Delivery of one of several installments of defective goods not necessarily repudiation of entire contract

Cimmaster Inc. v. Piccione Manufacturing Technologies Company, 2011 ONCA 486 deals with one defective delivery of goods. The Court upheld the trial judge's conclusion that the defective delivery was a severable breach giving rise to a claim for compensation for the defective delivery and not a repudiation of the entire contract. The Court holds:

[11] The trial judge held that resolution of the appellant's counter-claim turned on s. 30(2) of the Sale of Goods Act, which provides as follows:

(2) Where there is a contract for the sale of goods to be delivered by stated instalments that are to be separately paid for and the seller makes defective deliveries in respect of one or more instalments or fails to deliver one or more instalments or the buyer neglects or refuses to take delivery of or pay for one or more instalments, it is a question in each case depending on the terms of the contract and the circumstances of the case whether the breach of contract is a repudiation of the whole contract or whether it is a severable breach giving rise to a claim for compensation but not to a right to treat the whole contract as repudiated. [Emphasis added.]

[12] The trial judge accepted that there had been a defective delivery in respect of the first instalment but there had not been repudiation of the whole contract by the respondent. In the result, what occurred was a severable breach entitling the appellant only to compensation for the problems with the first instalment but not loss of profit for the balance of the contract. The trial judge applied the test from Maple Flock Co. v. Universal Furniture Products (Wembley) Ltd., [1934] 1 K.B. 148 (C.A.) which had considered the identical United Kingdom legislation. The court in Maple Flock, at p. 156, characterized the issue as to whether the seller had delivered the earlier instalment in such circumstances as to lead to the inference that it "cannot or will not deliver any other kinds of goods in the future". The trial judge applied the approach outlined at p. 157 of Maple Flock:

With the help of these authorities we deduce that the main tests to be considered in applying the sub-section to the present case are, first, the ratio quantitatively which the breach bears to the contract as a whole, and secondly the degree of probability or improbability that such a breach will be repeated.

[13] The trial judge held that the defective delivery of the first instalment did not reasonably give rise to an inference that similar breaches would occur with respect to the other two instalments.