RBC Nice Bearings, Inc. v. SKF USA, Inc.

Summary

The Connecticut Supreme Court reviewed whether the plaintiffs waived a contractual minimum-purchase requirement under agreements for the sale and distribution of industrial ball bearings. The court held that the record supported the trial court’s finding of a continuing waiver extending into the sixth contract year, and it reversed in part the Appellate Court’s judgment. The opinion also discusses waiver, course of performance, contractual modification, and retraction of waiver under the Uniform Commercial Code.

Holdings

1. A course of performance involving repeated occasions for performance and repeated opportunities to object may establish a continuing waiver of a contractual requirement when a reasonable person in the obligor's position would conclude that the obligee no longer intended to insist on strict compliance.
2. The existence and scope of a continuing waiver are determined objectively by whether a reasonable observer would conclude from the obligee's repeated conduct that it no longer intended to insist on strict compliance; the obligee's undisclosed subjective intent is not controlling.
3. An obligee's reminders or complaints about contractual performance do not, by themselves, prevent a finding of waiver when the obligee continues to accept noncompliant performance and perform under the contract.
4. A party that has waived a contractual requirement affecting an executory portion of a UCC-governed contract may retract the waiver only by reasonable notification that strict performance will be required, unless retraction would be unjust because of a material change in position in reliance on the waiver.
5. The Appellate Court improperly substituted its judgment for the trial court's when it rejected the trial court's supported finding of continuing waiver.

Questions Presented

1. Whether the Appellate Court improperly substituted its judgment for that of the trial court in determining that the plaintiffs' conduct did not create a continuing waiver of the minimum purchase requirement.
2. Whether the plaintiffs' conduct constituted an effective retraction of any waiver as to the sixth contract year and the executory portions of the agreement.

Disposition

reversed_and_remanded