Business Law Case Studies Essay

Submitted By jracicot
Words: 4101
Pages: 17

Jordan Racicot
Applied Summary

Case 1: Wall Co. v. Prep of Houston, Inc.

Facts: Prep of Houston, Inc. (“Prep”) is in the business of painting steel coils used in the metal building industry. The painting process includes heat-curing in a gas oven. Prep built a new facility and contacted Wall Co. (“Wall”) concerning the purchase of an infrared oven to replace the gas one. While Wall was in the business of assembling infrared ovens, it had never designed one for use in coil painting. After extensive conversations, the parties entered a contract for the purchase and sale of an infrared stove. The contract required that the stove not interfere with the speed at which the painting process occurs.
In due time, Wall built the oven and installed it in Prep’s new factory. Immediately upon using it, Prep discovered two problems: 1) the oven slowed down the painting process; and 2) the infrared bulbs used for the oven broke frequently. Wall promised to address these problems but was unable to do so. It thereafter agreed to build a new redesigned oven for Prep at no cost. However, Wall later backed down from that position, refused to deliver a new oven, and asserted that the original oven conformed to the contract.
Meanwhile, Prep continued to use the oven. Wall sued for the balance due on the purchase price. Prep counter-claimed, seeking to revoke its acceptance and damages for breach of an express warranty.
Issue: Can Prep seek to revoke its acceptance and damages for the breach of the contract and express warranty provided by Wall according to UCC 2-313?
Rule: UCC 2-313 Express Warranties by Affirmation, Promise, Description, Sample. (1) Express warranties by the seller are created as follows:
(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
(2) It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.
Analysis: When Prep entered a contract with wall it was understood that it was a requirement that the oven not interfere with the speed that the paint dries in the oven. Upon using the oven, it was discovered that the oven in fact slowed down the paint drying process. Wall was unable to address the issues and agreed to make a new oven. Wall later backed down from his position and refused to build and deliver a new oven for Prep. Under the UCC 2-313 there was an express warranty made; where Wall (the seller) made affirmations that he could build and deliver a product that would meet the needs of Prep. Under their contract, Wall should provide Prep with the oven that was promised, and if he cannot, the oven should be returned by Prep and any money that has been paid should be returned.
Conclusion: Wall broke his end of the deal by delivering an oven that did not work as promised. He should be required to send a new oven to Prep or to return any funds that have been paid in advance.
Issue: Does Wall have a case to sue for balance due on the purchase price, even though the terms of the oven were not met, according to UCC 2-703?
Rule: UCC 2-703 Seller’s Remedies in General.
Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract (Section 2-612), then also with respect to the whole undelivered balance,…