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Barton Chemical Corp. v. Pennwalt Corp.

OPINION FILED DECEMBER 28, 1979.

BARTON CHEMICAL CORPORATION, PLAINTIFF-APPELLANT,

v.

PENNWALT CORPORATION, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. ARTHUR L. DUNNE, Judge, presiding.

MR. JUSTICE MCGLOON DELIVERED THE OPINION OF THE COURT:

Plaintiff, Barton Chemical Corporation, filed this suit for declaratory judgment, seeking an adjudication that it had a "firm price" contract to purchase chlorine and caustic soda for the year 1976, from defendant Pennwalt Corporation. Plaintiff alleged that the contract, though oral, was later confirmed through a letter sent by defendant's regional sales manager, thus satisfying the Statute of Frauds.

Defendant filed a motion for summary judgment denying that it ever agreed to a "firm price" provision since that was contrary to trade practice. Defendant also asserted that any alleged agreement was provisional since a written contract, formalizing the agreement, was never issued by the home office. Subsequently, defendant's motion for summary judgment was granted and plaintiff appealed.

On appeal, plaintiff argues that the entry of the summary judgment was improper because (1) their agreement satisfied the Statute of Frauds and did not otherwise require an approved, written contract as a condition precedent to its becoming binding on the parties and (2) whether the parties agreed to a "firm price" contract for 1976 was a factual issue precluding a summary judgment.

We reverse and remand.

In 1970, plaintiff Barton Chemical Corporation and defendant Pennwalt Corporation began negotiating the first of a series of two-year requirements contracts. The first contract (1971-72), as were all subsequent contracts, was for the sale of chlorine and caustic soda to Barton. Following initial discussions, Pennwalt submitted its standard form contract to Barton. The contract contained all of the proposed terms that applied not only to the 1971-72 contract, but also to all subsequent contracts as well. Included was the provision that:

"This contract is not binding on the Seller until accepted by it at its Home Office in Philadelphia, Pennsylvania."

Accordingly, the 1971-72 contract was signed by Barton's president in late 1970 and accepted by an official at Pennwalt's Philadelphia office on January 5, 1971. Each of the contracts executed from 1970-75 was the result of the same procedure.

Because of price instability in the bulk chemical industry, Pennwalt's contract forms included a "price adjustment clause" which allowed Pennwalt to raise prices quarterly or on 30 days' notice. It also provided that Barton could obtain chlorine and caustic soda from another supplier and thereby be released from the contract if a lower price was available.

These clauses were the subject of negotiation and were often modified during the contract period. At times, the clauses were deleted, creating a fixed price ("firm price") contract, deleted initially and reinstated later, or left intact. The modifications would subsequently be confirmed in letters originating from Pennwalt's home office or, as more often the case, from the regional office in Chicago.

In December of 1973, Pennwalt sought to renegotiate the 1973-74 contract prices. Subsequently, the parties agreed instead to negotiate a new contract for the 1974-75 term. New contract forms were prepared. Stricken was the provision allowing Pennwalt to raise prices quarterly or upon 30 days' notice. The parties had agreed to a "firm price" contract.

In 1974, despite the fact that the parties agreed to a "firm price" contract, Pennwalt twice requested that it be allowed to raise prices. The first request was agreed to orally by Barton on May 24, 1974. It was later confirmed by letter from George Grogan of Pennwalt.

The second price increase request was made by Pennwalt in September of 1974. Discussions were originally held in Philadelphia. It was then decided that negotiations should continue in Chicago with Pennwalt's regional manager, Mr. Rowe.

After the meeting in Philadelphia, but before the negotiations in Chicago, Pennwalt's Philadelphia manager, Mr. Grogan, instructed Mr. Rowe by letter ...


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