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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 41220
Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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If a manufacturer receives faulty parts, and severe damages

Customer Question

If a manufacturer receives faulty parts, and severe damages occured because of it, ie having to compensate customers for medical bills, loss of profit and injury to business reputation, what are the applicable areas of the law for a breach of contract lawsuit? Also, what laws would be used to resolve the issues? Would state or federal courts be used?
Submitted: 3 years ago.
Category: Legal
Expert:  Dimitry K., Esq. replied 3 years ago.

Thank you for your question. Please permit me to assist you with your concerns.

This would most fully fall under contract law. The first thing to keep in mind is that most of contract law is 'common law', that is, unwritten law. For commercial transactions the UCC governs, specifically Article 2. You can find the code at the link below:

http://www.law.cornell.edu/ucc

What else governs potentially is product liability against the other parties if the items received were defective. Most likely state courts would govern unless the cause of action is extremely large ($90,000 or more in damages), and the parties have 'complete diversity' from one another, meaning that they are located in separate states. Typically state courts are more favorable in this instance.

Good luck.

Customer: replied 3 years ago.

That didn't really answer my questions. What part of article 2 would this fall? How would I apply the law to resolve this issue, and because this lawsuit is potentially over 20 million, which courts would I apply to?

Expert:  Dimitry K., Esq. replied 3 years ago.
Susan,

Perhaps you could provide me with a bit more information as to what took place, where you feel the violation took place, and I can more specifically respond. As you initial question appeared to be fairly general, I provided you with general information. Please advise!
Customer: replied 3 years ago.

A manufacturer of computers acquires it's microchips from a corporation. Several of these computers have exploded; the corporation fixes the problems, which were their fault, but the manufacturer has had substantial loses from this...estimated to be around 20 million. I want to know what the applicable principles of the law are, including key facts, and how I would apply those laws, as well as which courts would handle this case...Federal or state?

Expert:  Dimitry K., Esq. replied 3 years ago.

Susan,

Let me work backward here. Either federal or state courts could hear the case. Both courts have 'concurrent' jurisdiction over this matter. State courts are more likely to hear it if there was a choice of law clause in the contractual terms between the parties, and if they choose to pursue this in state courts since those courts are not as complicated with rules, and tend to be more plaintiff friendly (higher potential awards).

The applicable principles of law here are based on the terms of the contract itself (which is not statutory), and also is based on breach of terms of the agreement, something that section 2-207 defines below:
http://www.law.cornell.edu/ucc/2/2-607

The key facts are based on who assumed the risk, which is again contractual, for whatever loss was obtained. That has to be reviewed from the agreement since that would spell out who is responsible for losses and who is not. For example if the corp did not claim liability for additional losses, then the other entity has to sue for foreseeable damages that were cause by the breach. But this is still a general response since without knowing your specific contract, and all of the underlying facts, I cannot in good conscience give you a proper theory of the case.

Good luck.

Expert:  Dimitry K., Esq. replied 3 years ago.
Susan,

I appreciate your 'poor' service rating. What specifically did I fail to respond to, or was it the fact that I stated to you that what governs here is very fact specific on your contract, and therefore hard to pick case law before knowing those facts was the issue with your lack of satisfaction? Please advise.

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