Legal-Ease: Perfect tender, when a Pepsi is a Coke


LEGAL-EASE

By Lee R. Schroeder - Guest Columnist



Lee R. Schroeder

Lee R. Schroeder


Summer holiday weekends almost always include food and drinks, including soft drinks. If we were celebrating in many parts of the country and wanted a soft drink, regardless of specific type, we would ask for a Coke. For those people, the brand name “Coke” includes all soft drinks, even if they are Mountain Dew, Dr Pepper or Pepsi.

Similarly, I am usually indifferent between Puffs facial tissues and Kleenex facial tissues. Nonetheless, I usually call them all Kleenexes. Likewise, when I was National Vice President of the FFA, I quickly learned that farmers in large parts of the United States tend to call all of the lawnmower-like weed chopping equipment attached to tractors “bush hogs,” which is the name of only one manufacturer of the several who make that type of equipment.

In the same sense, in the legal world, the use of a brand name can sometimes include non-brand name substitutes.

In 1921, New York’s top court clarified a law that has since been adopted through the rest of the country regarding one brand name being used to describe an entire line of products.

In the subject case, a contractor signed a certain construction contract to build a house. In the contract, the somewhat famous brand name (at the time) Reading was used to describe the pipe that should be placed in the house. However, during construction, the contractor accidentally installed another manufacturer’s pipe, pipe of the same quality as the brand-name Reading pipe.

In the case, the court introduced the principle that some contracts and agreements should be interpreted practically and not necessarily always literally. The judges decided that “trivial” or “innocent” deviations in fulfilling certain contracts will not always be considered breaches of those contracts. Otherwise stated, in contracts, there is not always a requirement that what is tendered (provided) must be “perfect”. The “perfect tender” rule is now applied across the country.

Notably, there is no general ability to disregard the terms of a contract, even if a substitute is better. To determine if a contract calls for “perfect tender,” courts look at the context. Does the mistake affect less than 1 percent of the total contract cost? If so, the mistake may be legally inconsequential. Or, is the contract literally only to provide Coca-Cola? In that instance, the substitution of Pepsi is likely a breach of the contract.

Courts also analyze whether the parties to the contract specifically agreed that the brand or type of product supplied cannot be substituted. In other words, if somebody says they want Coke and also says that the Coke cannot be any other brand of soft drink, the contract calls for perfect tender.

Blurry legal standards like the perfect tender rule can introduce uncertainty and necessarily invite longer and more detailed contracts. However, sometimes, the law tries to be right “practically” in addition to being right “literally.” Therefore, depending upon the context, sometimes a Pepsi can be a Coke as a matter of law.

Lee R. Schroeder
https://www.limaohio.com/wp-content/uploads/sites/54/2016/07/web1_Schroeder-Lee-RGB-1.jpgLee R. Schroeder
LEGAL-EASE

By Lee R. Schroeder

Guest Columnist

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-523-5523. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-523-5523. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.

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