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Jespersen v. Minnesota Mining and Manufacturing Co.

June 18, 1998

VICTOR R. JESPERSEN, APPELLANT, V. MINNESOTA MINING AND MANUFACTURING COMPANY, APPELLEE.


The opinion of the court was delivered by: Justice Heiple

Agenda 16

March 1998.

It has long been recognized that contracts of indefinite duration are generally terminable at the will of the parties. *fn1 This case involves a twist on that general rule: where the parties specifically provide that their contract may be terminated for enumerated instances of material breach, is the contract indefinite as to duration and terminable at will, or is it terminable only for cause? The courts below held that such a contract is terminable at will. We affirm. *fn2

This case is before the court on review from an order granting a motion to dismiss the plaintiff's complaint for failure to state a cause of action for breach of contract. 735 ILCS 5/2-615 (West 1994). In reviewing such a case, all well-pleaded facts and all reasonable inferences from them are admitted as true and interpreted in the light most favorable to the nonmoving party. In re Chicago Flood Litigation, 176 Ill. 2d 179, 189 (1997); Mt. Zion State Bank & Trust v. Consolidated Communications, Inc., 169 Ill. 2d 110, 115 (1995). In his attempt to state a cause of action for breach of contract, the plaintiff has alleged as follows. In 1978, Victor R. Jespersen (the plaintiff) entered into a sales distribution agreement (the agreement) with Trim-Line, Inc. (Trim-Line), a manufacturer of auto body trim, moldings and decoration. Under the agreement, Jespersen became the exclusive distributor of Trim- Line products in the Chicago area.

Subsequently, Minnesota Mining and Manufacturing Company (3M) purchased Trim-Line. In 1991, 3M instituted a plan to dissolve Trim-Line and to merge that business into 3M's Automotive Trades Division. 3M sent a letter to Jespersen, and all Trim-Line distributors, terminating the agreement.

Jespersen and two other terminated distributors filed a class action complaint in the circuit court of Cook County, alleging that 3M breached the agreement by terminating it. After much procedural wrangling, the circuit court dismissed Jespersen's third-amended complaint for failure to state a cause of action (735 ILCS 5/2-615(a) (West 1994)) on the grounds that the agreement (1) was of indefinite duration and thus terminable at will and (2) expressly granted 3M the right to cancel a distributor's right to use the Trim-Line name.

Jespersen appealed and argued that the agreement included specific termination events and thus could be terminated only for cause. The appellate court rejected this argument and affirmed with one Dissent. 288 Ill. App. 3d 889. The appellate court held that the agreement was indefinite in duration and thus terminable at will. We allowed leave to appeal.

May 3M terminate its agreement with Jespersen absent Jespersen's breach or default? The answer to this question, of course, depends upon the terms of the contract. The agreement here provides that it "shall continue in force indefinitely" unless terminated in the manner provided in article IV. Contracts of indefinite duration are terminable at the will of either party. Duldulao, 115 Ill. 2d at 489; Joliet Bottling, 254 Ill. at 219. An agreement without a fixed duration but which provides that it is terminable only for cause or upon the occurrence of a specific event is in one sense of indefinite duration, but is nonetheless terminable only upon the occurrence of the specified event and not at will. See, e.g., R.J.N. Corp. v. Connelly Food Products, Inc., 175 Ill. App. 3d 655, 660 (1988); Dawson v. W.&H. Voortman, Ltd., 853 F. Supp. 1038, 1042 (N.D. Ill. 1994) (applying Illinois law). The agreement here addressed termination as follows:

"4.01 Trim-Line's Right To Terminate Trim-Line may, upon not less than thirty (30) days notice to the Distributor, terminate this agreement for any of the following reasons:

(a) Distributor's failure to reasonably promote Trim-Line's products ***.

(b) Distributor's breach of any term or condition of this agreement.

(c) Distributor's failure to make payment ***.

(d) The death, bankruptcy, or insolvency of Distributor ***.

(e) The sale *** or transfer *** of all or any part of the Distributor's rights under this contract without the written ...


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