Opinion ID: 1628702
Heading Depth: 1
Heading Rank: 2

Heading: waiver of the fifteen-day payment provision

Text: Dangerfield argues in the alternative that even if the evidence establishes that the parties orally modified the contract on December 5, 1972, to include a fifteen-day payment provision, the subsequent delivery of potatoes by Markel at and after the time when Dangerfield had breached that condition by failing to pay within the prescribed time constituted a waiver of his right to claim breach of contract. Dangerfield failed to pay for a January 9 shipment of potatoes until February 5, well beyond the fifteen-day prescribed payment period, but, in spite of this, Markel continued to deliver potatoes until February 10, at which time he notified Dangerfield of his intention to discontinue shipments. It is significant that on February 10 Dangerfield had become current in his payments, and the fifteen-day period had not expired on any of the shipments of potatoes made after January 9. We have defined waiver as the voluntary and intentional relinquishment and abandonment of a known existing right, advantage, benefit, claim, or privilege, which, except for such waiver, the party would have enjoyed. Stenehjem v. Sette, 240 N.W.2d 596 (N.D.1976). A party who makes an unexplained delay in enforcing his contractual rights or who accepts performance in a manner different from that required by the contract has been held to have acquiesced to the nonconforming performance made by the other party. 2 Williston on Sales, Squillante & Fonseca, § 12-8, p. 39 (4th ed. 1973). In Western Transmission Corp. v. Colorado Mainline, Inc., 376 F.2d 470, 472 (10th Cir. 1967), the court said: It is elementary that an innocent party may waive a breach of a contract and continue performance on his part. If such performance is continued with no conditions attached, the innocent party has made an election and waived the breach. Dangerfield bases his waiver argument upon a case remarkably similar to the instant case, Flood v. M. P. Clark, Inc., 319 F.Supp. 1043, 1046 (E.D.Pa.1970). In that case Clark had contracted to deliver potatoes to Taylor, payment to be made on presentation of invoices. Taylor fell behind in payments, and Clark refused to make further deliveries. The parties later agreed to continue under the contract on a c. o. d. basis. Taylor became current in his payments, but Clark again discontinued his deliveries. Commenting on Clark's second refusal to deliver potatoes, the court said: Clark also contends that Taylor's failure to pay for deliveries from June 26, 1964 to October 14, 1964 substantially impaired the value of the entire contract and therefore constituted a breach of the entire contract. U.C.C. § 2-612(3), 12A P.S. § 2-612(3). Consequently, Clark argues, it had the right to cancel the contract with respect to future deliveries. U.C.C. § 2-703, 12A P.S. § 2-703. It is clear, however, that Clark did not cancel the contract at this time, but rather agreed to continue dealing with Taylor provided the dealing was on a c. o. d. basis. There is no evidence as to any act on Taylor's part after the resumption of dealing between the parties which would give rise to the right of cancellation by Clark. Therefore we agree with the Secretary that Clark's failure to deliver potatoes to Taylor from January 19, 1965 to April 30th, 1965, constituted a breach of the contract. The trial court, in its memorandum opinion denying Dangerfield a new trial, stated: In failing to make payment for loads delivered in January 1973, the plaintiff breached the modified contract entitling the defendant to cancel it. This differentiates the instant case from Flood v. Clark, 319 F.Supp. 1043 (1970), cited by the plaintiff in support of his motion for new trial. The record indicates that the first delivery of potatoes after the December 5 oral modification was shipped on January 9, 1973. That delivery was paid for on February 5, 1973, beyond the fifteen-day payment period but five days before Markel refused further deliveries. During that five-day period between Dangerfield's late payment and Markel's subsequent refusal to deliver, Markel delivered four more shipments of potatoes, two on February 8 and two on February 10. When Markel refused to deliver future shipments, only potato shipments of January 30, February 8, and February 10 remained unpaid. The fifteen-day payment period had not expired on any of these shipments, and Markel appears to be without a basis for his cancellation of the contract at that time. The trial court did not specifically refer to the Code section which deals with installment contracts. Section 41-02-75 (2-612), NDCC, which appears to be relevant, provides: 1. An `Installment contract' is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause `each delivery is a separate contract' or its equivalent. 2. The buyer may reject any installment which is nonconforming if the nonconformity substantially impairs the value of that installment and cannot be cured or if the nonconformity is a defect in the required documents; but if the nonconformity does not fall within subsection 3 and the seller gives adequate assurance of its cure the buyer must accept that installment. 3. Whenever nonconformity or default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole. But the aggrieved party reinstates the contract if he accepts a nonconforming installment without seasonably notifying of cancellation or if he brings an action with respect only to past installments or demands performance as to future installments. [2] There is little evidence in the record to indicate that delay in payment of one potato shipment substantially impaired the value of the whole contract. Evidence indicated nothing unusual about slow payments in the potato industry. Gulf Chemical & Metal. Corp. v. Sylvan Chem. Corp., 122 N.J.Super. 499, 300 A.2d 878 (1973). We note that subsection 3 above provides for reinstatement of the contract by the aggrieved party in the absence of seasonable notification of cancellation. The danger of wrongfully alleging breach was noted by the court in Walker & Company v. Harrison, 347 Mich. 630, 81 N.W.2d 352, 355 (1957): But the injured party's determination that there has been a material breach, justifying his own repudiation, is fraught with peril, for should such determination, as viewed by a later court in the calm of its contemplation, be unwarranted, the repudiator himself will have been guilty of material breach and himself have become the aggressor, not an innocent victim. It is significant that, according to evidence of Markel's stocks on hand introduced by Dangerfield in the form of an exhibit at trial, as of February 10 when Markel refused further deliveries, it appears that Markel had considerably fewer potatoes on hand than he owed Dangerfield on the contract. We believe that, under the law and the evidence in this case, Markel's right to cancel the contract because of Dangerfield's breach of the fifteen-day payment provision (even if found to substantially impair the value of the whole contract) was waived by Markel when he continued to make deliveries under the contract, or, more correctly, Markel's subsequent shipment of potatoes indicates an election on his part to continue performance of the contract. 3A Corbin on Contracts, §§ 754, 755; Daniel v. Hamilton, 61 N.W.2d 281 (N.D.1953). To avoid a possible misunderstanding, we add that the waiver by Markel was not a waiver of future prompt payments by Dangerfield, but only a waiver of Markel's right to cancel the contract on the basis of previous breaches by Dangerfield. Markel's subsequent refusal to make any further deliveries (at a time when Dangerfield had become current with his payments and was therefore in compliance with the payment provisions of the contract) constituted a breach by Markel of the oral agreement, giving rise to damages under the Uniform Commercial Code. It was error for the trial court to find that Markel could cancel because of a default by Dangerfield which Markel had previously waived. Findings are clearly erroneous when they are without substantial evidentiary support or are induced by an erroneous view of the law. See, Rule 52(a), NDRCivP, and Stee v. L Monte Industries, Inc., 247 N.W.2d 641, 644 (N.D.1976). The judgment is reversed and the case is remanded for such further proceedings by the trial court as are consistent herewith. ERICKSTAD, C. J., and VOGEL, PAULSON and SAND, JJ., concur.