VRT, Inc. v. Dutton-Lainson Company

Nebraska Supreme Court

530 N.W.2d 619 (Neb. 1995)

The seller may not sue a buyer for breach of a contract where the seller misrepresented an essential fact relating to the very basis of the transaction.

Relevant Facts

Sanitas, Inc. (the plaintiff) created and distributed products based on an invention to lift and move medical patients. The plaintiff retained an attorney to file a patent application and then entered into a contract with Dutton-Lainson Company (the defendant) to produce and sell the products. The defendant agreed to pay the plaintiff royalties in exchange for an assignment of the plaintiff’s interest in the invention, including the patent application as well as any related trademarks. The agreement was made on the assurance that the patent application was filed and would likely issue. The defendant began production, but no patent was ever issued because the application was never filed and the lapse of time prior to discovery of the error precluded issuance of the patent. The plaintiff filed a lawsuit against its attorney for malpractice, which was settled. Subsequently, the plaintiff sued the defendant for breach of contract for failure to pay royalties.

The district court ruled in favor of the plaintiff, and the defendant appealed.

Issue

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Holding & Reasoning

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Concurrence

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Dissent

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Last updated:

December 13, 2020

Judicial Opinion

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Procedural History

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Citations

530 N.W.2d 619 (Neb. 1995)