## Facts

- Dynamic Machine Works, Inc. (buyer), a Massachusetts precision-components manufacturer, contracted to buy a Johnford CNC lathe from Machine & Electrical Consultants, Inc. (seller), a Maine machinery distributor, for $355,000.
- The lathe was to be manufactured in Taiwan; the parties agreed to staged payments tied to delivery and acceptance.
- Before delivery, Dynamic rented a similar lathe from Machine and complained of performance problems, warning it would reject the new lathe if similar issues persisted.
- Delivery and commissioning were delayed due to production backlog and a SARS outbreak; the parties extended deadlines and agreed to a $500-per-day credit for further delay.
- The lathe was delivered October 9, 2003; Machine’s technicians worked during October and November to adjust and repair it to meet Dynamic’s requirements.
- On December 9, 2003, Dynamic sent a letter granting an extension to December 19, 2003 for the lathe to be “fully and unconditionally commissioned.”
- On December 11, 2003, Dynamic notified Machine it intended to retract the extension and reject the lathe entirely.

## Issues

1. Under Mass. Gen. Laws ch. 106, § 2-209(5), may a buyer retract a written extension giving the seller more time to cure defects in delivered goods when the seller has not relied on the extension?
2. How does the buyer’s ability to retract depend on whether the extension is characterized as a contract modification or a waiver of an executory term?

## Decision

- The Supreme Judicial Court answered the certified question with a conditional rule tied to characterization under UCC § 2-209.
- If the written extension is a contract modification, the buyer may not retract it unilaterally.
- If the written extension is a waiver of an executory portion of the contract, the buyer may retract it only by reasonable notification that strict performance will be required.
- Even for a waiver, retraction is barred if it would be unjust due to the seller’s material change of position in reliance on the waiver.
- The court did not decide whether the December 9 letter was a modification or a waiver; that determination was left to the federal court.

## Legal Principles

- UCC § 2-209 distinguishes between (a) contract modifications that alter contractual duties going forward and (b) waivers that relax enforcement of an executory term.
- A modification under UCC § 2-209(1) is binding without consideration and is not subject to unilateral “retraction” under § 2-209(5).
- A waiver affecting an executory portion of the contract is retractable under UCC § 2-209(5) only if:
  - the waiving party gives reasonable notice that strict performance will again be required; and
  - retraction would not be unjust because of the other party’s material reliance on the waiver.
- Lack of reliance by the nonwaiving party is relevant to retraction only if the extension is a waiver; it is not a basis to retract a binding modification.

## Conclusion

A buyer’s written extension granting the seller additional time to cure is nonretractable if it operates as a contract modification; if it operates as a waiver of an executory term, it may be retracted only by reasonable notice and only where retraction is not unjust due to the seller’s material reliance, with the modification-versus-waiver classification determined from the parties’ intent and the extension’s function.


Dynamic Mach. Works, Inc. v. Mach. & Elec. Consultants, Inc., 444 Mass. 768, 831 N.E.2d 875 (2005)