Bosway Tube & Steel Corp. v. McKay Mach. Co., Docket No. 19701
| Decision Date | 12 November 1975 |
| Docket Number | Docket No. 19701 |
| Citation | 237 N.W.2d 488,65 Mich.App. 426,18 UCC Rep.Serv. 857 |
| Parties | BOSWAY TUBE & STEEL CORPORATION, Plaintiff-Appellee, v. McKAY MACHINE COMPANY, Defendant-Appellant. 65 Mich.App. 426, 237 N.W.2d 488, 18 UCC Rep.Serv. 857 |
| Court | Court of Appeal of Michigan — District of US |
[65 MICHAPP 427] Cross, Wrock, Miller & Vieson by W. Robert Chandler, Detroit, for defendant-appellant.
Hill, Lewis, Adams, Goodrich & Tait by Timothy D. Wittlinger, Detroit, for plaintiff-appellee.
[65 MICHAPP 428] Before J. H. GILLIS, P.J., and BRONSON and T. M. BURNS, JJ.
Plaintiff purchased a tube mill (a machine which manufactures metal tubing) from defendant in 1965. After delivery and installation, the mill did not perform properly and much time and money were expended by both parties in attempts to repair it. The mill was designed and constructed to manufacture both round and square tubing, but in operation never satisfactorily produced square tubing. It is apparent from the record that plaintiff's primary purpose in purchasing the tube mill was for the production of square tubing. A year after delivery of the machine, defendant ceased making repairs on the tube mill, despite the fact that the mill would still not produce square tubing. Plaintiff subsequently sold the machine and brought the suit below alleging breach of contract by defendant. The trial court awarded plaintiff $107,944 in damages with a setoff to defendant for that portion of the purchase price yet unpaid. While defendant makes several assignments of error which warrant discussion, we find none which require reversal.
Defendant first asserts that the trial court erred in granting plaintiff damages since the offer to sell the machine limited defendant's liability to repair or replacement of defects in the machine. This argument is without merit. The agreement between the parties for the sale and purchase of the tube mill was not reduced to final written form. The only evidence of a contract in this cause is a detailed offer to sell emanating from defendant, a bare acceptance by plaintiff which conflicts with the offer, and the conduct of the parties in carrying out the contract. In such situations, § 2--207 of the Uniform Commercial Code (UCC) provides that [65 MICHAPP 429] the acceptance creates a contract even though it states terms different from those contained in the offer. 1 Under UCC § 2--207(3), the contract is established by the conduct of the parties and the contract terms are those upon which the writings agree and terms supplied by the code. 2 Most important to this litigation is that the writings disagreed as to warranties. Defendant's offer contained the following paragraph:
(Emphasis added.)
Plaintiff's acceptance was as follows:
(Emphasis added.)
Since the writings conflicted as to warranties, neither provision became a part of the contract, and the UCC implied warranty of merchantability [65 MICHAPP 430] (§ 2--314) was in effect. 3 The trial court found that this implied warranty was breached. The correctness of this finding we will discuss Infra.
As to the limitation of damages clause in defendant's offer, we need not decide whether that was part of the contract or not. Section 2--719(2) of the UCC provides that '(w)here circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this act.' 4 The court below found that several defects were never corrected by defendant. There is no question that the machine on delivery was grossly defective. Not only does the limitation of remedies provision fail of its essential purpose, but its application in this case would be unconscionable. Without that limiting clause, the code remedies apply, including those set out in UCC § 2--714 which allows the buyer damages for nonconforming goods. 5
Defendant next claims that the damage award, being greater than the purchase price of the machine, was based on insufficient evidence. Defendant argues that when the resale price of the machine is coupled with the award of damages, the plaintiff will receive more than the purchase price of the machine. Defendant fails to note that improvements were made to the machine by both parties after delivery. These improvements could only have enhanced the original value of the tube mill. It is not disputed that these improvements were made and included in the resale price. Considering the sale price and the improvements...
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