## Facts

- A Hungarian seller (Interag) sold and delivered sweaters to a U.S. buyer (Stafford) for resale in the United States.
- Stafford issued two checks covering about 70% of the purchase price, then stopped payment, alleging the sweaters were defective or nonconforming.
- Stafford resold at least part of the sweaters to third parties and asserted a counterclaim for substantial damages tied to losses on the resale.
- Stafford argued its damages should be measured under U.C.C. § 2-714(2) by the difference between the value of the goods as accepted and as warranted, and contended valuation could be shown by expert testimony rather than resale data.
- Interag sued to recover the contract price and sought discovery of Stafford’s resale documents and further examination of Stafford’s representative concerning the resale.
- Stafford resisted discovery, claiming resale information was irrelevant and disclosure would harm it competitively by exposing customer information; the court noted Stafford had previously shared its client list with Interag.

## Issues

1. Whether documents and testimony about the buyer’s resale of allegedly nonconforming goods (including resale price and terms) are discoverable when the buyer seeks damages measured by diminished value under U.C.C. § 2-714(2) and references CISG art. 50.
2. Whether the buyer may rely on expert valuation while withholding market evidence of value shown by actual resale transactions.
3. Whether asserted confidentiality/competitive harm justifies withholding otherwise relevant resale discovery.

## Decision

- The court granted Interag’s motion to compel.
- Stafford was ordered to produce documents relating to the resale of the sweaters.
- Interag was permitted to re-examine Stafford’s representative regarding the resale.
- The court rejected Stafford’s position that resale information was irrelevant and its confidentiality objection, given the pleadings and Stafford’s prior disclosure of its client list.

## Legal Principles

- Discovery is proper for information relevant to the claims and defenses framed by the pleadings, including damages theories tied to resale performance.
- When a buyer claims damages based on the value differential for accepted but nonconforming goods under U.C.C. § 2-714(2), evidence of actual resale price and terms is probative of the goods’ market value and is discoverable.
- A party may not shield objective market evidence (such as resale data) while proposing to prove the same valuation issue solely through expert opinion.
- In an international sale involving CISG Contracting States, the valuation concepts in CISG art. 50 (proportional price reduction based on value at delivery) may be treated as corresponding to the U.C.C.’s value-differential framework for purposes of assessing relevance in discovery.
- Generalized competitive-harm assertions do not bar discovery where the information is central to the asserted damages theory and confidentiality claims are weakened by prior disclosures.

## Conclusion

The court compelled production of resale documents and further testimony because Stafford’s resale transactions were directly relevant to its resale-based damages theory and to determining the value of the allegedly nonconforming sweaters under value-differential measures associated with U.C.C. § 2-714(2) and CISG art. 50, and confidentiality objections did not justify withholding the evidence.


Interag Co. Ltd. v. Stafford Phase Corp., No. 89 Civ. 4359 (CSH), 1990 WL 71478 (S.D.N.Y. May 22, 1990)