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Contracts Keyed to Fuller
JOM, Inc. v. Adell Plastics, Inc.
Citation:
193 F.3d 47 (1st Cir. 1999)Facts
From 1986 to 1994, Chipco purchased resin exclusively from General Electric for manufacturing casino gaming chips. In September 1994, Chipco began purchasing resin from Adell, which was represented as equal or superior to GE’s product but less expensive. Chipco’s purchase orders contained no language regarding warranties or remedies, while Adell’s invoices included a damages-limitation clause stating that no claim could exceed the purchase price of the materials. By July 1995, Chipco was buying all its resin from Adell. Soon after, Chipco’s casino customers began complaining that the new chips were less attractive and durable than those made with GE resin. Under its two-year unconditional product warranty, Chipco had to replace over one million defective chips. By February 1996, Chipco had switched to another resin supplier. Chipco sued Adell for breach of contract, breach of warranties, negligence, and misrepresentation, seeking damages for replacement costs and lost profits. Adell counterclaimed for unpaid invoices. The jury found for Chipco on the contract and warranty claims, awarding $961,658, and for Adell on its counterclaim for $77,336.
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