Caseflicks

Supreme Court of Kansas • 1970

Southwest Engineering Co., Inc. v. Martin Tractor Co.

473 P.2d 18 | 205 Kan. 684 | 1970 Kan. LEXIS 337

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Takeaway

In short, this case shows that under the UCC, a signed writing identifying a goods sale and its quantity can enforce a contract even when important terms such as payment remain open, because the Code can supply the missing terms.

Background

Southwest Engineering, a general contractor, sought to bid on a Corps of Engineers runway-lighting project at McConnell Air Force Base. Before bidding, its superintendent, R. E. Cloepfil, obtained from Martin Tractor's engine-division manager, Ken Hurt, an $18,500 telephone quotation for a standby generator and accessories. Southwest used that figure in its bid, which the Corps accepted.

At an April 28 meeting in Springfield, Hurt raised Martin's price. He and Cloepfil reviewed the specifications, and Hurt prepared and gave Cloepfil a handwritten memorandum listing the generators, accessories, component prices, discounts, and total prices. The parties agreed that Martin would supply the required D353 generator and accessories for $21,500, or a less expensive D343 for $15,000 if the Corps approved it. The Corps ultimately required the D353.

Southwest later directed Martin to proceed with drawings and submittal documents. Martin responded on May 24 that it could not accept the directive and was withdrawing its verbal quotations. Southwest eventually bought the equipment elsewhere for $27,541 and sued Martin for the $6,041 difference, plus delay damages.

After a bench trial, the district court found that the Springfield meeting produced an enforceable sales contract, that Hurt had apparent authority to make it, and that Martin's May 24 letter was an anticipatory breach. It awarded Southwest $6,041 in cover damages but denied delay damages. Martin appealed; Southwest did not cross-appeal.

Issues

Issue #1

Whether the handwritten April 28 memorandum satisfied the Uniform Commercial Code statute of frauds for a sale of goods exceeding $500.

Holding

Yes. The memorandum was a sufficient signed writing under K.S.A. 84-2-201 and made the sales agreement enforceable.

Reasoning

Under UCC section 2-201, a writing need not recite every material term of a goods contract. It need only provide a basis to believe a real sales transaction occurred, be signed or authenticated by the party to be charged, and state a quantity. Price, delivery, payment, warranties, and similar terms may be omitted without defeating enforceability.

The memorandum met those requirements. It recorded the particular generator equipment and accessories to be sold, listed their prices and discounts, and reflected the quantities and components involved. Cloepfil testified that Hurt prepared and delivered it as a record of the agreement reached at their meeting, while Hurt acknowledged preparing it and testified that the parties reached an overall agreement on the major items.

The notation at the top of the memorandum—"Ken Hurt, Martin Tractor, Topeka, Caterpillar"—was a sufficient signature. The UCC defines a signature broadly to include any symbol executed or adopted with a present intent to authenticate a writing. Hurt wrote the memorandum and did not deny placing his name on it; a formal signature was unnecessary.

Issue #2

Whether the parties formed a binding contract despite leaving the terms of payment unresolved.

Holding

Yes. The parties intended to contract and had a reasonably certain basis for a remedy, while the UCC supplied payment at delivery as the default term.

Reasoning

The trial court's finding that Hurt and Cloepfil reached an agreement at Springfield was supported by substantial competent evidence and therefore bound the Supreme Court on appeal. Their discussion settled the equipment, alternatives dependent on Corps approval, pricing, discount, delivery-related responsibilities, and Martin's preparation of submittal materials. Hurt's own deposition recognized an overall agreement on the major items.

K.S.A. 84-2-204(3) provides that a contract for sale does not fail merely because one or more terms remain open, so long as the parties intended to make a contract and an appropriate remedy can be determined with reasonable certainty. The UCC rejects the view that leaving even an important term unresolved necessarily prevents contract formation.

Although the parties did not agree on payment terms, K.S.A. 84-2-310 filled the gap by making payment due when and where the buyer received the goods. The brief, casual discussion of each side's usual payment practices did not show that payment was a condition precedent to any deal. Martin's later reliance on the missing payment term also appeared to be an after-the-fact justification, since its earlier withdrawal letter gave different reasons.

Issue #3

Whether Southwest's May 2 letter, which proposed payment terms different from the UCC default, prevented, altered, or terminated the contract under UCC section 2-207.

Holding

No. The letter was only an unaccepted proposal to modify an already formed contract, and section 2-207 did not apply.

Reasoning

A valid and writtenly memorialized agreement had already been made at the April 28 meeting. Thus, when Southwest sent its May 2 letter, there was no outstanding offer for Southwest to accept and no merely oral agreement requiring written confirmation. Offer and acceptance had already merged into the sales contract.

Southwest's proposed payment arrangement differed from the default payment-at-delivery term supplied by the UCC. But one party cannot alter an existing agreement simply by sending a later writing that states additional or different terms. Because Martin did not agree to the proposed change, the proposal neither modified nor extinguished the original contract.

Section 2-207 governs a definite expression of acceptance to an open offer or a written confirmation of an agreement previously made orally. Neither setting existed here, so the trial court's additional findings under that provision were unnecessary. They did not undermine the conclusion that Martin's May 24 withdrawal was an anticipatory breach of the contract formed in Springfield.