Court Opinion

ID: 9472423
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:59:47.54028+00
Date Added: 2024-06-11T17:42:55.662537
License: Public Domain

CUDAHY, Circuit Judge,
concurring.
I agree with the majority that a limitation of remedy might have been accomplished by trade custom or usage and that the evidence of trade custom should probably have been admitted. However, the majority’s discussion of the significance of the contract formation issue and its analysis of the “battle of the forms” is, I believe, novel in at least one particular. Thus, the majority seems to be saying that, if the contract was not formed during the May 17 phone conversation, then the question to be put to the jury is whether the existence of a trade custom which denies consequential damages serves to give precedence to Newcor’s form (excluding consequential damages) over Western’s form (including consequential damages). Rather, it seems to me that the proper question for the jury is whether, once the conflicting terms in the Western and Newcor forms fall out of the contract (as they would under either a § 2-207(2) or a § 2-207(3) analysis), a sufficiently established trade custom exists which supplements the otherwise-silent contract to supply a term excluding consequential damages.
I would also depart from the majority in its formulation of a critical issue in this case — that is, in supplying terms for such a silent contract, the question is which Code provision should govern: §§ 1-205 and 2-202 invoking trade usage to explain or supplement contract terms or § 2-719 providing only that the agreement may exclude consequential damages. Comment 3 to § 2-715 states that: “In the absence of excuse under the section on merchant’s excuse by failure of presupposed conditions, the seller is liable for consequential damages in all cases where he had reason to know of the buyer's general or particular requirements at the time of contracting.” The Wisconsin Supreme Court has interpreted §§ 2-714 and 2-715 to mean “that a potential recovery for consequential loss is implicit in [a] contract.” Air Products & Chemicals, Inc. v. Fairbanks Morse, Inc., 58 Wis.2d 193, 212, 206 N.W.2d 414, 424 (1973). In addition, the UCC “disfavors limitations on remedies and provides for their deletion where they would effectively deprive a party of reasonable protection against breach,” despite the fact that § 2-719 allows for the alteration or elimination of the,damages remedies otherwise granted under the UCC. Murray v. Holiday Rambler, Inc., 83 Wis.2d 406, 418, 265 N.W.2d 513, 520 (1978).
Nevertheless, in my view, the policy of the UCC may seem to favor an expansive use of trade custom in explaining or supplementing contract terms, even to the point of allowing, without regard to the parties’ express agreement, trade custom to supply significant elements of a contract term. See, e.g., Columbus Milk Producers’ Cooperative v. Department of Agriculture, 48 Wis.2d 451, 459-60, 180 N.W.2d 617, 621 (1970). Once trade usage becomes *1208a part of the contract, then, like express terms, it may supersede or vary other provisions usually supplied by the Code. J. White & R. Summers, Handbook of the Law Under the Uniform Commercial Code 100 (1980). Hence, evidence of trade usage may be admitted for the purpose of explaining and supplementing the terms of the contract to the extent of excluding consequential damages. Such a trade usage is not, however, something which arises by express agreement of the parties. “[T]he proof 0$ such usage must be clear and explicit, and the usage so well established, uniform, and so notorious that the parties must be presumed to know it, and to have contracted in reference to it.” Knobel v. J. Bartel Co., 176 Wis. 393, 398, 187 N.W. 188, 190 (1922) (emphasis supplied). See also White & Summers, supra, at 103-04. While this Wisconsin decision antedates adoption of the Uniform Commercial Code, it finds a clear echo in the definition of trade usage provided by the Code itself, § 1-205(2): “A usage of trade is any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with pespect to the transaction in question ” (emphasis _ supplied). Further, proof of trade usage, unlike proof of course of dealing or course of performance, usually requires the calling of an expert witness. A published trade code (which Newcor attempted to use in establishing its trade usage) does not necessarily constitute a trade usage and, in any event, it must be a trade code binding on both parties. See White & Summer, supra, at 104 and n. 33.
I believe the jury should be instructed with these principles of trade usage in mind. The Uniform Commercial Code favors the incorporation of trade custom into the contractual understanding where appropriate. But disclaimer of liability for consequential damages is certainly not something which may be lightly assumed from a flurry of forms between buyer and seller.