I & R MECHANICAL, INC. v. HAZELTON MANUFACTURING CO., 02-P-1605.
| Decision Date | 10 November 2004 |
| Docket Number | No. 02-P-1605.,02-P-1605. |
| Citation | 817 NE 2d 799,62 Mass. App. Ct. 452 |
| Parties | I & R MECHANICAL, INC. v. HAZELTON MANUFACTURING CO. |
| Court | Appeals Court of Massachusetts |
Present: GELINAS, DUFFLY, & TRAINOR, JJ.
Alvin S. Nathanson for the plaintiff.
Cynthia B. Hartman for the defendant.
In this case we consider whether an unsolicited written quote for three "Mills" boilers — which the defendant Hazelton Manufacturing Co. (Hazelton), a wholesale supplier of heating and cooling equipment, sent by facsimile transmission to plaintiff I & R Mechanical, Inc. (I & R), a subcontractor — rose to the level of a firm offer and, ultimately, a binding contract between the two after I & R relied on the quote in submitting a subbid for related work on a public school building project in Dartmouth. Relying on Cannavino & Shea, Inc. v. Water Works Supply Corp., 361 Mass. 363, 366 (1972), and New England Insulation Co. v. General Dynamics Corp., 26 Mass. App. Ct. 28, 30 (1988), a judge of the Superior Court determined after a jury-waived trial that no contract had been formed between the parties, concluding that the unsolicited quote that Hazelton sent I & R was merely an invitation for I & R to make an offer to purchase boilers from Hazelton. Judgment entered in favor of Hazelton on all claims in I & R's complaint. I & R appealed.
Facts. We summarize the facts found by the trial judge and supplement with undisputed matter of record. Hazelton distributes boilers manufactured by a company known as H.B. Smith (Smith). In August, 2000, Hazelton received an unsolicited facsimile from Smith quoting a price for three "Mills" type boilers. Smith sent this quotation form to a number of its distributors based on trade publication information that specified the requirement of three Mills boilers for a Dartmouth High School construction job. Unlike in some other quotes, where Smith would quote a retail or "trade" price for the boilers, which the distributor would then discount for sale to commercial customers, Smith here quoted a "net" price of $131,711 for the three boilers and indicated that there were to be no further discounts. The net price, which indicates the cost to the distributor, is typically marked up by the distributor to generate its profit. Instead of marking up the net price, Hazelton here mistakenly considered Smith's quoted price to be the retail or trade price and, in accordance with the industry practice for discounting trade prices, applied a discount multiplier to the net price, reducing it to a "dealer" price of $88,200. Hazelton handwrote this figure and the words "dealer cost" on the Smith quote form next to the net price; initialed it; stamped the quotation with Hazelton's name, address, phone number, and dealer status; and forwarded the quotation, unsolicited, to a number of businesses, including I & R, that Hazelton believed might be bidding on the Dartmouth project.
I & R received Hazelton's facsimile and calculated its subbid for the heating, ventilation, and air conditioning (HVAC) portion of the Dartmouth project using the mistakenly discounted price. Prior to submitting its bid, I & R received an additional distributor's quote on the Mills boilers from Babbitt Steam Specialty Co. (Babbitt), which, at $146,345, was consistent with the Smith net price marked up for a profit to Babbitt, and was approximately forty per cent more than the Hazelton quote. The Babbitt quote was submitted to I & R on a Smith quotation form identical to Hazelton's except that, on Babbitt's quote, Smith's net price figure was removed.
I & R learned on September 21, 2000, that it had been chosen as the subcontractor. In accordance with industry practice of shopping for the lowest possible price after the bid selection, I & R determined to contact other dealers in an effort to secure the lowest possible price for the boilers. On October 4, 2000, I & R called Hazelton seeking to place an order for the three Mills boilers at its quoted dealer cost. Hazelton informed I & R that its original quotation contained an error and that Hazelton would not sell the boilers for $88,200. Ultimately, I & R paid $140,000 to Babbitt for three Mills boilers and then brought suit against Hazelton, seeking in a breach of contract count to recover the difference between the quoted price and the actual amount paid for the boilers. The trial judge found in favor of Hazelton, ruling that the initial quotation was merely an invitation to I & R to submit an offer, and that the original quote had no binding contractual effect.1
Discussion. I & R first claims error in the judge's ruling that Hazelton's quotation to I & R did not give rise to a contract. I & R argues that the trial judge was mistaken in relying on Cannavino & Shea, Inc. v. Water Works Supply Corp., 361 Mass. 363, 366 (1972), and ignored the more recent and applicable decision of Loranger Constr. Corp. v. E.F. Hauserman Co., 376 Mass. 757 (1978). We disagree.
We review some general contract principles that bear on this transaction. "A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty." Restatement (Second) of Contracts § 1 (1981). Contract formation requires a bargain in which there is a manifestation of mutual assent to the exchange. Situation Mgmt. Sys. Inc. v. Malouf, Inc., 430 Mass. 875, 878 (2000). Restatement (Second) of Contracts § 17(1) (1981). The manifestation of mutual assent between contracting parties generally consists of an offer by one and the acceptance of it by the other. Id. § 22(1).
An offer is the manifestation of willingness to enter into a bargain made in such a way as to justify the other person in understanding that his assent will conclude the agreement. Id. § 24. See Montgomery Ward & Co. v. Johnson, 209 Mass. 89, 91 (1911); Kuzmeskus v. Pickup Motor Co., 330 Mass. 490, 493 (1953); Levenson v. L.M.I. Realty Corp., 31 Mass. App. Ct. 127, 130 (1991). An offer ripens into a binding contract when it is accepted. Acceptance occurs when the offeree gives the return requested in the offer. Restatement (Second) of Contracts § 50(1) (1981).
Advertisements, price quotations, and price lists generally do not constitute offers but are instead usually considered requests for offers or invitations to negotiate. Montgomery Ward & Co. v. Johnson, supra; Mellen v. Johnson, 322 Mass. 236, 238-239 (1948); Cannavino & Shea, Inc. v. Water Works Supply Corp., supra. See Restatement (Second) of Contracts § 26 comment c (1981). See also 1 Williston, Contracts § 4:7 (4th ed. 1990).
In contract formation, the element of agreement or mutual assent is often referred to as a "meeting of the minds." Restatement (Second) of Contracts § 17 comment c (1981). The parties must give their mutual assent by having "a meeting of the minds" on the same proposition on the same terms at the same time. See Situation Mgmt. Sys. Inc. v. Malouf, Inc., 430 Mass. at 878, and cases cited. See also Otis Elevator Co. v. Westchester Fire Ins. Co., 50 Mass. App. Ct. 712, 714 (2001).
On the basis of Cannavino & Shea, Inc. v. Water Works Supply Corp., 361 Mass. at 366, the trial judge found that there was no meeting of minds. In Cannavino, the general contractor sued the supplier for breach of contract. In making a bid, the general contractor relied on price quotations listed in an unsolicited letter, sent by the supplier to twenty-two contractors, detailing materials and prices required for a municipal water main contract. Id. at 364. After the general contractor was awarded the project, it learned that the valves listed in the letter did not conform to the municipality's bid specifications. Id. at 365. The general contractor sought to recover the difference between the supplier's quoted price and the higher priced conforming valves. Ibid. The court concluded that the price list was only an invitation to bidders to make an offer, and, as there was no meeting of the minds, no contract was formed. Id. at 366. The unsolicited letter did not create either a binding offer or promise on the part of the supplier.
Based on a thorough analysis of the transaction, the trial judge here found that Hazelton was a supplier that forwarded a manufacturer's price quotation to potential customers. She further found that Hazelton played no active role in researching project specifications in trade publications; that Hazelton's price quotation was unsolicited by I & R; that Hazelton sent the quotation to a large number of potential subcontractors without knowledge of whether or not they would be bidding on the project; and that Hazelton's quotation applied strictly to supplying a product, and not to performing any services. She ultimately concluded that Hazelton's facsimile constituted, and was intended to be, a mere invitation to offer; that I & R understood this; and that no contract was created between the parties. These findings may not be set aside unless clearly erroneous. Mass.R. Civ.P. 52(a), as amended, 423 Mass. 1402 (1996). Freyermuth v. Lutfy, 376 Mass. 612, 615 (1978). Based on the record before us, we conclude that they are not clearly erroneous.
We think Loranger Constr. Corp. v. E.F. Hauserman Co., 376 Mass. 757 (1978), readily distinguishable. In Loranger, there was evidence that the supplier prepared its "quotation" or "estimate" based on information from the architect's office; contacted the general contractor directly by telephone to give the quotation; and proposed in its quotation to actually perform a portion of the work, and not simply supply materials. Id. at 759. On this evidence, the court distinguished Cannavino and concluded that a jury was warranted in finding that there was an offer or promise, and not merely an invitation to offer. Id. at 760. By contrast, we conclude that here there was no error in the application of Cannavino, and in the trial court's...
To continue reading
Request your trial