RBC Nice Bearings, Inc. v. SKF USA, Inc. ( 2015 )

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RBC NICE BEARINGS, INC., ET AL. v. SKF USA, INC.
(SC 19253)
Palmer, Zarella, Eveleigh, McDonald, Espinosa and Robinson, Js.
Argued January 5—officially released September 22, 2015
David Richman, pro hac vice, with whom were Mat-
thew D. Janssen, Robert B. Flynn and, on the brief,
Steven J. Zakrzewski, for the appellant (defendant).
Kim E. Rinehart, with whom were Tadhg A.J. Dooley
and, on the brief, Joseph W. Martini and Matthew C.
Brown, for the appellees (plaintiffs).
Opinion
ESPINOSA, J. This appeal arises from a dispute over
a contract for the sale of goods. The plaintiffs, RBC
Nice Bearings, Inc., Roller Bearing Company of
America, Inc., and Roller Bearing Company of America,
Inc., doing business as Nice Ball Bearings, Inc., manu-
facture industrial ball bearings. They appealed to the
Appellate Court from the judgment of the trial court,
which had denied the plaintiffs’ claim for contractual
damages on the basis of its finding that the plaintiffs
had waived a contractual requirement that the defen-
dant, SKF USA, Inc., a distributor, purchase a minimum
dollar value of bearings from the plaintiffs each year.
See RBC Nice Bearings, Inc. v. SKF USA, Inc., 146
Conn. App. 288, 294, 78 A.3d 195 (2013). The Appellate
Court reversed the trial court’s judgment, concluding
that, even if there was sufficient evidence to support
a finding that the plaintiffs had waived the minimum
purchase requirement as to certain years of the con-
tract, the trial court’s finding that the waiver continued
into subsequent contract years was clearly erroneous.
Id., 310–11. We subsequently granted the defendant’s
petition for certification to appeal, limited to the follow-
ing questions: (1) ‘‘Did the Appellate Court properly
determine that the judgment of the trial court should
be reversed or did it substitute its judgment for that of
the trial court when it determined that the conduct of
the parties did not give rise to a waiver of the minimum
purchase requirement?’’; and (2) ‘‘Did the Appellate
Court properly determine that the trial court incorrectly
decided that the [plaintiffs] failed to retract [their]
waiver of [the defendant’s] minimum purchase require-
ment . . . ?’’ RBC Nice Bearings, Inc. v. SKF USA,
Inc., 310 Conn. 962, 963, 83 A.3d 345 (2013). With respect
to the second certified question, we conclude that certi-
fication was improvidently granted.1 With respect to the
first certified question, we conclude that the record
contained sufficient evidence to support the trial court’s
finding that the plaintiffs waived the minimum purchase
requirement on a continuing basis. Accordingly, we
reverse in part the judgment of the Appellate Court.2
The decision of the Appellate Court, as supplemented
by the record, reveals the following factual background
and procedural history. The defendant owned Nice Ball
Bearings, Inc. (Nice), producer of the oldest line of ball
bearings manufactured in the United States, until 1997,
when it sold the product line and associated manufac-
turing assets to the plaintiffs. RBC Nice Bearings, Inc.
v. SKF USA, Inc., supra, 146 Conn. App. 291. ‘‘The
parties simultaneously executed a ‘Sales and Supply
Agreement’ (1997 agreement) through which the defen-
dant became the plaintiffs’ exclusive distributor for cer-
tain Nice products [to certain aftermarket customers].
The 1997 agreement provided for a term of eight years
and required that the defendant expend, at a minimum,
$9 million for the purchase of Nice products from the
plaintiffs each year.’’ Id.
Although the defendant failed to purchase the con-
tractual minimum during the first three years of the
1997 agreement, the plaintiffs did not demand compli-
ance with the minimum purchase requirement, nor did
they take any steps to challenge the defendant’s failure
to comply with that requirement. Id. Rather, on July
31, 2000, the parties negotiated a new sales and supply
agreement to reflect what they agreed were changed
market realities (2000 agreement). Id. This 2000
agreement superseded the 1997 agreement. Id. It
extended the term of the parties’ exclusive supply rela-
tionship through the end of 2008, while lowering the
minimum purchase requirement by providing that the
defendant was required to buy not less than $6 million
per year of Nice products. Id. The 2000 agreement also
contained an adjustment clause that allowed for future
increases in the minimum annual purchase requirement
to reflect price increases in the marketplace. Id., 291–92.
The new agreement also allowed for downward adjust-
ments in the minimum purchase requirement under cer-
tain exceptional circumstances outlined in the
agreement. Id., 292.
Each contract year was designated to run from March
1 to the end of the following February.3 Id. The 2000
agreement provided that, if a deficit remained after the
close of a given contract year, the defendant could
designate a portion of its March sales during the follow-
ing year toward making up the shortfall. Id. In any event,
the defendant would be required to purchase enough
Nice product to make up the shortfall by April 30 of the
following year. Id. The 2000 agreement also provided,
however, that, upon the expiration or termination of the
agreement, the plaintiffs were obligated to repurchase
from the defendant all salable Nice products in the
defendant’s inventory. Finally, the 2000 agreement
retained the defendant’s exclusive distributorship,
under which it held exclusive rights to sell Nice prod-
ucts to certain industrial aftermarket customers. Id.
During the first year of the 2000 agreement, the defen-
dant purchased the required amount of bearings from
the plaintiffs. Id. Although its purchases in the second
contract year fell short of the $6 million minimum, this
shortfall was contractually excused because the terror-
ist attacks of September 11, 2001, resulted in a signifi-
cant falloff in demand for industrial bearings in the
second half of the contract year.
For reasons that are disputed by the parties, the
defendant was unable to satisfy its minimum purchase
requirements during the third through sixth years of the
2000 agreement. The shortfalls amounted to $221,584 in
the year ending February 28, 2003; $1,810,638 in the
year ending February 29, 2004; $2,150,515 in the year
ending February 28, 2005; and approximately $2 million
in the year ending February 28, 2006.
In the third through fifth years of the 2000 agreement,
the plaintiffs, as they had under the 1997 agreement,
continued to perform under the contract despite the
defendant’s repeated failure to meet its contractual obli-
gations. They indicated their acceptance of the defen-
dant’s deficient performance, and they forbore from
demanding compliance with the minimum purchase
requirement, invoicing the defendant for the shortfalls,
or taking any legal action to enforce their contractual
rights. Instead, each year, while continuing to remind
the defendant of its contractual obligations, the plain-
tiffs negotiated with the defendant a purchase require-
ment that the defendant believed the market reasonably
could bear. During this period, in the interest of main-
taining a solid business relationship between the par-
ties, the defendant also overlooked or tolerated various
deviations by the plaintiffs from their contractual
requirements. For example, the defendant allowed the
plaintiffs to fill its orders at a fill rate lower than pro-
vided for in the 2000 agreement, and also to increase
prices earlier than the agreement permitted.
The plaintiffs adopted a different strategy, however,
midway through the sixth contract year, which began
on March 1, 2005. The plaintiffs had, for some time,
been exploring the possibility of terminating the 2000
agreement with the defendant, cutting out the middle-
man, and taking over direct-to-market distribution of
Nice bearings. The plaintiffs never revealed these plans
to the defendant. Their internal target date for the tran-
sition was the end of 2005. Accordingly, in July, 2005,
Michael Hartnett, the plaintiffs’ president and chief
executive officer, instructed Bruce Whipple, his direc-
tor of business development, as follows: ‘‘I want to run
Nice at a rate this year that does not create a major
inventory hangover problem [and] I don’t want to end
the contract this year. Play nice! But let’s reserve our
claim.’’ (Emphasis in original.)
Pursuant to this new strategy, on August 10, 2005,
the plaintiffs presented the defendant with a $1.6 million
shortfall invoice for the fifth contract year. Still, despite
the defendant’s failure to make up the shortfall, the
plaintiffs continued to sell Nice bearings to the defen-
dant under the contract through the end of the sixth
contract year on February 28, 2006. When the defendant
again failed to purchase the contractual minimum by
the end of March, 2006, the plaintiffs issued a shortfall
invoice for the sixth contract year. RBC Nice Bearings,
Inc. v. SKF USA, Inc., supra, 146 Conn. App. 302. Finally,
in June, 2006, the plaintiffs unilaterally terminated the
2000 agreement.
‘‘On June 22, 2006, the plaintiffs commenced this
action against the defendant for [among other things]
failure to meet its contractual obligations under the
2000 agreement in the fifth and sixth contract years
and for the anticipatory breach of contract in years
seven through nine. . . .4 In [a] counterclaim, the defen-
dant alleged breach of contract, tortious interference
with contractual relations and prospective business
relations, unjust enrichment, promissory estoppel, and
violations of [the Connecticut Unfair Trade Practices
Act, General Statutes § 42-110a et seq.].’’ (Footnote
added.) Id., 293.
‘‘After a trial to the court [Miller, J.], the court issued
a memorandum of decision in which it ruled in favor
of the defendant on the plaintiffs’ claims and in favor
of the plaintiffs on the defendant’s counterclaims. The
court concluded that the evidence presented clearly
demonstrated that the 2000 agreement had been modi-
fied by the conduct of the parties, who for most of the
contract period did not follow the annual sales require-
ments set forth therein, and instead negotiated mutually
acceptable, annual purchase volumes based on the real-
ities of the market and on their business capacities.
. . . [In the alternative, the] court found that for the
fourth and fifth contract years, the plaintiffs . . .
waived their right to enforce the minimum purchase
requirement in the 2000 agreement . . . .’’ (Internal
quotation marks omitted.) Id., 293–94. These conclu-
sions were based, in part, on the court’s findings that:
(1) the testimony of the defendant was more credible
than that of the plaintiffs; and (2) there was ‘‘close to
overwhelming’’ evidence that the plaintiffs merely used
the defendant’s contractual shortfalls as a pretext to
terminate the agreement once they were ready to
assume direct distribution of the Nice product line.
The trial ‘‘court found these conclusions dispositive
of all of the plaintiffs’ claims against the defendant.’’
RBC Nice Bearings, Inc. v. SKF USA, Inc., supra, 146
Conn. App. 294. As to the defendant’s counterclaim that
the plaintiffs had violated the exclusive sales clause of
the 2000 agreement, although the court found that the
plaintiffs had breached the agreement, it denied the
defendant any relief on the grounds that: (1) the defen-
dant had failed to prove its counterclaim damages with
sufficient certainty; and (2) ‘‘the amount in dispute did
not become a significant issue between the defendant
and the [plaintiffs] until litigation was being contem-
plated.’’ (Internal quotation marks omitted.) Id., 312.
On appeal, the Appellate Court reversed the judgment
of the trial court as to both the plaintiffs’ breach of
contract claims and the defendant’s counterclaim. Id.,
316. With respect to the plaintiffs’ claims, the Appellate
Court concluded that, as a matter of law, any modifica-
tion of the agreement by the parties’ course of perfor-
mance was barred by a provision of the 2000 agreement
requiring that any modification of its terms be in writing.
Id., 296, 300–301. The Appellate Court further concluded
that ‘‘there were no signed writings from which the
[trial] court could properly conclude that the plaintiffs
had agreed to modify the terms of the 2000 agreement.’’5
Id., 302. In addition, the Appellate Court concluded that
the trial court’s finding that the plaintiffs waived the
minimum purchase requirement in the sixth contract
year was clearly erroneous. Id., 311. Accordingly, it
remanded the case for a new trial. Id., 316. With respect
to the defendant’s counterclaim, the court concluded
that the defendant’s damages could be calculated with-
out speculation, and that the defendant’s motive for
pursuing the claim was irrelevant. Id., 314–15. Accord-
ingly, the Appellate Court remanded the case with direc-
tion to render judgment in favor of the defendant on
its counterclaim and for further proceedings to deter-
mine the amount of damages to which the defendant
was entitled. Id., 316. The sole issue we consider in this
certified appeal is whether the Appellate Court properly
concluded that the trial court’s finding of a continuing
waiver of the minimum purchase requirement as to the
sixth contract year and the executory portions of the
agreement was clearly erroneous. Additional facts will
be set forth as necessary.
We begin our analysis with a brief overview of the
relevant legal principles. We then consider whether the
trial court’s findings as to waiver in the third through
fifth contract years were clearly erroneous, and, finally,
whether its finding of continuing waiver as to the sixth
and subsequent contract years was clearly erroneous.
‘‘Waiver is a question of fact. . . . [When] the factual
basis of the [trial] court’s decision is challenged we
must determine whether the facts set out in the memo-
randum of decision are supported by the evidence or
whether, in light of the evidence and the pleadings in
the whole record, those facts are clearly erroneous.
. . . [T]he trial court’s conclusions must stand unless
they are legally or logically inconsistent with the facts
found or unless they involve the application of some
erroneous rule of law material to the case.’’ (Citations
omitted; internal quotation marks omitted.) AFSCME,
Council 4, Local 704 v. Dept. of Public Health, 272
Conn. 617, 622–23, 866 A.2d 582 (2005).
Contracts for the sale of goods are governed by the
Uniform Commercial Code (UCC), which Connecticut
has codified at General Statutes § 42a-1-101 et seq.
Although the UCC contains numerous references to the
‘‘waiver’’ of contractual requirements, it never defines
the term waiver; see General Statutes § 42a-2-103 (defi-
nitions and index of definitions in article 2 of UCC);
Dynamic Machine Works, Inc. v. Machine & Electrical
Consultants, Inc., 352 F. Supp. 2d 83, 88 (D. Mass. 2005);
nor does it set forth standards for determining whether
a party to a contract has waived its contractual rights.
To determine the existence and contours of a purported
waiver, therefore, we must seek guidance from our
state’s common law of contract, as supplemented by
the UCC. See General Statutes § 42a-1-103 (b); Conn.
Gen. Stat. Ann. (West 2009) § 42a-1-103, comment (2),
pp. 21–22; Boston Helicopter Charter, Inc. v. Agusta
Aviation Corp., 767 F. Supp. 363, 372 (D. Mass. 1991).
Waiver is defined generally as ‘‘the voluntary relin-
quishment of a known right.’’ MacKay v. Aetna Life
Ins. Co., 118 Conn. 538, 547, 173 A. 783 (1934). In the
contract context, waiver refers to ‘‘the excuse of the
nonoccurrence of or a delay in the occurrence of a
condition of a duty.’’ 2 E. Farnsworth, Contracts (3d
Ed. 2004) § 8.5, p. 447. ‘‘Waiver does not have to be
express, but may consist of acts or conduct from which
waiver may be implied. . . . [W]aiver may be inferred
from the circumstances if it is reasonable to do so.’’
(Internal quotation marks omitted.) AFSCME, Council
4, Local 704 v. Dept. of Public Health, supra, 272 Conn.
623. Accordingly, although an ‘‘[i]ntention to relinquish
must appear . . . acts and conduct inconsistent with
[the] intention to terminate the contract are sufficient.’’
(Internal quotation marks omitted.) MacKay v. Aetna
Life Ins. Co., supra, 547–48.
With respect to contracts governed by the UCC, Gen-
eral Statutes § 42a-1-303 (f) provides in relevant part
that ‘‘a course of performance is relevant to show a
waiver . . . of any term inconsistent with the course
of performance.’’6 Indeed, ‘‘it is a settled principle of
contract law that a party to an executory bilateral con-
tract waives a material breach by the other party if he
continues the business relationship, and accepts future
performance without some warning that the contract
is at an end.’’ (Internal quotation marks omitted.) Apex
Pool Equipment Corp. v. Lee, 419 F.2d 556, 561 (2d
Cir. 1969); see also 2A L. Lawrence, Anderson on the
Uniform Commercial Code (3d Ed. 2008) § 2-209:99, p.
75; 13 R. Lord, Williston on Contracts (4th Ed. 2000)
§ 39.31, pp. 637–42.
Once it is determined that an obligee has waived the
performance of one or more of the obligor’s contractual
duties, the question arises as to the scope and extent
of that waiver. See 2A L. Lawrence, supra, § 2-209:56,
p. 53. For example, when a contract provides that an
obligor will satisfy its contractual duties in instalments,
or provides for repeated occasions of performance, the
fact that the obligee waives the obligor’s noncompliance
as to a single instalment, or on one particular occasion,
does not necessarily evidence an intent to waive non-
compliance as to the obligor’s future, executory obliga-
tions. See Dallas Aerospace, Inc. v. CIS Air Corp., 352
F.3d 775, 783 (2d Cir. 2003); 2A L. Lawrence, supra, § 2-
209:57, p. 54. Rather, for a course of performance to
give rise to a continuing waiver, there must be ‘‘repeated
occasions for performance and [the] opportunity for
objection . . . .’’ (Emphasis omitted; internal quota-
tion marks omitted.) Dallas Aerospace, Inc. v. CIS Air
Corp., supra, 783; see, e.g., Bradford Novelty Co. v.
Technomatic, Inc., 142 Conn. 166, 170–71, 112 A.2d 214
(1955) (by repeatedly acquiescing in previous delays,
obligee waived its right to insist on strict compliance
with contractual provisions as to time of performance);
Remington Arms Union Metallic Cartridge Co. v.
Gaynor Mfg. Co., 98 Conn. 721, 731, 120 A. 572 (1923)
(by accepting noncompliant deliveries for fourteen
months, obligee abandoned right to peremptorily put
end to further performance by obligor without first
giving obligor reasonable notice of its intention to
demand strict performance in future); Bronson v. Lei-
bold, 87 Conn. 293, 297, 87 A. 979 (1913) (by accepting
multiple noncompliant payments, obligee waived right
to insist on forfeiture for noncompliance). Whether the
obligee’s repeated waiver of a contractual right creates
a continuing waiver is determined by an objective stan-
dard of whether a reasonable observer would conclude
that the obligee no longer intended to insist on strict
compliance. See 2 Restatement (Second), Contracts
§ 247, comment (a), p. 266 (1981); 13 R. Lord, supra,
§ 39:22, p. 590; 2A L. Lawrence, supra, § 2-209:98, p. 74.
Finally, waiver of a contractual requirement differs
from a contractual modification in two important
respects. First, ‘‘[w]hile a waiver may be effectuated by
one party, a modification is the result of the bilateral
action of both parties to the . . . transaction.’’ (Inter-
nal quotation marks omitted.) Dynamic Machine
Works, Inc. v. Machine & Electrical Consultants, Inc.,
444 Mass. 768, 771–72, 831 N.E.2d 875 (2005); 2A L.
Lawrence, supra, § 2-209:50, p. 51. Second, and relat-
edly, whereas the modification of a contract may not
be revoked without the consent of both parties, the
obligee may, under certain circumstances, unilaterally
retract its waiver of a contractual requirement. See
Dynamic Machine Works, Inc. v. Machine & Electrical
Consultants, Inc., supra, 444 Mass. 772; Nassau Trust
Co. v. Montrose Concrete Products Corp., 56 N.Y.2d 175,
184, 436 N.E.2d 1265, 451 N.Y.S.2d 663, appeal denied,
57 N.Y.2d 674 (1982). Specifically, in contracts governed
by the UCC, ‘‘[a] party who has made a waiver affecting
an executory portion of the contract may retract the
waiver by reasonable notification received by the other
party that strict performance will be required of any
term waived, unless the retraction would be unjust in
view of a material change of position in reliance on
the waiver.’’ General Statutes § 42a-2-209 (5). This is
consistent with our state’s common law, which provides
that an obligee may not ‘‘peremptorily put an end to
further performance by the [obligor on the basis of
the obligor’s continued noncompliance with the waived
contractual provisions] without first giving the [obligor]
reasonable notice of its intention to demand a strict
performance in the future.’’ Remington Arms Union
Metallic Cartridge Co. v. Gaynor Mfg. Co., supra, 98
Conn. 731; see also Bradford Novelty Co. v. Techno-
matic, Inc., supra, 142 Conn. 171; 2 Restatement (Sec-
ond), supra, § 247, comment (b), p. 267.
With these legal principles in mind, we turn to the
present case and, specifically, to the conclusion of the
Appellate Court that the trial court’s finding that the
plaintiffs waived the minimum purchase requirement
as to the sixth contract year was clearly erroneous.
Because the issue is one of continuing waiver, before
we address the sixth and subsequent contract years we
first review the trial court’s finding that the plaintiffs
waived the minimum annual purchase requirement in
previous contract years.
The trial court’s findings in this respect are not as
clear as they might be. In its memorandum of decision,
the court found that the plaintiffs waived compliance
with respect to the fourth and fifth contract years. In
its December 22, 2011 articulation, the court corrected
this finding and clarified that the plaintiffs waived the
requirement as to the fifth and sixth contract years, as
well as ‘‘any year thereafter.’’ At that time, the court also
articulated that ‘‘[the plaintiffs’] waiver [of the minimum
purchase requirements] extended to the entire period,
up to June 21, 2006, and would also have extended
throughout the remainder of the contract . . . .’’ In a
subsequent reply to the defendant’s request for further
articulation, however, the court stated that ‘‘the correc-
tion set forth in its December 22, 2011 articulation
should not have been included therein,’’ and reiterated
its initial finding that ‘‘the conduct that gave rise to
waiver occurred in the fourth and fifth years of the
contract.’’ RBC Nice Bearings, Inc. v. SKF USA, Inc.,
supra, 146 Conn. App. 295.
There is no dispute that the trial court ultimately
found that the plaintiffs intended to and did waive the
minimum purchase requirement at least with respect
to the fourth and fifth contract years. There is ample
evidence in the record to support this finding, and nei-
ther party challenges it on appeal.7 At a minimum, then,
we must assume that the plaintiffs waived the relevant
contractual requirements for two consecutive years
leading up to the sixth contract year.
The parties disagree as to whether the trial court also
found waiver in the third contract year. The plaintiffs
contend that the trial court repeatedly declined the
defendant’s request that it find that they waived the
minimum purchase requirement for that year. They fur-
ther argue that any finding of waiver in year three con-
tained in the court’s December 22, 2011 articulation
was without support in the record and was retracted by
its subsequent clarification. The defendant, by contrast,
relies on the trial court’s statement in its December 22,
2011 articulation that the waiver covered the entire
period up to June 21, 2006, and it contends that there
is adequate evidence in the record to support a finding
of waiver as to the third contract year. We agree with
the defendant.
Although it is not entirely clear how much of the
court’s December 22, 2011 articulation it sought to
revoke through its reply to the defendant’s request for
further articulation, the Appellate Court concluded, and
we agree, that there is no indication that the trial court
intended to alter or withdraw its finding that the plain-
tiffs’ waiver applied to the entire period during which
the parties had conducted business under the contract,
and would have extended to the remaining years of the
contract as well. See id., 306 and n.11; see also Abington
Ltd. Partnership v. Heublein, 257 Conn. 570, 586 n.29,
778 A.2d 885 (2001) (this court construes ambiguous
memorandum of decision to support judgment). We
have no reason to gainsay this finding. The record con-
tains evidence that: (1) the parties negotiated a mutually
agreeable sales figure for the third contract year; (2)
the plaintiffs wrote the defendant at the close of the
third contract year to confirm that, notwithstanding
the contractual shortfall, ‘‘the contract has been met
[through] February 2003’’; (3) two of the plaintiffs’ exec-
utives opted to accept the defendant’s performance and
to forbear from issuing a shortfall notice for that year;
and (4) the plaintiffs never invoiced the defendant for
the year three shortfall.
We also are not persuaded by the plaintiffs’ sugges-
tion on appeal that they could not have waived the
requirement for the third contract year because the
shortfall to which they agreed, $221,584, was ‘‘de min-
imus . . . .’’ Neither the record nor the law supports
this argument. At trial, the plaintiffs took the position
that the defendant’s performance in the third year was
‘‘not in compliance’’ with their contractual obligations.
Moreover, even if the third year shortfall were de min-
imus, that fact would ‘‘[provide] only the motive for the
waiver and [would] not vitiate the waiver itself.’’ Getty
Terminals Corp. v. Coastal Oil New England, Inc., 995
F.2d 372, 375 (2d Cir. 1993).
Accordingly, we conclude that it was not clearly erro-
neous for the trial court to find that the plaintiffs had
waived the minimum annual purchase requirement for
three consecutive years prior to the sixth contract year.
We also note that the plaintiffs conceded at trial that,
for all three years of the predecessor 1997 agreement,
the defendant failed to satisfy its minimum purchase
requirements and the plaintiffs opted to continue doing
business with the defendant and to forbear from issuing
any shortfall invoice. There was evidence in the record,
then, to support a finding that the plaintiffs waived the
defendant’s minimum annual purchase requirement in
six of the eight years leading up to the sixth year of
the 2000 agreement.
We now turn to the central question presented by
this appeal, namely, whether, in light of the parties’
course of performance under the 2000 agreement and
their course of dealing under the previous 1997
agreement, it was clearly erroneous for the trial court to
find that the plaintiffs’ conduct gave rise to a continuing
waiver that extended into the sixth year of the 2000
agreement. We begin by emphasizing that the plaintiffs
bear a heavy burden in seeking to establish that the
trial court’s finding of continuing waiver was clearly
erroneous. We also emphasize that the relevant ques-
tion is not whether the plaintiffs subjectively intended
to waive their rights in the sixth contract year, but,
rather, whether a reasonable person in the position of
the defendant would have interpreted the plaintiffs’
course of conduct, in that year or previous years, to
mean that the plaintiffs would not require strict compli-
ance in the sixth year. See 2A L. Lawrence, supra, § 2-
209:98, p. 74. Accordingly, the plaintiffs’ argument that
there is no evidence that they actually intended to waive
the contractual requirements past the fifth year is
unavailing.
In reviewing the trial court’s findings, the Appellate
Court recognized that the trial court had found that the
parties’ course of performance gave rise to a ‘‘perma-
nent waiver’’ of the plaintiffs’ right to enforce the mini-
mum purchase requirement. RBC Nice Bearings, Inc. v.
SKF USA, Inc., supra, 146 Conn. App. 306. The Appellate
Court did not appear to find fault with that finding.8
Nevertheless, the Appellate Court proceeded to con-
sider whether there was sufficient evidence to find that
the plaintiffs waived their contractual rights in the sixth
contract year. Id., 306–307. In that regard the Appellate
Court went astray. Once a continuing waiver is estab-
lished, the obligee need not repeatedly indicate anew
its intent to waive its rights. Rather, the waiver persists,
and the onus falls on the obligee to demonstrate that
it retracted its waiver as to the executory portion of
the contract. Accordingly, the Appellate Court should
have inquired not into whether there was fresh evidence
of waiver in the sixth contract year but, rather, whether
there was evidence sufficient to support the trial court’s
finding of continuing waiver and, if so, whether the
plaintiffs executed an effective retraction of that waiver
prior to the sixth year.
As we have discussed, there was evidence sufficient
to support a finding of waiver in six of the previous
eight years of the parties’ business relationship and,
indeed, the plaintiffs have essentially conceded that
they waived their rights as to five of those six years.
Although the parties have not brought to our attention
any Connecticut cases on point, and our own indepen-
dent review has revealed none, courts in other jurisdic-
tions regularly have found—or upheld findings of—
continuing waiver of contractual rights where an obli-
gee has acquiesced in between two and six instances of
noncompliant performance. See, e.g., Getty Terminals
Corp. v. Coastal Oil New England, Inc., supra, 995 F.2d
375 (failure to bill for taxes and licensing fees for four
years gave rise to continuing waiver requiring retrac-
tion); Apex Pool Equipment Corp. v. Lee, supra, 419
F.2d 559–64 (retraction of waiver was required where
seller allowed buyer to purchase less than contractual
minimum in first year of contract and for first several
months of second year); Ada Liss Group (2003) Ltd.
v. Sara Lee Corp., Docket No. 1:06CV610 (NCT), 2014
WL 4370660, *8 (M.D.N.C. August 28, 2014) (seller’s
acquiescence in distributor’s failure to provide annual
and quarterly reports for several years resulted in
waiver requiring retraction); Gillani Consulting, Inc.
v. Daewoo Heavy Industries America Corp., Docket
No. C05-0823-JCC, 2006 WL 3545467, *11 (W.D. Wn.
December 7, 2006) (waiver of transfer fees in 1997 and
2000 estopped software licensor from collecting fees
for 2001 transfer), aff’d, 300 Fed. Appx. 466 (9th Cir.
2008); Burger King Corp. v. Family Dining, Inc., 426
F. Supp. 485, 493 (E.D. Pa.) (where franchisor allowed
franchisee to retain franchise after failing to meet con-
tractual deadlines in contract years four and five,
franchisor could not enforce deadlines strictly in years
nine and ten without prior notice), aff’d, 566 F.2d 1168
(3d Cir. 1977); In re Humboldt Fir, Inc., 426 F. Supp.
292, 297–98 (N.D. Cal. 1977) (granting of two one year
extensions resulted in waiver requiring retraction
before contractual deadline could be reinstated), aff’d
sub nom. United States v. Humboldt Fir, Inc., 625 F.2d
330 (9th Cir. 1980); Duncan v. Malcomb, 234 Ark. 146,
148–49, 351 S.W.2d 419 (1961) (lessor’s acceptance of
two of lessee’s late annual rental payments held suffi-
cient to establish continuing course of conduct); Bio-
Tech Pharmacal, Inc. v. International Business Con-
nections, LLC, 86 Ark. App. 220, 228–29, 184 S.W.3d
447 (2004) (affirming finding of waiver where buyer
received and paid for several noncompliant orders with-
out protest or complaint); John B. Robeson Associates,
Inc. v. Gardens of Faith, Inc., 226 Md. 215, 222–23, 172
A.2d 529 (1961) (by accepting sales below minimum
requirement for two consecutive quarters, cemetery
owner relinquished its right to terminate contract
because of such defaults); Farmers Elevator Co. of
Reserve v. Anderson, 170 Mont. 175, 180, 552 P.2d 63
(1976) (acceptance of multiple noncompliant deliveries
over two month period established continuing course
of conduct); Southwest Industrial Import & Export,
Inc. v. Borneo Sumatra Trading Co., 666 S.W.2d 625,
629 (Tex. App. 1984) (buyer waived contractual rights
by accepting three deliveries of wire at price above
contracted rate); see also annot., 31 A.L.R. 2d 377, § 16
(1953) (acceptance of several late instalment payments,
consistent with settled course of dealing, precludes
summary termination for subsequent defaults without
prior notice).
The parties’ undisputed course of performance and
course of dealing, then, adequately support the trial
court’s finding of continuing waiver. In light of the fact
that the plaintiffs previously had accommodated the
defendant’s deficient performance each time the defen-
dant was unable to satisfy its contractual requirements,
a course of conduct that spanned six of the eight years
during which the parties did business together, it was
not unreasonable for the trial court to credit testimony
by the defendant’s employees that the plaintiffs had
led the defendant to believe that it could continue to
purchase based on the realities of the marketplace.
Trial testimony from executives of both parties sup-
ports the trial court’s finding in this regard. The defen-
dant’s vice president of logistics, Bonita J. Thomerson,
testified that the plaintiffs’ executive vice president,
Michael S. Gostomski, told her late in the fourth con-
tract year that ‘‘he thought that $5 million would be
something that we could even look at continuing to do
forward, that that was a reasonable volume to con-
sider.’’ By the sixth year, she indicated, the defendant
was ‘‘operating under the premise that we had
agreements on what our purchases would be, and they
had agreed with them . . . .’’ The trial court expressly
credited Thomerson’s testimony. Indeed, Gostomski
himself acknowledged that, after the second contract
year, ‘‘I negotiated—I’ll use the word ‘discussed,’ and
went through various things with [employees of the
defendant], but we would always go back and forth and
come to a number that we would both agree upon.’’
In addition, it is noteworthy that the trial court also
found that the parties, through their course of perfor-
mance, attempted to modify the 2000 agreement so as
to replace the minimum purchase requirement with a
purchase requirement to be negotiated annually based
on prevailing market conditions and the defendant’s
reasonably foreseeable business needs. The Appellate
Court properly rejected this finding, concluding, as a
matter of law, that any modification of the 2000
agreement by the parties’ course of performance was
barred by the contractual provision requiring that modi-
fications be in writing. RBC Nice Bearings, Inc. v. SKF
USA, Inc., supra, 146 Conn. App. 300–301. Nevertheless,
the trial court’s finding that both parties intended per-
manently to modify their agreement is not without rele-
vance. If, as the trial court found, the plaintiffs intended
to permanently eliminate the minimum annual purchase
requirement, then, it follows, they necessarily intended
to waive that requirement on a continuing basis, and
not simply for individual contract years. See Wisconsin
Knife Works v. National Metal Crafters, 781 F.2d 1280,
1293–94 (7th Cir. 1986) (Easterbrook, J., dissenting);
see also 2A L. Lawrence, supra, §§ 2-209:51 and 2-
209:124, pp. 52, 83–84 (waiver can be established by
lower demonstration of assent than required to prove
modification).9
We also agree with the defendant that the Appellate
Court improperly substituted its own judgment for that
of the trial court when it concluded that the plaintiffs
could not have waived their contractual rights as to
the sixth year. The Appellate Court, in reaching that
conclusion, alluded to ‘‘evidence . . . that the defen-
dant was not operating under the impression that the
plaintiffs had relinquished their contractual rights.’’
RBC Nice Bearings, Inc. v. SKF USA, Inc., supra, 146
Conn. App. 307. We assume that the Appellate Court’s
reference is to: (1) internal e-mails sent by officers of
the defendant during the sixth year reminding their
sales and marketing personnel of the $7.1 million mini-
mum sales requirement and urging those personnel to
promote Nice products so as to meet the contractual
requirement; (2) testimony by the plaintiffs, as well as
an e-mail from an officer of the defendant, both indicat-
ing that, late in the sixth contract year, the parties
discussed the possibility of converting the agreement
to a requirements contract; and (3) evidence that the
plaintiffs continued to remind the defendant of its con-
tractual obligations during the sixth year. The plaintiffs
contend that the defendant’s employees would not have
prodded their sales team to meet the minimum sales
requirement, nor would they have sought to modify or
eliminate that requirement, if they believed that the
plaintiffs already had permanently waived it, and, in
any event, they could not reasonably have reached that
conclusion in light of the plaintiffs’ frequent suggestions
to the contrary.
None of the evidence upon which the Appellate Court
relied, however, is incompatible with a finding of
waiver. First, with respect to the defendant’s internal
e-mails to its sales staff, the defendant contends that,
even though it believed heading into the sixth contract
year that the plaintiffs would continue to accept pur-
chases below the contractual minimum, its executives
sought in good faith to maximize those purchases, in
part by continuing to encourage its sales staff to try to
meet the original contract targets. There was testimony
at trial in support of this interpretation of the e-mails,
and the trial court was free to credit that testimony.
Second, with respect to the parties’ conversations
regarding a potential transition to a requirements con-
tract, we fail to understand how such conversations
are incompatible with a finding that the plaintiffs had
waived the minimum purchase requirement on a contin-
uing basis. The defendant’s view of the parties’ relation-
ship, which the trial court credited, is that, rather than
insisting that the defendant purchase the contractual
minimum, the plaintiffs opened negotiations each year
by pressing for that minimum sales figure but ultimately
‘‘back[ed] off’’ to a sales level that the defendant thought
the market reasonably could bear. Nevertheless, the
plaintiffs continued to press the defendant throughout
each year to purchase as many Nice products as possi-
ble and, at the very least, to meet its negotiated purchase
commitment. Under a traditional requirements con-
tract, by contrast, there would be no need for a conten-
tious annual negotiation process, nor would the
defendant have been under constant pressure to attain a
certain sales target. Rather, the defendant simply would
have committed to obtaining any industrial bearings
similar in design to Nice bearings that it required from
the plaintiffs, rather than from other vendors. See
Black’s Law Dictionary (9th Ed. 2009) (defining
‘‘requirements contract’’ as one in which ‘‘a buyer prom-
ises to buy and a seller to supply all the goods or services
that a buyer needs during a specified period’’ and noting
that such contract ‘‘assures the buyer of a source for
the period of the contract’’). Accordingly, we perceive
no contradiction in the defendant concluding that the
minimum purchase requirement established by the 2000
agreement had been waived in favor of an annual negoti-
ation process, and that the relationship between the
parties might be made more harmonious—and the pos-
sibility of litigation reduced—if they were to enter into
a formal requirements contract.
Third, with respect to the Appellate Court’s conclu-
sion that the plaintiffs could not have waived their rights
because they ‘‘repeatedly attempted to secure the defen-
dant’s compliance with the minimum purchase require-
ment during the sixth year’’; RBC Nice Bearings, Inc.
v. SKF USA, Inc., supra, 146 Conn. App. 311; this was
an incorrect statement of the law. In concluding that
the plaintiffs did not waive the minimum purchase
requirement as to the contract year ending February 28,
2006, the Appellate Court emphasized that the plaintiffs:
(1) sent the defendant an invoice for the unpaid shortfall
from the fifth contract year; id., 308–309; (2) constantly
communicated with the defendant regarding the $7.1
million minimum purchase requirement for the sixth
contract year; id., 309; and (3) expressed ‘‘that they
were very concerned’’; id., 311; about the ‘‘ ‘critical’ ’’
issue of the contractual shortfall. Id., 310–11.
However, the fact that an obligee repeatedly reminds
an obligor of its contractual duties,10 or complains of
the obligor’s noncompliance,11 does not preclude a find-
ing of waiver, when the obligee nevertheless continues
to acquiesce in the obligor’s noncompliance and to per-
form under the contract. The rule applies with particu-
lar force in the present case, where there was evidence
that the plaintiffs gave the defendant intentionally
mixed signals with regard to its minimum purchase
requirement, and where the trial court found that the
plaintiffs always had intended to terminate the contract
prematurely and merely used the shortfall invoices as
a pretext to do so when they decided that the time
was right.
We next consider the plaintiffs’ argument, which the
Appellate Court embraced, that the law should hesitate
to find a continuing waiver in a situation such as this
where one party to a contract makes a good faith effort
to accommodate its partner’s initially unsuccessful
attempts to comply with its contractual obligations,
rather than ‘‘suing at the first sign of breach.’’ To hold
otherwise, the plaintiffs contend, would promote
unnecessary litigation at the expense of cooperation,
and would deprive buyers such as the present defendant
of the benefits of lenience during difficult market condi-
tions. We are not persuaded.
We begin by noting that the narrative according to
which the plaintiffs characterize their business relation-
ship with the defendant—one in which they patiently
tried to help the defendant satisfy its contractual obliga-
tions until they finally, reluctantly concluded that the
recalcitrant defendant never would hold up its side of
the bargain—was rejected by the trial court. The trial
court found, instead, that both parties recognized
throughout their relationship that, in light of market
realities, it was in their mutual best interest to align their
sales goals with the defendant’s reasonably foreseeable
business needs, and not to build up excess inventory
that the defendant would be unable to sell and that the
plaintiffs ultimately would have to repurchase under
the terms of the 2000 agreement.12 There was substantial
evidence that this understanding changed only after the
plaintiffs determined that it would be more profitable
for them to cultivate their own direct sales force, cut
out the middleman, and terminate the agreement.
Even if the equities favored the plaintiffs, however,
the outcome would be no different. We agree with the
plaintiffs that, in situations where one party to an
agreement finds itself temporarily unable to satisfy its
contractual obligations, but both parties desire to main-
tain the contract, there must be a mechanism by which
the obligee can accommodate the obligor’s nonperform-
ance—perhaps even repeatedly—without permanently
waiving its contractual rights. The plaintiffs’ solution
is, apparently, to require that the defendant prove by
clear and convincing evidence that the plaintiffs
intended to continue waiving the minimum purchase
requirement past the fifth contract year.13 Under this
standard, even when an obligee’s repeated waiver of a
contractual duty creates in the obligor a reasonable
belief that the obligee no longer intends to insist on
compliance therewith, the obligor could not rely on
that belief in the future, but would have to continually
ascertain whether it remained true.
There are two problems with such a rule. First,
although the plaintiffs may be correct that, under the
UCC, clear and convincing evidence is required to estab-
lish a binding oral modification of a written contract;
see 2A L. Lawrence, supra, § 2-209:9, p. 36; it would not
be appropriate to impose that heightened standard of
proof for a waiver. As we have explained, a waiver is
a unilateral decision by an obligee not to insist on strict
compliance with a contractual condition, and its exis-
tence and scope are, therefore, defined by the apparent
intent of the obligee. When it is not completely clear
whether an obligee who repeatedly has waived its con-
tractual rights intends to continue waiving those rights,
it would be unreasonable to place the onus of properly
interpreting the obligee’s ambiguous behavior on the
obligor. In the present case, for example, the plaintiffs
repeatedly reminded the defendant of its contractual
obligations and expressed concern over its deficient
performance, but nevertheless continued to do business
with the defendant and to acknowledge that its deficient
performance had satisfied the contractual require-
ments. Under such circumstances, if the law were to
require that the obligor be absolutely convinced before
it could rely on the obligee’s continued forbearance,
then the benefits of accommodation touted by the plain-
tiffs would largely disappear.
Second, and relatedly, the rule urged by the plaintiffs
would permit an unscrupulous obligee to ride the fence,
tolerating noncompliance so long as that suits the obli-
gee’s interests but leaving it free to exercise its contrac-
tual remedies, without advance notice, whenever it sees
fit. In fact, there is evidence in the record, and the trial
court appears to have found, that that is precisely what
the plaintiffs did in the present case. In July, 2005, for
example, Hartnett, the plaintiffs’ president and chief
executive officer, instructed his director of business
development to ‘‘[p]lay nice’’ by continuing to conduct
business under the contract for the remainder of the
sixth year, and to sell at a rate that did not result in
the buildup of excess inventory, while at the same time
putting the defendant on notice of its delinquency and
reserving the plaintiffs’ claim. These intentionally
mixed messages left the plaintiffs’ own employees con-
fused as to the plaintiffs’ policy with respect to enforce-
ment of its contractual rights. One expressed that ‘‘we
are getting conflicting signals from the top,’’ while
another requested ‘‘clearer direction on the tone’’ to be
taken in communications with the defendant. If the
plaintiffs’ own officers, who were privy to its secret
plans to take their distribution business direct, were
unsure whether the plaintiffs intended to waive the
minimum purchase requirement for the sixth year, it
is unreasonable to expect the defendant, who had no
knowledge of those plans, to discern when exactly the
plaintiffs intended to change course and begin strictly
enforcing their rights.
How, then, is an obligee to communicate, and its
obligor to understand, that the obligee’s previous will-
ingness to waive a contractual requirement should not
be construed as a continuing waiver? For agreements
governed by the UCC, General Statutes § 42a-1-308 (a)
provides clear guidance: ‘‘A party that, with explicit
reservation of rights, performs or promises perfor-
mance or assents to performance in a manner
demanded or offered by the other party does not
thereby prejudice the rights reserved. Such words as
‘without prejudice’, ‘under protest’ or the like are suffi-
cient.’’ (Emphasis added.) ‘‘The making of a valid reser-
vation of rights preserves whatever rights the person
then possesses and prevents the loss of those rights by
application of the concepts of waiver . . . . [Specifi-
cally, the] right to cancel is not lost by the acceptance
of performance when the aggrieved party has made a
reservation of rights.’’ 1A L. Lawrence, Anderson on
the Uniform Commercial Code (3d 2004) § 1-308:14R,
pp. 1174–75. A reservation of rights pursuant to § 1-
308R of the UCC must be ‘‘ ‘so clearly stated or distinc-
tively set forth that there is no doubt as to its meaning.’ ’’
Id., § 1-308:10R, p. 1173. ‘‘In the absence of [such] an
express reservation, a party may be found to have
waived his or her right to object . . . if that party per-
forms or accepts the performance of the other con-
tracting party.’’ Id., § 1-308:3R, pp. 1170–71; see also id.,
§ 1-308:17R, p. 1175 (failure to reserve rights may bar
assertion of waived right at later date). Moreover,
‘‘[w]hen there is a series of performances by the [obli-
gor], each performance of which involves a breach, the
[obligee] making the reservation of rights should repeat
the reservation for each performance rather than run
the risk of being deemed to have waived his or her right
by subsequently accepting a defective performance or
performing without objection.’’ Id., § 1-308:12R, p. 1174.
The drafters of the UCC, then, made a reasonable deter-
mination that the obligee, whose choice it is to enforce
or waive its contractual rights, should bear the risk of
any ambiguity arising from its failure to clearly
announce whether its decision repeatedly to waive
those rights is to be construed as a continuing waiver.
In the present case, if the plaintiffs, when waiving the
minimum purchase requirement as to the third through
fifth contract years, wished to reserve their rights as
to those or subsequent contract years, they had only to
inform the defendant thereof. See, e.g., Olean v. Treglia,
190 Conn. 756, 772–73, 463 A.2d 242 (1983) (plaintiff
declined to exercise option to accelerate indebtedness
at time of sale but expressly reserved right as to future
disposition of property); see also County Fire Door
Corp. v. C. F. Wooding Co., 202 Conn. 277, 289, 520
A.2d 1028 (1987) (noting that ‘‘article 2 [of the UCC;
General Statutes § 42a-2-101 et seq.] urges the con-
tracting parties to engage in a continuing dialogue about
what will constitute acceptable performance of their
sales contract’’ and provides ‘‘a statutory methodology
for the effective communication of objections’’). This
they failed to do. Despite Hartnett’s internal instruction
to ‘‘reserve our claim,’’ there is no evidence that the
plaintiffs’ employees ever communicated to the defen-
dant a clear and unambiguous reservation of rights pur-
suant to § 42a-1-308. Accordingly, we conclude that the
trial court’s finding that the plaintiffs’ previous waiver
of the minimum purchase requirement extended into
the sixth year and the executory portion of the 2000
agreement was not clearly erroneous.
The judgment of the Appellate Court is reversed with
respect to the plaintiffs’ breach of contract claims, and
the case is remanded to that court with direction to
render judgment affirming the judgment of the trial
court in favor of the defendant on the plaintiffs’ breach
of contract claims and to remand the case to the trial
court for further proceedings on the defendant’s coun-
terclaim.
In this opinion the other justices concurred.
1
Although the parties briefed the issue of retraction before the trial court,
that court did not address the issue in its memorandum of decision. More-
over, the Appellate Court, which concluded that there was no continuing
waiver, had no cause to and did not directly address the question whether
the plaintiffs executed a legally effective retraction of their waiver. On
certification to this court, the plaintiffs—the only party that could benefit
from a finding of retraction—concede that the issue of retraction is not
properly before the court. Accordingly, we decline to address the issue.
2
The Appellate Court also held that the trial court improperly determined
that the defendant was not entitled to damages on its counterclaim. RBC
Nice Bearings, Inc. v. SKF USA, Inc., supra, 146 Conn. App. 311, 314. That
issue is not before us in this certified appeal.
3
The ninth and final year of the agreement was an exception, as it was
to have ended December 31, 2008, rather than February 28, 2009. For the
purpose of clarity in this opinion, we refer to the contract years not by the
calendar year span (e.g., 2000–2001) but, instead, by the annual term of the
contract. For example, the first contract year ran from March 1, 2000 through
February 28, 2001, and the second contract year ran from March 1, 2001
through February 28, 2002.
4
The plaintiffs also alleged breach of the covenant of good faith and fair
dealing, unjust enrichment, trade secret violations, violation of the Connecti-
cut Unfair Trade Practices Act, General Statutes § 42-110a et seq., violation
of the Connecticut Unfair Sales Practices Act, General Statutes § 42-115e
et seq., tortious interference with business relations, and usurpation of
corporate opportunity.
5
The defendant does not challenge those conclusions on appeal.
6
The UCC defines a ‘‘ ‘course of performance’ ’’ as ‘‘a sequence of conduct
between the parties to a particular transaction that exists if: (1) [t]he
agreement of the parties with respect to the transaction involves repeated
occasions for performance by a party; and (2) [t]he other party, with knowl-
edge of the nature of the performance and opportunity for objection to it,
accepts the performance or acquiesces in it without objection.’’ General
Statutes § 42a-1-303 (a). The UCC distinguishes between a course of perfor-
mance, which relates to the parties’ conduct under the contract at issue,
and a course of dealing, which relates to the conduct of the parties during
transactions that occurred prior to the agreement. See General Statutes
§ 42a-1-303 (b); Conn. Gen. Stat. Ann. (West 2009) § 42a-1-303, comment
(2), p. 63.
7
To the extent that the Appellate Court determined that the plaintiffs could
not have waived their rights during this period because they continually
‘‘insist[ed] that the defendant should be purchasing at the minimum purchase
requirement level’’; RBC Nice Bearings, Inc. v. SKF USA, Inc., supra, 146
Conn. App. 306; that determination was incorrect. Although the plaintiffs
at times urged the defendant to purchase the contractual minimum, by
accepting or acquiescing in the defendant’s noncompliant performance and
continuing to perform under the agreement, the plaintiffs failed to insist
on compliance in the legally relevant sense. See MSO, LLC v. DeSimone,
313 Conn. 54, 64, 94 A.3d 1189 (2014).
8
We address hereinafter the Appellate Court’s concern that an obligee’s
attempt to encourage a breaching party to adhere to its contractual obliga-
tions ought not be construed as a waiver. See RBC Nice Bearings, Inc. v.
SKF USA, Inc., supra, 146 Conn. App. 307.
9
The Appellate Court also recognized that, under the UCC, ‘‘[a]lthough
course of performance evidence that parties to a contract attempted to
modify their contract may fail for lack of a signed writing in the face of a
written modification clause, such evidence can operate as a waiver.’’ (Inter-
nal quotation marks omitted.) RBC Nice Bearings, Inc. v. SKF USA, Inc.,
supra, 146 Conn. App. 305; see General Statutes § 42a-2-209 (4) (‘‘[a]lthough
an attempt at modification or rescission does not satisfy the requirements
of [a signed writing] it can operate as a waiver’’ [emphasis added]). Because
the trial court made an independent finding that the plaintiffs waived the
defendant’s compliance with the minimum annual purchase requirement,
the Appellate Court did not have to resolve a question of first impression
in Connecticut, over which legal scholars and our sister courts have divided,
namely, whether an attempted oral modification barred by a no oral modifica-
tions clause automatically functions as a waiver, or does so only under
certain circumstances. Compare Wisconsin Knife Works v. National Metal
Crafters, supra, 781 F.2d 1287 (Posner, J.) (concluding that ‘‘an attempted
modification is effective as a waiver only if there is reliance’’), with id.,
1290–94 (Easterbrook, J., dissenting) (concluding that detrimental reliance is
not required for failed modification to function as waiver); see also Dynamic
Machine Works, Inc. v. Machine & Electrical Consultants, Inc., supra, 352
F. Supp. 2d 88 (‘‘Section 2-209 of the UCC has been the cause of much
confusion and unpredictability amongst courts and has led to a wealth of
academic analysis. Specifically, judges and scholars alike have had difficulty
in reconciling the five subsections of [§] 2-209 to avoid superfluous and
inconsistent interpretations.’’). For the same reasons, we need not resolve
that question here.
10
See, e.g., Lopez v. Bell, 207 Cal. App. 2d 394, 399, 24 Cal. Rptr. 626 (1962)
(‘‘[T]he mere request for [performance] does not meet the requirement [of]
. . . the giving of written notice [after acceptance of performance] that
strict performance of the contract’s covenants will be necessary in the
future. To be reasonably definite, the notice should recite in substance that
unless [performance is accomplished], far enough in the future to give the
[obligor] reasonable time and opportunity to comply with his [contractual
obligations], the contract will be terminated and forfeiture will take place.’’
[Internal quotation marks omitted.]); Battista v. Savings Bank of Baltimore,
67 Md. App. 257, 271, 507 A.2d 203 (1986) (upholding finding of ongoing
waiver when bank repeatedly sent debtor ‘‘ ‘ten-day letter’ ’’ warning of need
for strict compliance, but failed to repossess car).
11
See Remington Arms Union Metallic Cartridge Co. v. Gaynor Mfg. Co.,
supra, 98 Conn. 732 (‘‘[i]t is of no consequence that the [obligee] protested
against the shortage and delay in deliveries’’); see also BMC Industries,
Inc. v. Barth Industries, Inc., 160 F.3d 1322, 1335 (11th Cir. 1998) (finding
waiver as matter of law when obligee’s executives frequently expressed
concern and disappointment with performance of obligor and implored
obligor to exert every effort to ensure speedy completion of project, but
never declared obligor in default or terminated contract), cert. denied, 526
U.S. 1132, 119 S. Ct. 1807, 143 L. Ed. 2d 1010 (1999); Southwest Industrial
Import & Export, Inc. v. Borneo Sumatra Trading Co., supra, 666 S.W.2d
628–29 (finding waiver, as matter of law, where buyer informed seller that
‘‘ ‘I think this is unreal, unjust,’ ’’ but continued to accept nonconforming
deliveries); 2A L. Lawrence, supra, § 2-209:99, p. 75 (waiver properly found
where buyer asserted that manufacturer’s near doubling of price charged
was unreasonable but agreed to new price); but see 2 Restatement (Second),
supra, § 247, reporter’s note comment (a), p. 268 (raising but not resolving
question whether obligor is justified in assuming that performance is waived
when obligee accepts but consistently complains of nonperformance).
12
We also see no evidence in the record to support the Appellate Court’s
apparent assumption that the plaintiffs continued their relationship with
the defendant ‘‘ ‘only on the assurance of better future performance . . . .’ ’’
RBC Nice Bearings, Inc. v. SKF USA, Inc., supra, 146 Conn. App. 307. On
the contrary, the plaintiffs themselves have complained that the defendant
took a ‘‘ ‘take it or leave it’ ’’ approach with respect to its contractual pur-
chase obligations.
13
We do not read the authorities cited by the plaintiffs to support this rule.