Eastern Sportswear Co. v. S. Augstein & Co.
141 Conn. 420 · Supreme Court of Connecticut · 1954
Facts
A dress manufacturer produced 692 defective dresses for a client, which had 'needle chews' making them unmarketable as regular merchandise. To protect its valuable brand and goodwill, the client sold the defective dresses at a reduced price to a discount retailer after removing labels, refusing the manufacturer's offer to buy them back.
Procedural history
The plaintiff initiated an action to recover a balance due from the defendants, and the trial court rendered judgment for the plaintiff on this complaint. The defendants counterclaimed, alleging losses from defective dresses manufactured by the plaintiff, and the trial court rendered judgment for the named defendant on the counterclaim for $2897.18. The plaintiff then appealed this judgment.
Issue
Did the client fail to reasonably mitigate damages or waive its claim by selling the defective dresses to a third party to protect its brand, rather than returning them to the manufacturer or allowing the manufacturer to sell them?
Holding
The court affirmed the judgment for the defendant on the counterclaim, holding that the defendant made a reasonable attempt to minimize damages and did not waive its claim for damages.
Rule
A party seeking to mitigate damages is not required to sacrifice its own substantial rights or adversely affect its business goodwill. Additionally, acceptance of goods for labor performed does not automatically waive defects, especially if waiver is not properly pleaded as a defense.
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