Lorbrook Corp. v. G & T Industries, Inc.

• Decision Date: 18 October 1990
• Citation: 162 A.D.2d 69,562 N.Y.S.2d 978
• Court: New York Supreme Court — Appellate Division
• Parties: , 13 UCC Rep.Serv.2d 988 LORBROOK CORPORATION, Respondent, v. G & T INDUSTRIES, INC., Appellant.

Page 978

562 N.Y.S.2d 978

162 A.D.2d 69, 13 UCC Rep.Serv.2d 988

LORBROOK CORPORATION, Respondent, v. G & T INDUSTRIES, INC., Appellant.

Supreme Court, Appellate Division Third Department.

Oct. 18, 1990.

Donohue, Sabo, Varley & Armstrong (Bruce S. Huttner, of counsel), Albany, for appellant.

Rapport, Meyers, Griffen & Whitbeck (Victor M. Meyers, of counsel), Hudson, for respondent.

Before CASEY, J.P., and WEISS, LEVINE, MERCURE and HARVEY, JJ.

LEVINE, Justice.

Plaintiff is a domestic corporation whose principal plant is located in Columbia County where it manufactures vinyl goods. Defendant is a Michigan corporation which, in 1988, purchased goods from plaintiff for resale under its trade name to customers who installed them in their marine products. Plaintiff brought this action for some $288,000, allegedly representing the agreed purchase price for its goods sold and delivered to defendant. Defendant moved to dismiss the complaint on the basis of forum non conveniens. The principal support for defendant's motion was a printed provision set forth on the reverse side of defendant's purchase orders for the goods in question stipulating that "[t]his transaction shall be governed by and interpreted under the laws of, and any legal disputes resolved in, the State of Michigan". Plaintiff opposed the motion, contending that, under UCC 2-207, the foregoing "choice of forum" clause in the purchase order never became a part of the parties' agreement. That section of the UCC provides that a timely expression of acceptance or written confirmation "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" (UCC 2-207[1]. The additional terms are deemed to be "proposals for addition to the contract" and, if the contract is "[b]etween merchants", the terms become part of the contract unless, inter alia, "they materially alter it" (UCC 2-207[2][b].

Plaintiff's submission in opposition included three letters from plaintiff's management to defendant's management purporting to be in confirmation of an oral agreement between the parties reached during several meetings and telephone conversations which took place in 1987. In a letter dated July 23, 1987, it is recited that the agreed selling price of "marine seating vinyl" of a certain type would be $1.90 per 54-inch yard for colors and $2 for the same quantity in reds with a minimum run of 1,500 yards per color, terms "net 45 days F.O.B. Hudson, New York". And in a letter dated November 3, 1987, plaintiff's representative recites that "[s]ince the handshake has taken place between us, the following are my understandings which outline our agreements", among which was that "[defendant] will insure that the vinyl production allocated to [plaintiff] will average 25,000 to 30,000 yards weekly". Plaintiff averred that the foregoing writings were in confirmation of an oral agreement entered into between the parties before any purchase order for the covered products was sent by defendant. Therefore, according to plaintiff, the provision contained in the purchase orders fixing Michigan as the forum state for any legal dispute was, under UCC 2-207, an "additional term[ ]" which did not become part of the contract because it "materially alter[ed] it". Supreme Court agreed, and defendant appeals from the denial of its motion.

On appeal, defendant does not dispute that the transactions which are the subject matter of this action were "between merchants", as that phrase is defined under the UCC (see, UCC 2-104[1], [3]. Nor is it contested that, if UCC 2-207 applies, the addition of a provision in an acceptance or confirmation designating a forum for legal disputes between the contracting parties would materially alter the agreement and, thus, not become part of the sales agreement without an additional expression of assent by the other party (see, Pacamor Bearings v. Molon Motors & Coil, 102 A.D.2d 355, 358, 477 N.Y.S.2d 856). Defendant's primary contention on appeal, however, is that no sales contract was ever formed here by virtue of any verbal discussions or exchanges of correspondence between the parties. Rather, each purchase order containing the forum selection clause sent to plaintiff constituted a separate offer to purchase by defendant, which was then accepted in all of its terms by plaintiff's delivery of the goods requested therein (citing UCC 2-206[1][b]. Thus, according to defendant, UCC 2-207 never came into play, and the forum selection provision of each purchase order was a binding term of the parties' series of agreements. We disagree. From our review of the parties' evidentiary submissions, we conclude that, on any factual version of the parties' transaction supported by the evidence, the forum selection provision of defendant's purchase orders never validly became incorporated in their agreement.

First, it can be inferred from the evidence, as plaintiff contends, that plaintiff and defendant reached an oral agreement, confirmed by plaintiff's letters previously described, which adequately covered the essential terms of a valid requirements contract as to price, identity of the goods sold, minimum quantity, delivery, and time and method of payment (see, UCC 2-204; cf., Kleinschmidt Div. of SCM Corp. v. Futuronics Corp., 41 N.Y.2d 972, 973, 395 N.Y.S.2d 151, 363 N.E.2d 701). Had such a prior oral agreement been reached, defendant's purchase orders would be nothing more than a request to ship a portion of the goods covered by that agreement, and the insertion of the forum selection clause would then be an unsuccessful ploy by defendant unilaterally to add a term not covered by the preexisting binding contract (see, LTV Aerospace Corp. v. Bateman, 492 S.W.2d 703 [Tex]; see also, Matter of Marcus Bros. Textiles v. Avondale Mills, 78 A.D.2d 800, 433 N.Y.S.2d 114 appeal dismissed 54 N.Y.2d 833; 2 Anderson, Uniform Commercial Code § 2-207:5, at 273 [3d ed.]. Alternatively, under the same scenario, defendant's purchase orders could readily be considered as confirmations of the preexisting contract (see, Foley Co. v. Phoenix Eng'g & Supply Co., 4th Cir., 819 F.2d 60, 61; M.K. Metals v. Container Recovery Corp., 8th Cir., 645 F.2d 583, 591; 2 Anderson, Uniform Commercial Code § 2-207:26, at 285 [3d ed.]. As such, however, the additional term fixing Michigan as the forum state for litigation never became part of the contract, because it materially altered the prior agreement and plaintiff never expressly assented to it (see, UCC 2-207[2][b]; Foley Co. v. Phoenix Eng'g & Supply Co., supra, at 63-64; see also, Matter of Marlene Indus. Corp. [Carnac Textiles], 45 N.Y.2d 327, 332-333, 408 N.Y.S.2d 410, 380 N.E.2d 239).

Another possible version of the parties' transaction, also reasonably inferable from the evidence, is that plaintiff's letters collectively constituted an offer to enter into an agreement for the sale of its products to defendant, which was accepted by defendant's...