepted. This was evidenced by three purchase orders sent by defendant to plaintiff together on the same date.

N.J.S.A. 12A:2-709, dealing with an action for the price, states that:

(1) When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under the next section, the price

(a) of goods accepted * * *

The facts are clear that defendant-buyer did accept the shipment of the first installment from plaintiff. N.J.S.A. 12A:2-606 indicates that the acceptance of goods occurs when the buyer does any act inconsistent with the seller's ownership. Such an act was done when Sylvan sold the shipment to its customer.

Such a sale, of course, does not preclude a revocation of the acceptance by defendant. However, as indicated by N.J.S.A. 12A:2-608, a revocation of acceptance presupposes that the goods were nonconforming. Since the court finds as a fact that Sylvan made a valid express waiver as to size specification with respect to the shipment in question, and that such shipment was in conformity with the contract specifications agreed upon, defendant must pay at the contract rate for the goods it has accepted. N.J.S.A. 12A:2-607(1).

Notwithstanding defendant's obligation to pay the full purchase price which accrued upon acceptance, the subsequent agreement between the parties modified defendant's obligation with respect to the price. Testimony reveals that Gulf agreed to allow five cents on the contract price of 42 cents a pound, thereby reducing defendant's obligation to 37 cents a pound for the total ...


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