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JONES & MCKNIGHT CORP. v. BIRDSBORO CORPORATION

December 2, 1970

JONES & MCKNIGHT CORP., PLAINTIFF,
v.
BIRDSBORO CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Will, District Judge.

MEMORANDUM OPINION

This is an action by Jones & McKnight Corporation against Birdsboro Corporation for damages arising out of Birdsboro's alleged breach of its contract to manufacture and deliver to plaintiff certain automated machinery and equipment. Plaintiff alleges that defendant did not design and manufacture the machinery and equipment in a workmanlike manner, that it failed to take remedial action to redesign and remake the machinery and equipment when necessary under the purchase agreement, and that plaintiff's production was therefore seriously interrupted and impaired, causing plaintiff to suffer substantial losses. The defendant moves for partial summary judgment as to the issues of whether certain clauses excluding the recovery of consequential damages are part of the contract and whether certain categories of plaintiff's requested damages must be denied as a matter of law because of their consequential nature.*fn1 On its part, Jones & McKnight is moving for leave to file an amended complaint adding a second count to its original complaint charging defendant with a wilful breach of its alleged duty to do promptly whatever was necessary to put the machinery and equipment in operating condition. For reasons stated below, we deny defendant's motion for partial summary judgment and grant plaintiff's motion for leave to file the amended complaint.

The factual background of the contract negotiations is as follows. After prior meetings, an understanding between plaintiff and defendant was reached on June 4, 1968, as to the items of machinery and equipment to be manufactured by Birdsboro and the prices therefor. The parties are in agreement that they each contemplated that a written confirmation would be made of their accord. On July 23, 1968, Jones & McKnight received a written confirmation from Birdsboro which had attached to it and incorporated into it the Birdsboro General Terms and Conditions Form 64D. This confirmation stated that it had to be accepted within thirty days to become effective. It is undisputed that Jones & McKnight did not execute and return the July 23, 1968 letter from Birdsboro. On August 6, 1969, Jones & McKnight sent a letter to defendant embodying the detailed order for machinery and equipment, requesting the return of a signed copy if acceptable. A portion of the letter stated:

    "Confirming the discussion between your
  representative and our company on June 10, 1968,
  regarding the above orders, we are pleased to
  submit written verification of our verbal orders
  No. 2062 and 2063. * * *.
    "It is understood that your General Terms and
  Conditions as set forth on your form 64D will
  govern * * *"

Birdsboro claims to have returned the requested signed copy of this letter, but plaintiff denies ever having received it.

For purposes of this summary judgment motion, Birdsboro contends that it is immaterial whether each party ever received the acknowledged return of its own memorandum from the other party. We agree. In an endeavor to bridge the legal abyss created in contract formation by industry's perennial battle-of-the-forms, the draftsmen of the Uniform Commercial Code included several provisions in the Act highly relevant to the type of situation before us.

Section 2-207(3) of the Code, Ill.Rev.Stat., Ch. 26, § 2-207(3), states:

    "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."

Because no dispute is present that a contract in fact exists, the terms of the contract consist, at the least, of those terms on which the writings of the parties agree. As both parties have written and signed confirmatory memoranda recognizing that the terms of Birdsboro's General Terms and Conditions Form 64D were to govern the contract, we conclude that those terms are embodied and incorporated into the contract.

Section 2-202 of the Code, Ill.Rev.Stat., Ch. 26, § 2-202, supports this conclusion and obviates the necessity of determining, as plaintiff suggests we must do, whether the contract was oral or written. This section provides:

  "Terms with respect to which the confirmatory
  memoranda of the parties agree * * * with respect
  to such terms as are included therein may not be
  contradicted by evidence of any prior agreement
  or of a ...

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