## Facts

- Scott Co. of California purchased 26 tower fan air handling systems from M+W Zander, U.S. Operations, Inc. for a construction project in Eugene, Oregon.
- Scott issued a purchase order listing the goods, a delivery completion date of November 7, 1996, and a price of $1,073,502.
- Delivery was late and the goods were allegedly defective; the parties negotiated a price reduction to compensate Scott for additional costs.
- On April 24, 1997, Scott issued a supplemental purchase order reflecting a $162,378 discount and a reduced price.
- On June 26, 1997, M+W applied the discount to Scott’s account and billed Scott for the reduced amount of $911,124.
- Scott made partial payments on August 8 and September 29, 1997, leaving an unpaid balance of $300,000.
- On August 24, 2001, M+W sued for breach of contract and related theories to recover the unpaid balance.

## Issues

1. Whether Oregon or California law governs the contract and statute-of-limitations analysis.
2. Under the governing law, when M+W’s cause of action accrued for purposes of the four-year limitations period applicable to contracts for the sale of goods.
3. Whether Scott’s partial payments in 1997 tolled or restarted the limitations period.

## Decision

- The court affirmed summary judgment for Scott.
- California law governed the contract and limitations issues.
- M+W accepted Scott’s supplemental purchase order by performance when it applied the discount and invoiced the reduced amount on June 26, 1997.
- Under the payment terms, Scott’s payment became due 45 days after June 26, 1997 (August 10, 1997); the four-year limitations period expired on August 10, 2001.
- M+W’s suit filed on August 24, 2001 was time-barred.
- Scott’s partial payments did not toll or restart the limitations period under California law for a UCC sale of goods claim.

## Legal Principles

- In a multistate sales dispute, the forum may apply another state’s law, including UCC limitations rules, when that state has the most significant relationship to the transaction and parties.
- Under California’s UCC statute of limitations for sales, an action must be filed within four years of breach; for nonpayment, breach occurs when payment becomes due under the contract.
- Acceptance of an offer to modify a sales contract may occur by performance; conduct such as applying an agreed discount and issuing an invoice can constitute acceptance.
- Under California law in this UCC sales context, partial payments do not toll or restart the four-year limitations period.

## Conclusion

Because California law applied and M+W accepted the supplemental purchase order by applying the discount and invoicing on June 26, 1997, payment was due by August 10, 1997 and the four-year limitations period expired before M+W filed suit; partial payments did not revive the claim.


M+W Zander, U.S. Operations, Inc. v. Scott Co. of Cal., 190 Or. App. 268, 78 P.3d 118 (2003)