The UCC and “ASAP” T-shirt Delivery

A recent case out of New York, Summit Apparel v. Promo Nation, 2014-795 Q C, strikes me as being a lovely demonstration of the UCC in action. 

My favorite part of this case is the court’s little aside that “ASAP” written on the order form for the T-shirts meant “as soon as possible.” It’s just a reminder that the things we often think are crystal-clear in our communication do sometimes need a translating step that happens so quickly in our brains that we seldom stop to acknowledge it. 

Anyway, the meaning of “ASAP” is important to this case, because the parties are having a disagreement over whether the T-shirts were, in fact, delivered ASAP. On August 13, the defendant ordered 38,640 T-shirts from the plaintiff, to be delivered “ASAP.” By September 8, 16,800 of these T-shirts had been shipped. The plaintiff told the defendant the remainder of the order would be shipped by September 20, provided that payment was received before that. In fact, the defendant didn’t provide payment until November 17, when it paid the balance less $10,000. The plaintiff delivered the remainder of the order the following day, November 18. However, the defendant never paid the remaining $10,000 due and the plaintiff sued. The defendant counterclaimed, saying that the November delivery was untimely and caused the defendant to lose a customer, with all attendant future business opportunities and profits, which the defendant estimated as $750,000. The defendant pointed to the fact that the inscription of “ASAP” on the order form meant that time was of the essence and yet the plaintiff nevertheless delayed fulfilling the order. 

The court turned to the UCC to analyze whether the defendant’s actions permitted it to seek the $750,000 in damages. The court noted that the defendant could have rejected the T-shirts as non-conforming because of their alleged untimely delivery. Instead, however, examination of the course of performance between the parties indicated that the defendant accepted the T-shirts without raising any objection as to their timeliness at all. In fact, the timeliness was never raised by the defendant until several years later, when it was first raised by the defendant’s counsel in connection with the plaintiff’s attempt to collect the $10,000 balance. (Additionally, it was the defendant’s own delay in payment that actually caused the delay in the delivery of the T-shirts in the first place.) 

Of course, the UCC allows that acceptance of non-conforming goods did not necessarily impair the defendant’s ability to seek other remedies. However, the right to seek other remedies under the UCC is preserved as long as the defendant notifies the plaintiff of the non-conforming nature of the goods within a reasonable time after discovering it. The defendant failed to notify the plaintiff, as stated above, until several years had gone by. Therefore, the court concluded, the defendant was barred from seeking other remedies. 

The court made one last note that even if the defendant could somehow prove it had notified the plaintiff that it considered the goods non-conforming within a reasonable time, the defendant’s lost profits and business opportunities were “purely speculative.” 

This is a fairly brief and relatively straightforward opinion, which I sometimes think it’s nice to remind ourselves exists out there.