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Ancraft Products Co. v. Universal Oil Products

OPINION FILED SEPTEMBER 30, 1981.

ANCRAFT PRODUCTS COMPANY, PLAINTIFF-APPELLEE,

v.

UNIVERSAL OIL PRODUCTS COMPANY, INC., ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. JOHN J. MORAN, Judge, presiding.

MR. PRESIDING JUSTICE RIZZI DELIVERED THE OPINION OF THE COURT:

This case involves a dispute over the construction of a contract between plaintiff, Ancraft Products Co., and defendant, Universal Oil Products Company, Inc. (UOP, Inc.). According to the contract, plaintiff was to build three impregnating machines for defendant. In its complaint, plaintiff alleged that it performed the work and design services required for the machines and delivered them on schedule, and that defendant owes $59,348.06 towards the total contract price. Defendant admitted that it had not paid the $59,348.06, but denied that it owed that amount. The gravamen of the dispute is that plaintiff characterizes the contract as a fixed fee contract, whereas defendant contends that it is a cost-plus contract with an upset price. The $59,348.06 represents the difference between the amount paid by defendant on the basis of time and materials, and the amount alleged by plaintiff to be the fixed price of the contract. The trial court entered judgment in favor of plaintiff but denied an award of interest on this sum from the date it became due until the date of the judgment. On appeal, defendant argues that the trial court erred in entering judgment in favor of plaintiff. Plaintiff cross-appeals, contending that the court should have ordered the payment of interest on the unpaid balance of the contract. Since we conclude that plaintiff was not entitled to the $59,348.06, we reverse.

The negotiations for the contract took place between E.W. Nyberg of Ancraft and D.A. Shepard of Hoyer-Schlesinger-Turner, Inc. (HST), an engineering firm acting as defendant's purchasing agent. Shepard died before the trial.

In April 1973, plaintiff sent HST a letter setting forth a quotation for building the three impregnating machines which defendant sought to acquire. The essential terms were:

"The price for the machine with the plastic valves and counter clockwise rotation would be $110,000.00."

"The price for the machines with the stainless steel valves parts and clockwise rotation would be $145,000.00 each."

"Engineering for the stainless steel machines with clockwise rotation would be approximately $25,000.00."

"Labor charges would be based on $13.00/Hr. Engineering charges would be based on $15.00/Hr. Materials would be billed at cost plus 15%."

"Payouts are to be made semimonthly with Ancraft providing copies of all invoices for purchased materials and accounting for labor and engineering hours worked."

"Should your order be cancelled before December 30, 1973 there would be a cancellation charge of $70,000.00 plus any monies due on purchased items received or to be received, labor and engineering."

Following further negotiations, HST sent plaintiff a letter dated May 2 which mirrored in most respects the terms contained in plaintiff's letter. The only major addition was a paragraph inserted after the price and hourly rate provisions which stated:

"However the cost of stainless and plastic Impregnating Machines shall not exceed the above listed prices, nor shall the engineering exceed the $25,000.00 limit unless there is a change in scope and a written change order issued."

Defendant's purchase order, signed by Shepard and dated May 7, 1973, reads:

"1 Stainless Steel Impregnation Machine ...


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