Austrian Airlines Oesterreichische Luftverkehrs AG v. UT Finance Corp.
United States District Court for the Southern District of New York
567 F. Supp. 2d 579 (2008)
UT Finance Corporation (UTF) (defendant) contracted to buy used airplanes from Austrian Airlines (Austrian) (plaintiff) under terms letting UTF reject the planes for any nonconformance, no matter how minor, departing from the industry custom Austrian claimed of accepting used planes with minor flaws. The planes had auxiliary fuel tanks lacking FAA approval, and UTF rejected the tender on that basis; Austrian sued, alleging UTF's real motive was that the used-plane market had declined since contracting, making the rejection bad faith. UTF moved to dismiss.
Whether a merchant buyer acts in bad faith when it rejects a nonconforming tender because the market for resale of the goods has declined.