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DEFENDANT PROPERLY REJECTED THE MACHINES AS NONCONFORMING GOODS, PLAINTIFF DID NOT CURE THE NONCONFORMITY, AND DEFENDANT WAS ENTITLED TO CONSEQUENTIAL DAMAGES AND LOST PROFITS (SECOND DEPT). ​

The Second Department determined Supreme Court properly found that defendant had rejected the machines as nonconforming goods, plaintiff did not cure the nonconformity, and defendant was properly awarded consequential damages and lost profits:

… [T]he Supreme Court found … the defendant[] demonstrated that the plaintiff had breached express and implied warranties by showing that the machines which were delivered to [defendant] Expansion did not conform to the descriptions set forth in the invoice. The court determined that Expansion was entitled to damages in the principal sum of $53,298.75 for breach of express and implied warranties, representing the amount of lease payments it made on the machines, as well as damages in the principal sum of $2,852,430 for lost profits resulting from that breach. …

… [T]he evidence established that Expansion rejected the machines with particularity as required by UCC 2-605. …

… [W]hile Expansion’s rejection triggered the plaintiff’s right pursuant to UCC 2-A-513 to cure the alleged nonconformity, the … determination that the plaintiff failed to do so was warranted by the facts. …

… [T]he determination that, at the time the parties entered into the contract, damages for lost profits were within the contemplation of the parties is warranted by the facts. It was foreseeable that a breach on the part of the plaintiff with respect to delivering functioning machines would result in Expansion being unable to manufacture sufficient ammunition to fill existing orders, or to accept new orders, culminating in lost profits … . Mil-Spec Indus. Corp. v Expansion Indus., LLC, 2022 NY Slip Op 00035, Second Dept 1-5-22

 

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