Continental Grain Co. v. Followell
| Decision Date | 12 March 1985 |
| Docket Number | No. 1-984A222,1-984A222 |
| Citation | 475 N.E.2d 318 |
| Parties | 40 UCC Rep.Serv. 1232 CONTINENTAL GRAIN COMPANY, Plaintiff-Appellant, v. Wilbur FOLLOWELL, Defendant-Appellee. |
| Court | Indiana Appellate Court |
K. Richard Hawley, Marc E. Hawley, Hawley, Hudson & Almon, Mount Vernon, Raymond W. Gray, Nashville, for plaintiff-appellant.
Thomas A. Zieg, Nashville, for defendant-appellee.
Plaintiff-appellant, Continental Grain Company (Continental), appeals an adverse judgment rendered in the Brown Circuit Court in its suit for breach of a grain company's contract against defendant-appellee, Wilbur Followell.
We affirm.
Followell, a Brown County farmer who had not previously dealt in grain futures, initiated a telephone call to an employee of Continental on March 14, 1983, which resulted in an oral agreement whereby he agreed to sell Continental 3000 bushels of corn at $2.81 per bushel, and 2000 bushels of soy beans at $6.01 per bushel, to be delivered September, October and November, 1983, at Continental's elevator in Evansville, Indiana. Following the conversation, Continental mailed a separate written "6. Buyer reserves right to change destination of shipments.
document for each sale item, which was signed by Coleman Chuen and entitled "Purchaser Confirmation". Each stated on the front that Continental confirmed purchase of the grain as stated above, and the basis of the purchase was to be "delivered by truck to Continental Elevator, Evansville, Indiana, on S/O/N, 1983." The documents were identical form documents and contained the sentence, "Subject to the terms and conditions on back thereof". The back of the document, entitled "Purchase Contract Terms", contained 11 clauses, and as relevant here, stated
9. The terms expressed herein are the entire contract between the parties. No modification or amendment of the contract shall be valid or binding unless agreed to by both parties and confirmed in writing by either to the other.
10. It is understood that the retention of the confirmation without immediately notifying us by phone and confirming telegrams of error herein, is acknowledgement of contract as stated."
Within a few days, Followell called Chuen and told him he didn't agree with item 6. Upon hearing Chuen's reply that it didn't mean anything, Followell asked why it was in there. He told Chuen, "if I sign this, you can send me to Memphis, Tennessee or anywhere else you want me to go at my expense". Followell asked for an amendment, or a confirmation in writing of the Evansville destination only, and Chuen told him to return the document with his objection noted. A duplicate of the first document was sent back to Followell around April 7 or 8 without any change. Followell noted on the duplicate "I do not agree with item 6", and returned it to Continental. At approximately the same time, there were more phone conversations about item 6 during which Followell again requested a confirmation in writing or modification confirming only an Evansville destination. Continental did not comply with Followell's request until July 29, 1983, after a dramatic rise in the price of soy beans and grain, Continental sent a letter to Followell stating "we agree to your amendment and will guarantee Continental Evansville as destination of all shipments". The purchase confirmation was never signed by Followell.
In finding of facts and conclusions of law, the trial court essentially found that no contract was formed and there was no agreement, because the purchase confirmation contained terms and conditions not agreed upon, and therefore, the parties were not in agreement on all the essential terms of the contract and negotiations had terminated.
I. Whether the judgment is contrary to law in that the trial court failed to enforce an oral agreement admitted to in court by the defendant.
II. Whether the judgment is contrary to law in that the trial court failed to enforce an oral agreement between merchants evidenced by a written confirmation not objected to in writing within ten (10) days.
III. Whether an additional term in a written confirmation makes the whole oral contract unenforceable.
IV. Whether the trial court's findings of fact numbers 12, 13, and 14 are erroneous.
We are of the opinion that all of the issues are interwoven, and we will discuss them together. All Indiana Code references herein to the Uniform Commercial Code, IND.CODE 26-1-1-101, et seq, shall be made by the UCC designation.
Continental's argument proceeds in the following manner: even though the contract was oral, since Followell did not sign the Purchase Confirmation, the contract is enforceable and relief is not barred by the Statute of Frauds, 2-201, because (1) Followell admitted the existence of the March 14 oral contract at trial pursuant to 2-201(3)(b) and (2) after receiving the confirmation document, he made no objection to its content within 10 days as required by 2-201(2). Continental then argues that 2-207 controls the transaction. That section states:
"Additional terms in acceptance of confirmation.
(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this act."
It argues that the additional term; that is, the right to change the point of destination, does not render the oral contract made on March 14 unenforceable. While conceding that the additional term was objected to and does not form a part of the contract, Continental claims the remainder of the contract is enforceable as to the Evansville destination.
Followell's argument follows the trial court's finding that no contract was ever entered into. The principal issue in this case is whether a contract ever came into being. For the purpose of this opinion, we will assume that the statute of frauds forms no impediment to enforcement.
2-204 of the UCC states that a contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct of the parties. The Indiana comment to this section found in Burns IND.CODE states that to form a sales contract there must be a meeting of the minds, an assent by both parties growing out of their intentions and an agreement freely reached. The courts cannot supply provisions actually lacking or impose conditions not actually assumed. Under 2-202, final written expressions of agreement cannot be contradicted by evidence of prior agreement or a contemporaneous oral agreement but may only be explained or supplemented. An agreement is defined in 1-201(3) as a bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing, course of performance, or usage in the trade. The law of contracts supplements the provisions of the UCC 1-103.
Clearly, the expressions contained in the various sections of a sales contract require a meeting of the minds on material points, the absence of which prevents the formation of a contract.
Under the law of contracts, the intention of the parties is a factual matter to be determined by the trier from all of the circumstances, and a party relying on an express contract bears the burden of proving its existence. 6 I.L.E. Contracts, Sec. 21; Dyer Construction Co. v. Ellas Co., (1972) 153 Ind.App. 304, 287 N.E.2d 262. Where there is probative evidence to support the conclusion that there was no meeting of the minds between the parties, we will not disturb that conclusion. Dyer, supra.
We read 2-207(2) to mean that an acceptance containing additional or different terms forms a contract as to the original offer, but that the additional or different terms become proposals for additions to the contract already made pursuant to the offer. Between merchants, the additional or different terms become a part of the contract unless excluded by (2)(a), (b), or (c), upon which exclusion the additional or different terms fall out and do not form a part of the contract. This interpretation conforms with J. White & R. Summers, Uniform Commercial Code, Chap. 1 (2d ed. 1980).
Section 2-207 abandons the mirror image rule that an acceptance must coincide exactly with all terms of an offer. Uniroyal, Inc. v. Chambers Gasket and Manufacturing Co., (1978) 177 Ind.App. 508, 380 N.E.2d 571; White & Summers, supra. 2-207 permits enforcement despite discrepancies between offer and acceptance if enforcement could be required without either party being bound to a material term to which he has not agreed. Uniroyal, supra, 380 N.E.2d at 575.
The phrase after the comma in 2-207(1) "unless acceptance is expressly made conditional on assent to the additional or different terms" must be construed as imposing a limitation upon how much an acceptance can differ and still be considered an acceptance at all. White & Summers state:
"We think that in the usual purchase order-acknowledgment context the forms do...
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