1. Why is there no breach of warranty?

2. What breach of contract occurred?

3. Were the terms conspicuous enough to be part of the contract? Explain why.

General Mills Operations, LLC, purchased “Big Meatballs Cooked Italian,” which is used in General Mills’ Progresso Italian–Style Wedding Soup, from Five Star Custom Foods, Ltd.

General Mills sent purchase orders to Five Star. The Purchase Order Terms and Conditions were on the back of every purchase order, including the meatball orders faxed to Five Star. General Mills also mailed a copy of the 2004 version of its Terms and Conditions to Five Star’s Customer Service Manager on February 4, 2004. The Terms and Conditions included the following: 5. GOODS: The Goods shall conform in all respects to the description on the face of this Order, and or [General Mills’] then current specifications furnished to [Five Star]. The Goods … shall be new, of first class commercial type … This warranty is in addition to and not in lieu of, any other warranties or guarantees made by [Five Star] or created or implied as a matter of law.

Additionally, the purchase order states that “[t]he goods must conform to all current General Mills’ specifications as furnished to Seller.” General Mills mailed a copy of the ingredient specifications for its meatballs to Five Star. Five Star acknowledged receipt of the specifications, which included the following:

The Beef or Beef By–Product in this ingredient must be sourced from countries or regions where USDA recognized BSE controls are in place in accordance with the recommendations of the World Animal Health Organization.

One of Five Star’s beef suppliers was Westland Meat Packing Company. Westland’s beef was used in two orders of meatballs supplied to General Mills. In February 2008, the Food Safety Inspection Service (FSIS) issued a recall of all products containing beef produced by Westland between February 1, 2006, and February 15, 2008. The recall was due to Westland’s supposed failure to contact FSIS when it identified nonambulatory disabled, or “downer,” cows that became nonambulatory after passing inspections but before slaughter. In such situations, regulations at the time required the producer to notify FSIS and to call a public-health veterinarian to conduct an examination. Westland’s alleged failure to consistently do this was deemed noncompliant, and the recall followed. There is no evidence, however, that any of the Westland beef supplied to Five Star or incorporated into General Mills’ meatballs came from downer cattle.

When Five Star learned of the recall, it traced the Westland beef that it had incorporated into its products and notified General Mills of the recall on February 8, 2008. Five Star identified two purchase orders of meatballs, totaling 32,460 pounds, which contained Westland beef. General Mills was required to identify and destroy all soup containing the recalled meatballs in its inventory as well as soup that it had already sold to grocery stores and other customers. The recall cost General Mills more than $1,000,000.

General Mills filed suit in January 2010, asserting claims for breach of contract, breach of express warranties, breach of the implied warranty of merchantability, breach of the implied warranty of fitness for a particular purpose, and negligence. (Five Star filed a Third-Party Complaint asserting claims against Cattleman’s Choice, Inc. d/b/a Westland.) Both General Mills and Five Star moved for summary judgment.

JUDICIAL OPINION

KYLE, Judge … Five Star argues the mere fact its meatballs were recalled does not, as a matter of law, mean they were unfit or defective in any way and thus it did not breach any express or implied warranty…………………………