L. Albert & Sons v. Armstrong Rubber Co.

United States Court of Appeals for the Second Circuit · Contracts

Contractsreliance damagesexpectation damagesseller delaylate deliveryrejection of goodsacceptance under Sales Actacts inconsistent with seller ownership

Facts

The seller contracted by correspondence in December 1942 to sell the buyer four rubber-refining machines and delivered two in August 1943, but did not deliver the remaining two until late August or early September 1945. On March 28, 1945, after earlier delays and continued dealings, the buyer demanded shipment of the remaining two machines at once, but the seller did not deliver them for about five months. In October 1945 the buyer rejected all four machines, and later, on February 20, 1946, used a 300 horsepower motor and accessories that had come with the equipment. The trial judge found the machines conformed or could be made to conform, but held the second delivery was too late and that the buyer had not accepted the machines.

Issue

Whether the seller's five-month delay after the buyer's March 28, 1945 demand justified the buyer's rejection of the entire indivisible contract, whether the buyer nevertheless accepted the goods through its statements, bookkeeping, retention, or later use of the motor, and what damages each side could recover. The case also presented whether the buyer could recover reliance expenditures despite not proving expected profits.

Rule

When a buyer renews a demand for delivery after prior delay, the seller must deliver within a reasonable time, and unexcused delay may justify rejection of the whole of an indivisible contract. Acceptance is not established merely by bookkeeping entries or similar internal treatment, and after an unequivocal rejection a later use of part of the goods will not invariably be treated as a retraction of rejection if that consequence would operate as a penalty under the circumstances. For damages, a promisee may recover outlays made in preparation for performance, subject to reduction by any amount the promisor proves the promisee would have lost had the contract been performed.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

Granite Ridge Recycling in Akron, Ohio contracted with North Valley Industrial Works to buy six specialized shredders under a single agreement. After tolerating earlier delays, Granite Ridge sent a letter on April 1 demanding immediate shipment of the remaining three machines; North Valley did not deliver them until late August, by which time the wartime scrap market had sharply weakened.

If Granite Ridge rejects all six shredders upon the late arrival of the final three, which result is most consistent with the governing rule?

Explanation. When the buyer renews its demand after prior delay, the seller must deliver within a reasonable time thereafter. On the majority's reasoning, a substantial further delay, especially amid materially changed market conditions, can justify rejection of the whole of an indivisible contract. Prior tolerance did not forever excuse future delay, and conformity is irrelevant if lateness alone justified rejection. (Derived from L. Albert & Sons v. Armstrong Rubber Co. (n.d.).)