BV Nederlandse Industrie Van Eiprodukten v. Rembrandt Enterprises, Inc.

Rembrandt Enterprises, Inc. (Rembrandt) (defendant) supplied eggs to US buyers. During the avian-flu epidemic, Rembrandt had to destroy half its birds and needed an alternate supplier to fulfill its contracts. BV Nederlandse Industrie Van Eiprodukten (NIVE) (plaintiff) agreed to supply egg products at specific prices. While awaiting US regulatory approval of its procedures, NIVE told Rembrandt that it had to increase its prices by €2.50 per kilogram because of unanticipated extra regulatory expenses. When Rembrandt requested a breakdown, NIVE sent cost calculations showing an extra €2.59 per kilogram. Rembrandt agreed to the higher pricing. In actuality, the €2.50 did not account only for regulatory costs but afforded NIVE additional profits. When the price of eggs dropped back to pre-flu levels, Rembrandt’s attorneys advised that it was canceling the contract. NIVE sued to recover its lost profits under the contract. Rembrandt countered that NIVE fraudulently misrepresented the reason for the price increase. Rembrandt’s CEO said he did not know what Rembrandt would have done if it had known the truth, but that he would have viewed the situation very differently. Rembrandt had been considering getting eggs from 30 other countries, and NIVE supplied less than 15 percent of Rembrandt’s total imports. NIVE countered that Rembrandt needed an alternate supplier urgently and would have accepted higher prices anyway. The trial judge found that the fraudulent misrepresentation created a presumption that the misrepresentation induced Rembrandt to enter the deal and that NIVE could not prove otherwise. NIVE appealed, arguing that Rembrandt had not proved inducement.