Opinion ID: 551885
Heading Depth: 3
Heading Rank: 1

Heading: Breach of the Written Agreement

Text: 177 General Poly's next argument on appeal is that the district court improperly directed a verdict in favor of Allied on General Poly's claim for breach of their written agreement. In directing a verdict in favor of Allied, the district court explained his reasoning as follows: 178 [A]s I listened to Plaintiffs' evidence, it seemed clear to me that if it was a claim for breach of contract, it was in part because the Plaintiffs had ordered and reordered time and again certain off-weight resins from Allied, received them, knowing they were off-weight, accepted them as off-weight, used them without any remonstration or complaint or attempts to set aside the terms of the agreement or to claim that the terms had been breached. I have always then been persuaded, if this case is premised in its commercial setting, that the provisions of Section 2-606 through 608 probably control this case, and as a consequence, Plaintiffs had no breach of contract. 179 R. Vol. 41 at 4587-88. 180 General Poly argues that the district court's ruling was erroneous because [t]here was unequivocal evidence that Allied had commercial quantities of prime resin available in May-June 1981, which it sold to others before offering [it] to General Poly.... That conduct directly breached the written 'first right to purchase' term of [the written agreement]. See Appellee's Br. at 86. 10 The first right of purchase provision provides as follows: 181 1.2 For a period commencing with the production by Allied Chemical of a semi-commercial or commercial scale of any new high density polyethylene film grade resin developed and terminating three (3) years thereafter, it is agreed that General Poly shall have the first right to purchase such high density polyethylene film grade resin from Allied Chemical up to a maximum of 500,000 pounds per month. General Poly's first right to purchase film grade pursuant to this Section 1.2, however, shall be contingent upon General Poly giving Allied Chemical at least thirty (30) days' prior written notice of its requirements for each calendar month in which General Poly chooses to exercise its first right to purchase. With respect to each calendar month for which Allied Chemical receives no written timely notice, as provided for herein, Allied Chemical shall be relieved of any obligation to General Poly. 182 Plaintiff's Ex. 420, First Addendum to Appellant's Br., Doc. 14. Because the written agreement states that it shall be governed by and construed in accordance with the internal laws of the State of New York without regard to conflict of laws, we must apply the law of New York. Id.
183 We believe the district court correctly entered its ruling directing a verdict in favor of Allied. The district court based its conclusion on Sections 2-606 through 608 of the Uniform Commercial Code (U.C.C.), and we believe those provisions establish that General Poly has no breach of contract claim for the off-grade resin that was delivered to it and accepted by it under the contract. With regard to the claim that Allied was delivering prime grade resin to General Poly without making such resin available to General Poly, in May and June, 1981, we observe that the terms of the written agreement specify that unless General Poly gives Allied thirty days written notice of its needs for the calendar month, no first right of purchase shall inure for that month. We hold that General Poly's failure to supply such notice precludes General Poly from asserting this breach of the agreement. 184 General Poly first argues that it was not required to give Allied written notice of its resin needs because Allied failed to notify General Poly of the available resins. In the alternative, General Poly suggests that its communications with Allied did constitute notice so as to satisfy its obligations under the written agreement. However, the record does not support either of those arguments. 185 General Poly contends that it was not obligated to give Allied written notice until such time as Allied first notified General Poly that resin was available. This position is untenable for two reasons. First, it is clear from the record that the AFK-9 PAXSON 4100 resin which General Poly complains was sold to other companies in breach of the agreement was first tested at the General Poly facility. Although General Poly evidently was not satisfied with the quality of the resin from that run, it cannot now argue that it did not have notice of its existence. Second, even if the record were otherwise, we are unwilling to read into the written agreement an obligation on the part of Allied to notify General Poly of the availability of prime resin, because no such provision appears in the clear and unambiguous language of the agreement. See Meccico v. Meccico, 559 N.Y.S.2d 974, 76 N.Y.2d 822, 559 N.E.2d 668 (1990) (Where the contract is clear and unambiguous on its face, the courts must determine the intent of the parties from within the four corners of the instrument.); cf. Remetich v. Remetich, 110 A.D.2d 760, 488 N.Y.S.2d 49 (1985) (plaintiff failed to exercise an option to purchase in the clear and explicit manner stated in the separation agreement). 186 General Poly argues in the alternative that it did in fact notify Allied of its resin needs. However, General Poly does not call our attention to any evidence in the record suggesting that it gave Allied any kind of written notice for either of the months for which it now alleges breach (i.e., May and June 1981). The three exhibits which General Poly cites are unavailing. The first letter General Poly relies on is a letter from Traver to Heath written on September 19, 1980. Plaintiff's Ex. 1088, First Addendum to Appellee's Br., Doc. 20. The letter indicates that General Poly would be willing to purchase [t]he two hopper cars which you have available and requests a meeting to work out with you a purchasing program for 1981. Id. The second exhibit General Poly relies on is an order for seven hopper cars of offgrade resin to be blended with Hoescht resin. Plaintiff's Ex. 1276, First Addendum to Appellant's Br., Doc. 24. The proposed shipping dates for those cars are listed as between February 9, 1981, and April 24, 1981. Id. The final exhibit referenced by General Poly is Traver's June 2, 1981 letter in which he inquired as to the availability of the resins which he found to be satisfactory but which contains no written statement of General Poly's requirements nor does it contain an order for material. Plaintiff's Ex. 1544, First Addendum to Appellee's Br., Doc. 33. None of these documents shows that General Poly ever gave Allied written notice of its resin needs for the months of the alleged breach--May and June 1981. It is a basic tenet of contract law that before liability can arise on a promise qualified by conditions expressed or implied in fact, such conditions must be fulfilled. Morse v. Ted Cadillac, Inc., 146 A.D.2d 756, 756, 537 N.Y.S.2d 239, 240 (N.Y.App.Div.1989) (quotations omitted). Because sufficient evidence was not presented such that a reasonable jury could properly have found that General Poly had fulfilled its notice obligations under the agreement, we hold that the district court properly directed a verdict in favor of Allied on General Poly's action for breach of the written agreement.