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Continental Sand & Gravel, Inc. v. K & K Sand & Gravel, Inc.
Citation:
755 F.2d 87, 40 U.C.C. Rep. Serv. (West) 387 (1985)Facts
In 1979, Continental purchased a sand and gravel business from K & K for $650,000, which included $50,000 for mobile equipment (front-loaders, cranes, trucks, and a dredging barge). The purchase agreement contained express warranties that “the Purchased Assets are all in good order, condition and repair” and that “[t]here are no defects in the Purchased Assets which would materially affect the use thereof.” The agreement also included a consulting arrangement where Continental would pay K & K $60,000 per year for four years. Shortly after beginning operations, Continental discovered the mobile equipment was in poor repair and poorly maintained. Within three months, Continental incurred over $23,000 in repair costs. In June 1979, a federal inspector condemned one of the cranes as unsafe, shutting down production. Continental notified K & K of the warranty breaches and submitted repair estimates totaling approximately $164,000. When K & K did not respond, Continental changed its dredging operation and refused to pay the $240,000 balance due under the consulting agreement.
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