168 Of 174 documents

Corbin on Contracts

Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART I FORMATION OF CONTRACTS

TOPIC A OFFER AND ACCEPTANCE

Supp. To CHAPTER 4 INDEFINITENESS AND MISTAKE IN EXPRESSION

1-4 Corbin on Contracts Supp. to § 4.6

Supp. to § 4.6 Uncertainty of Subject Matter to Be Exchanged for Price-Requirements and Output Contracts

[Go To Main]

(A) The following cases are noteworthy:

(1) Brewster of Lynchburg, Inc. v. Dial Corp., 33 F.3d 355 (4th Cir. 1994) (applying Arizona law). Dial entered into an oral contract with Brewster for Brewster to supply all Dial's plastic bottle needs for a plant in Salem, Virginia. The deal was struck after a blizzard of price quotes, purchase orders, change orders, and conversations worthy of a law school exam question on U.C.C. § 2-207. Settling the dust, the Fourth Circuit concluded that the contract allowed Dial to exercise an escape clause only on the contract's anniversary-June 30. In August Dial authorized the sale of its Salem plant because it continued to be unprofitable, and in September gave notice of termination to Brewster. Brewster ultimately sued.

The Fourth Circuit held that though no Arizona authority has addressed the issue, under Arizona law a requirements contract allows a buyer to reduce the quantity demanded to any amount, including zero, so long as it does so in good faith. If the seller wishes to reallocate some of the risks inherent in such a contract, the court said, it may specify some minimum requirement, which Brewster had not done. Thus, though Dial had wrongly assumed a power to terminate prior to June 30, it was nonetheless entitled to reduce its requirements to zero, so long as it did so in good faith.

The court found that Dial acted in good faith. Dial closed the Salem plant as part of its overall restructuring of the Special Business Division. Dial ultimately closed all but one of the plants within this division. Hence, Dial's decision to have no requirements ''did not stem from any desire to avoid its obligations to Brewster, but rather from a legitimate business decision.'' 33 F.2d at 366 .

(2) Essco Geometric v. Harvard Industries 46 F.3d 718 (8th Cir. 1995) (applying Missouri law). Supplier's lawsuit against office chair manufacturer raised a question regarding the formation of a requirements contract, despite no express reference to quantity of materials or manner to fix price, or exclusivity. ''The UCC does not require certain specific words to enforce a requirements contract.''

169 Of 174 documents

Corbin on Contracts

Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART I FORMATION OF CONTRACTS

TOPIC A OFFER AND ACCEPTANCE

Supp. To CHAPTER 4 INDEFINITENESS AND MISTAKE IN EXPRESSION

1-4 Corbin on Contracts Supp. to § 4.7

Supp. to § 4.7 Effect of Subsequent Verbal Clarification or Action by the Parties

[Go To Main]

(A) The following cases cite this section:

(1) Nebraska Nutrients, Inc. v. Shepherd, 261 Neb. 723, 626 N.W.2d 472 (Neb. 2001) . Although an agreement did not contain an essential term, when this term was supplied by a subsequent agreement approximately 35 days later, it defined with reasonable certainty the nature and extent of the parties' obligations under the original agreement such that the agreement was enforceable. The court utilized the following quote from this section: ''even though the parties have expressed an agreement in terms so vague and indefinite as to be incapable of interpretation with a reasonable degree of certainty, they may cure this defect by later verbal clarification or their subsequent conduct that indicates their own practical interpretation.'' 1 Arthur L. Corbin, Corbin on Contracts § 4.7 at 606 (rev. ed. 1993). This case is also noted at § 4.1 of this supplement.

(2) Lake Michigan Contractors, Inc. v. Manitowoc Co., 2002 U.S. Dist. LEXIS 9547 (W.D. Mich. May 21, 2002) . The defendant shipbuilder's allegation that it had provided the price schedule for a building project was confirmed by the parties' six-month course of performance. The defendant billed the plaintiff according to the price schedule and the plaintiff paid those bills. The court cited Corbin in support of this holding to the effect that a vague and indefinite agreement may be cured by the subsequent conduct of the parties. See the full discussion of this case at § 4.1.

(3) Acinapura v. Natalizia, 2003 R.I. Super. LEXIS 98 (R.I. Super. Ct. July 30, 2003) . The plaintiff claimed to be a partner under an agreement with the defendants for the purchase and sale of a controlling interest in the plaintiff's publications. The agreement, however, was unenforceable because it was vague, uncertain and indefinite, making it incapable of interpretation with reasonable certainty. The court cited Corbin in recognizing that it is possible to cure such defective language by evidence of the parties' course of performance. The court, however, held that the plaintiff failed to present sufficient evidence to meet his burden of demonstrating the existence of a partnership through such evidence.

This case is also discussed at §§ 4.1 and 4.13.

(4) Gurley, et al. v. King, et al., 2005 Tenn. App. LEXIS 504 (2005) . This case is fully described at § 1174. The court cited this section for the proposition that partial performance by one party to a bargain may cure an indefinite term in the contract. The case also cites §§ 2.8, 2.9 and 4.1.