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Fabric World, Inc. (defendant), a large retail fabric store, regularly purchased “first quality” goods from Foxco Industries, Ltd. (Foxco) (plaintiff). After a dispute arose regarding the quality of the fabrics shipped to fill an order, Fabric World refused to pay for a portion of the goods. Months later, Fabric World decided to cancel its order after the price of yarn and finished goods drastically declined. Foxco replied that the order was already substantially completed. Fabric World agreed to accept the order on the condition that it did not contain a single flaw. Believing that this would be impossible with such a large order, Foxco declined to ship the goods and sued for breach of contract. Following a jury trial, Foxco recovered a $26,000 judgment. Fabric World appealed, arguing that the district court erred in admitting into evidence a textile trade association’s definition of “first quality” to establish the meaning of the term under the contract.
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