## Facts

- Clark manufactured metal powder cans and covers and supplied them to Gold Bond for packaging pharmaceutical powder.
- On or about November 9, 1984, Gold Bond ordered 250,000 four-ounce cans/covers and 250,000 ten-ounce cans/covers for a total price of $172,523.09.
- Gold Bond received the containers and began using them to package and distribute its product; Clark invoiced the goods in February 1985.
- Gold Bond refused to pay, asserting the containers were defective.
- In an April 18, 1985 letter, Gold Bond identified alleged defects including jagged edges inhibiting proper attachment and improperly attached bottoms that allowed powder leakage.
- Gold Bond asserted that defects were not always detectable before filling, and that filled product was shipped to retailers and later returned, generating credits and shipping reimbursements.
- Clark sued to recover the contract price plus costs and attorneys’ fees; Gold Bond asserted affirmative defenses and counterclaims for breach of express and implied warranties and negligence, seeking consequential damages including lost profits and loss of goodwill.
- The court addressed Clark’s motion for partial summary judgment under Fed. R. Civ. P. 56 in a diversity action.

## Issues

1. Whether a seller is entitled to summary judgment for the contract price when the buyer received, used, and thus accepted goods but alleges defects and asserts warranty and negligence counterclaims.
2. Whether the buyer’s evidence of nonconformity and consequential damages created genuine disputes of material fact precluding judgment for the full price.
3. Under the UCC remedies scheme, whether the buyer’s proper remedy for accepted but allegedly defective goods is damages/setoff rather than total nonpayment of the price.

## Decision

- The court granted Clark’s motion for partial summary judgment in part and denied it in part.
- Because Gold Bond undisputedly received and used the containers, the court treated at least some of the goods as accepted, supporting Clark’s right to recover the price for accepted goods.
- The court declined to award Clark full recovery of the entire claimed amount at the summary-judgment stage because Gold Bond produced evidence of defects and consequential damages.
- Gold Bond’s breach-of-warranty and negligence theories, and the extent of any defects and damages, presented factual disputes requiring trial.

## Legal Principles

- Under UCC Article 2, a buyer that accepts goods must pay the contract rate for the goods accepted, even if the buyer later claims the goods were nonconforming.
- Alleged defects in accepted goods generally support a remedy in damages (including potential consequential damages), typically pursued through setoff or counterclaim, rather than permitting complete withholding of the contract price as a matter of law.
- Summary judgment is proper only when no genuine dispute of material fact exists; competent evidence of nonconformity and resulting damages can preserve warranty and negligence claims and prevent full summary disposition of the seller’s price claim.
- A seller may obtain partial summary judgment for the undisputed portion of the price when delivery/acceptance is not genuinely contested, while leaving defect and damages questions for trial.

## Conclusion

The court held that Gold Bond’s acceptance and use of the containers supported Clark’s right to recover at least part of the contract price, but Gold Bond’s supported allegations of defects and consequential damages created triable issues that barred summary judgment for the entire amount and preserved Gold Bond’s warranty and negligence claims.


J.L. Clark Mfg. Co. v. Gold Bond Pharm. Corp., 669 F. Supp. 40 (D.R.I. 1987)