Bethlehem Steel Corp. v. Chicago Eastern Corp.

863 F.2d 508 (1988)

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Bethlehem Steel Corp. v. Chicago Eastern Corp.

United States Court of Appeals for the Seventh Circuit
863 F.2d 508 (1988)

Facts

Chicago Eastern Corp. (Chicago Eastern) (defendant) ordered steel from Bethlehem Steel Corp. (Bethlehem) (plaintiff). Chicago Eastern never paid the purchase price, and Bethlehem sued Chicago Eastern for breach of contract. Chicago Eastern counterclaimed for breach of the implied warranty of merchantability, arguing the steel it received was not fit for ordinary use. Bethlehem’s steel met the technical specifications found in the contract, but Chicago Eastern presented evidence that the steel had exceptionally high nitrogen content. Chicago Eastern presented expert testimony that the steel’s high nitrogen content made the steel brittle and subject to cracking. The expert concluded that the steel could not be used for wall sheets in grain-storage tanks. Based on this, Chicago Eastern argued the steel was not “fit for the ordinary purposes for which such goods are used,” which was the test for merchantability that applied to this dispute. The trial court found this was not enough to show Bethlehem had breached the implied warranty of merchantability and dismissed the claim. Chicago Eastern appealed.

Rule of Law

Issue

Holding and Reasoning (Flaum, J.)

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