## Facts

- Middletown Concrete Products, Inc. (MCP), formed by experienced contractors, built a precast concrete manufacturing plant in Middletown, Delaware.
- MCP contracted in 1989 with Hydrotile Machinery Company, a division of Black Clawson Co., to buy a concrete pipe manufacturing system exceeding $2 million in price, later adding equipment for elliptical pipe.
- MCP alleged Hydrotile made performance assurances (including production capability and “acceptable performance” benchmarks) and discussed a buy-back concept if the system failed to perform, though such terms were not included in the signed contracts.
- The written contracts were standardized forms containing integration clauses, limited warranties, a repair-or-replace limited remedy, and limits/exclusions on consequential damages.
- After installation, MCP asserted the system failed to achieve required production rates and quality and that defendants’ repair efforts did not cure the problems, allegedly depriving MCP of the value of the bargain.
- MCP sued for breach of contract and warranty and asserted business-related tort claims (including misrepresentation-type theories).
- Jurisdiction was based on diversity; Iowa law governed the contract/UCC issues and Delaware law governed the tort claims.

## Issues

1. Whether alleged pre-contract performance guarantees and a buy-back concept were enforceable despite contractual integration clauses and the parol evidence rule.
2. Whether post-contract writings and conduct (including an “Acceptable Performance” letter) could support UCC modification or waiver of the written terms.
3. Whether defendants breached express and/or implied warranties under the governing UCC standards and the contracts’ warranty limitations.
4. Whether the repair-or-replace limited remedy failed of its essential purpose under U.C.C. § 2-719.
5. Whether the consequential-damages limitation/exclusion was enforceable or unconscionable under Iowa law, including its relation (if any) to a failure of essential purpose.
6. Whether MCP’s tort claims were barred by Delaware’s economic loss doctrine or could proceed based on independent misrepresentations.

## Decision

- The court denied MCP’s motion for summary judgment on the contract and warranty counts.
- The court denied defendants’ motion for summary judgment on all counts.
- The court held that genuine disputes of material fact existed as to whether any additional performance terms became part of the parties’ agreement through post-contract modification or waiver.
- The court held that disputed facts also precluded summary judgment on breach of express warranty, the operation and adequacy of the limited remedy, and the enforceability of the consequential-damages limitation.
- The court declined to dismiss the tort claims on summary judgment where factual disputes remained over the nature of the representations and their relationship to the contract.

## Legal Principles

- An integrated written sales contract generally bars enforcement of prior or contemporaneous oral terms that contradict or supplement the writing under the parol evidence rule.
- Under the UCC, subsequent writings and course of performance may support modification or waiver of contract terms even when the original agreement contains a merger clause, depending on the evidence and required formalities.
- Express warranties arise from affirmations of fact or promises that become part of the basis of the bargain; distinguishing warranty from nonbinding sales talk is often fact-dependent.
- A contractual limitation of remedy to repair or replacement may be displaced if the limited remedy fails of its essential purpose under U.C.C. § 2-719, a determination that commonly turns on disputed facts about performance and cure efforts.
- Consequential-damages exclusions in commercial contracts are generally enforceable unless unconscionable; unconscionability commonly requires fact-intensive assessment of the commercial setting and the parties’ sophistication.
- In commercial disputes, tort recovery for purely economic loss is restricted; misrepresentation-based tort claims may proceed where the alleged misstatements are independent of the contractual duties and the record supports such a theory.

## Conclusion

The court denied both sides’ summary-judgment motions because material factual disputes remained regarding the contractual scope after alleged post-contract modification or waiver, the existence and breach of express warranties, whether the repair-or-replace remedy failed under U.C.C. § 2-719, the enforceability of consequential-damages limits, and whether any misrepresentation-based tort claims were independent of the contract under Delaware law.


Middletown Concrete Prods., Inc. v. Black Clawson Co., 802 F. Supp. 1135 (D. Del. 1992)