## Facts

- Ajax Tool Works, Inc., an Illinois tool manufacturer, purchased a fluidized bed furnace from Can-Eng Manufacturing Ltd., an Ontario furnace manufacturer.
- After several unaccepted proposals in 1996, Can-Eng sent Ajax a proposal dated January 27, 1997, offering the furnace for $90,000; Ajax’s pleadings alleged the parties contracted after issuance of that proposal and that its terms formed the contract.
- The contract included express performance warranties and a limited repair warranty obligating Can-Eng to repair defects for 90 days after delivery.
- After installation, Ajax reported recurring operational and performance problems and claimed the furnace did not meet the promised performance standards, causing production disruption and economic loss.
- Although the 90-day period had expired, Can-Eng repeatedly attempted to correct the problems at no cost to Ajax over several years, but Ajax remained dissatisfied and sued for breach of express and implied warranties and related contract claims.
- The transaction was treated as an international sale between parties in different Contracting States; the court applied the CISG, with Ontario law informing issues not resolved by the CISG.
- Can-Eng moved for summary judgment; in a prior ruling, the court precluded Ajax from recovering consequential damages.

## Issues

1. Whether Ajax could avoid the January 27, 1997 proposal’s terms by arguing the contract formed earlier and that it never accepted or executed the disputed warranty limitations.
2. Whether genuine disputes of material fact existed under the CISG and applicable domestic law as to whether the furnace conformed to the contract and whether Can-Eng breached express and implied warranties.
3. Whether contractual warranty limitations restricted Ajax’s remedies to repair/replacement and, in any event, whether Ajax could recover consequential damages.

## Decision

- The court granted in part and denied in part Can-Eng’s summary judgment motion.
- The court held Ajax was bound by its judicial admissions in its pleadings that the contract followed the January 27, 1997 proposal and that the proposal’s terms formed the contract; Ajax could not contradict that position at summary judgment to escape disputed terms.
- The court denied summary judgment on core nonconformity and breach-of-warranty theories because evidence of repeated performance failures and the parties’ repair history created triable factual disputes.
- Consistent with the prior ruling, the court granted relief for Can-Eng to the extent Ajax sought consequential damages, limiting Ajax to non-consequential recovery if it proved breach.

## Legal Principles

- A party may be bound at summary judgment by judicial admissions in its pleadings and may not contradict unequivocal pleaded facts to reframe contract formation or terms.
- Under the CISG, a seller must deliver goods conforming to the contract’s requirements, including any expressly warranted performance specifications.
- Summary judgment is improper where material facts are disputed regarding performance, conformity, and causation, particularly when resolution depends on technical evidence.
- Limitations of remedy (such as time-limited repair obligations) are distinct from limitations on damages; absent an effective damages exclusion, a buyer may still pursue direct damages for nonconformity where repair efforts fail.
- Where consequential damages have been barred, a buyer’s potential recovery is confined to direct, non-consequential losses even if breach is shown.

## Conclusion

The court enforced Ajax’s pleaded admission that the January 27, 1997 proposal supplied the contract terms, allowed Ajax’s CISG-based nonconformity and warranty claims to proceed due to genuine factual disputes about furnace performance, and restricted any recovery by precluding consequential damages.


Ajax Tool Works, Inc. v. Can-Eng Mfg. Ltd., 2003 WL 223187 (N.D. Ill. Jan. 29, 2003)