Princess Cruises, Inc. v. General Electric Co PDF

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Princess Cruises, Inc. v. General Electric Co. Sunday, September 25, 2011

3:41 PM

Citation Princess Cruises, Inc. (π) v. General Electric Co. (∆) United States Court of appeals 143 F.3d 828 (4th Cir. 1998)

Procedural Posture 1. ∆ lost to π in district court where jury found ∆ liable for breach of contract and awarded π $4,577,743.00 for incidental and consequential damages as well as lost profits. ∆ had contended UCC stipulations should not apply in this case but district court did not agree and brought the trial to a jury anyway. 2. ∆ now appeals in on grounds of district court’s erroneous instructions to the jury and denial of renewed motion of judgment as a matter of law.

Facts 1. Π scheduled SS Sky Princess for routine inspection services and repairs in 12/1994 and requested that the original manufacturer of the main turbines ∆ perform them and provide the incidental parts. π sent off a purchase order in 10/1994. a. Order included a proposed contract price of $260,000 as well as a brief description of services to be performed and terms and conditions that indicated that this was an offer, that the ∆ could accept by acknowledging or performing; the terms could not be changed unilaterally; and that GE would provide a warranty of workmanlike quality and fitness for the use intended. 2. The same day that ∆ got it, they replied with a Fixed Price Quotation which included a detailed work description and included a parts and material lists along with an offering price of $201,888 and π’s own terms and conditions. Upon review, π noted some work that was missing and asked for the error to be rectified. 3. 10/20/1994 - ∆ faxed a FPQ for $231,925 which included: a. Π’s terms and conditions b. A rejection of π’s terms and conditions c. A rejection of liquidated damages d. a limitation on liability of ∆ to defective goods or damaged equipment resulting from defective services, exclusive of all written, oral, implied or statutory warranties e. a limitation on liability of ∆ on any claims to not more than the greater of either $5000 or the contract price (the least they will agree to pay is $5000, the most is $231,925) f. a disclaimer of any liability for consequential damages, lost profits, or lost revenue. 4. 11/1/1994 - ∆ sent a confirmatory letter stating they would perform the services. 5. When the ship arrived for inspection, ∆ noted surface rust on the rotor and advised it be taken ashore to be cleaned. During clean, the rotor lost good metal on it and as a result became unbalanced. 6. Despite efforts by ∆, the rotor, due to continued vibrations and high temperatures, caused damage to the ship and forced π to cancel a ten day cruise. 7. 04/22/1996 – π filed a four count complaint alleging: (1) breach of contract; (2) breach of express warranty; (3) breach of implied maritime warranty and; (4) negligence. 8. In trial, the court advised the jury to follow the principles set forth in UCC §2-207 a. The warranty of merchantability b. Warranty of fitness for a particular purpose c. Warranty of workmanlike performance d. Π’s right to recover damages for ∆’s alleged breach of the contract e. Π’s right to recover damages for incidental and consequential damages as well as lost profits – as a result of ∆’s breach of contract.

Question 1. Was this a case that should have been governed by the UCC (as the district put forth) or common law (as ∆ contended)?

Answer 1. Common law takes precedence here. 2. Π’s original contract does not hold.

Reasoning 1. To determine whether the UCC or common law takes power of this case, we must determine if the order was for goods or services. 1. Coakley’s 3 tests as determined by the 4th circuit: a. The language of the contract b. The nature of the business of the supplier c. The intrinsic worth of the materials 2. The language of the contract – words such as “Installation/Repair/Maintenance”, “Service Engineer”, and “Quotation for Services” express that this contract was for services rendered. Furthermore, the work described (opening, cleaning, checking, inspecting, disassembling) are all service oriented jobs. a. Order was for repairs with purchase of incidental parts. b h i h f h i i l f i i

Predominant Factor • Is it Goods (UCC) or Services (CL)? • What's the value of the goods? Vs. What's the value of the services? ○ Whichever one is more, is the predominant factor. This is how we determine a predominant factor Three tests applied.

2. The language of the contract– words such as Installation/Repair/Maintenance , Service Engineer , and “Quotation for Services” express that this contract was for services rendered. Furthermore, the work described (opening, cleaning, checking, inspecting, disassembling) are all service oriented jobs. a. Order was for repairs with purchase of incidental parts. b. The main thrust of the original contract was for repair service. 3. The nature of the business of the supplier – though ∆ is largely a manufacturer, the arm of their corporation that was working here was the Installation and Service Engineering Department. 4. The intrinsic worth of the materials – specific prices for parts were never mentioned as the price was meant for the repairs rendered with everything inclusive. 5. Counteroffer by ∆ - ∆ changed the form they sent back making it a counteroffer instead of an acceptance. ∆’s stipulated how much they would end up paying if something like this were to happen. Though there was no explicit acceptance the fact that π paid the amount requested showed acceptance by conduct.

Holding 1. Court of appeals reverses decision and orders ∆ to pay π damages as per their contract under common law  the amount of the contract, $231,925 + interest accumulated from date of original judgment.

GE is the seller. Their final price quotation is wh was accepted.

Incidences proving Acceptance: 1. 10/31 phone call - princess says yes come fix my boat. 2. Princess let ge come on their boat and start mucking about. 3. Princess paid them money....