RAJAT WIRES PRIVATE LIMITED v. AMERICAN STEEL INDUSTRIES, INC.
2:12-cv-01997
| E.D. Pa. | Oct 21, 2013Background
- Rajat Wires (Indian seller) shipped 141 metric tons of steel bars to American Steel Industries (ASI) pursuant to purchase orders in Sept, Nov, Dec 2010 totaling $198,618.00; ASI paid $45,000 and withheld the balance.
- Dispute: Rajat sued for unpaid purchase-price balance ($153,618.00); ASI counterclaimed that it was acting as Rajat’s agent and/or that the steel was nonconforming (damaged), seeking offsets and reimbursement for fees/storage (~$22,925).
- The parties agreed to a binding, non-appealable bench trial; Pennsylvania law and the UCC govern.
- Key factual disputes: whether the purchase orders constituted binding sales contracts, whether ASI was Rajat’s agent (or merely a buyer), whether ASI properly rejected nonconforming goods, and who bore post-arrival storage costs.
- Court credited testimony and documentary evidence showing ASI completed and sent purchase orders listing ASI as buyer, accepted and sold the goods without timely rejection or giving Rajat an opportunity to cure, and failed to remit proceeds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence/enforceability of contract | Purchase orders are binding sales contracts; ASI agreed to pay per terms | Purchase orders were sham/only for Indian export paperwork and not a binding sale | Purchase orders constituted enforceable contracts under the UCC; ASI was buyer and bound to pay |
| Agency relationship (was ASI Rajat’s agent?) | No agency; Rajat never agreed to an agency, no control relationship, transactions look like buyer-seller | ASI claims it had an agency arrangement (via prior dealings with third party Kalyani) and was to market on agency basis | No agency: no assent or evidence Rajat authorized ASI as agent; ASI acted as buyer (invoiced, received goods, sold to customers) |
| Nonconforming goods / rejection / right to setoff | Rajat: ASI accepted the goods and failed to timely notify/reject; thus cannot withhold price | ASI: goods were damaged/rusty/poorly packaged; ASI sold at discount to mitigate and withheld funds to cover alleged customer claims | ASI accepted goods and did not seasonably reject or give seller opportunity to cure; therefore ASI cannot recover for breach and must pay contract price balance |
| Damages, interest, storage fees | Rajat seeks unpaid price plus prejudgment interest | ASI seeks to offset for customer claims, storage, fees; contends some funds retained for alleged liabilities | Judgment for Rajat for $153,618 plus applicable prejudgment interest; ASI conceded at least $50k but breached by not remitting proceeds; storage costs not charged to Rajat (CIF shipment) and parties to compute interest or submit calculations if disputed |
Key Cases Cited
- Zeno v. Ford Motor Co., Inc., 480 F. Supp. 2d 825 (W.D. Pa. 2007) (defines basic elements of agency under Pennsylvania law)
- Vanalt Elec. Const. Inc. v. Selco Mfg. Corp., [citation="233 F. App'x 105"] (3d Cir. 2007) (buyer must comply with UCC notice requirements to recover for breach of accepted goods)
- Travelers Cas. & Sur. Co. v. Ins. Co. of N. Am., 609 F.3d 143 (3d Cir. 2010) (Pennsylvania law on prejudgment interest rate guidance)
- Scott v. Purcell, 415 A.2d 56 (Pa. 1980) (agency requires manifestation of principal, agent's acceptance, and principal's control)