RBC NICE BEARINGS, INC., et al. v. SKF USA, INC., SC 19253

Judicial District of Hartford

 

Contracts; Uniform Commercial Code; Whether Plaintiffs Failed to Retract Waiver of Defendant's Minimum Purchase Requirement; Whether Appellate Court Improperly Substituted its Judgment for that of Trial Court on Question of Waiver. In 2000, the parties executed a multiyear contract requiring the defendant to buy not less than $6 million per year of the plaintiffs' products.Over time, the defendant became unable to meet its minimum purchase requirements. During the seventh contract year, the plaintiffs terminated the agreement and brought this breach of contract action.The trial court found for the defendant, concluding that the plaintiffs' conduct in the fourth and fifth contract years in repeatedly negotiating and accepting annual purchases that fell short of the base amount requirement constituted a waiver of their right to claim a breach of the agreement in those years or in any year thereafter. The plaintiffs appealed, challenging the trial court's conclusion that they waived their right to enforce the agreement as to the sixth contract year. The Appellate Court (146 Conn. App. 288) determined that the fact that the plaintiffs chose to continue the contract, despite the defendant's shortfalls in the fourth and fifth contract years, did not, standing alone, support the conclusion that the plaintiffs waived their right to seek damages for the defendant's continued breach in the sixth contract year. Further, the court determined that the trial court failed to consider the abundance of evidence that the plaintiffs repeatedly attempted to secure the defendant's compliance with the minimum purchase requirement during that year. Such evidence, the court opined, demonstrated that the plaintiffs did not waive their right to full performance and that the defendant was not operating under the impression that they had intentionally relinquished that right. Concluding that there was insufficient evidence to support the trial court's conclusion that the plaintiffs' conduct amounted to a permanent waiver, the Appellate Court reversed the judgment of the trial court. The Supreme Court will now consider whether the Appellate Court properly determined that the trial court incorrectly decided that the plaintiffs failed to retract their waiver of the defendant's minimum purchase requirement as set out in 42a-2-209 (5) of Connecticut's Uniform Commercial Code. Under 42-2-209 (5), a party may retract a waiver affecting an executory portion of a contract unless the retraction would be unjust in view of the other party's reliance on the waiver. Also, the court will decide whether the Appellate Court properly decided that the judgment of the trial court should be reversed or whether it substituted its judgment for that of the trial court when it determined that the conduct of the parties did not give rise to a waiver of the minimum purchase requirement.