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WILLRED CO. v. WESTMORELAND METAL MFG. CO.

May 4, 1959

WILLRED COMPANY (a corporation) and Professional Metal Manufacturing Company (a corporation) and William V. Bliwise and Ellen Bliwise and Albert Bliwise
v.
WESTMORELAND METAL MFG. CO., (a corporation)



The opinion of the court was delivered by: KIRKPATRICK

In this action, tried to the Court without a jury, *fn1" the plaintiff *fn2" claims damages on two counts (1) breach of an exclusive distributorship contract and (2) late and defective deliveries of merchandise under the contract.

The defenses are (1) that no enforceable contract resulted from the negotiations between the parties, (2) that the plaintiff rather than the defendant breached the contract or, perhaps, rescinded it, and (3) that, so far as the defendant was responsible for defects in the merchandise, that item, along with the plaintiff's entire claim arising out of certain New York contracts, was settled by an accord and satisfaction.

 Both parties (the plaintiff through an affiliate) were in the business of manufacturing school furniture and they were competitors in that field. In March 1955 *fn3" there was a meeting between representatives of the two companies the purpose of which was to work out an arrangement which would be to their mutual advantage by eliminating competition between them. Westmoreland had begun the manufacture of school furniture and Willred, in addition to being a manufacturer, was an experienced sales outfit and, at the time of the meeting, held two contracts with the New York school authorities (one for 1954 which remained unfinished and the other for 1955 which had just been awarded) and a smaller contract with Baltimore.

 A contract was entered into at the meeting, complete agreement having been reached upon the following points: *fn4"

 (1) Willred was to discontinue manufacturing school furniture and would sell Westmoreland any of its manufacturing equipment which the latter might have use for, at a reasonable price to be subsequently fixed by agreement.

 (2) Westmoreland agreed to manufacture and deliver to Willred school furniture to fulfill the two New York contracts and the Baltimore contract and also any future contracts awarded to Willred by any school authorities, subject to certain definitely fixed territorial and quantity limitations, and Willred agreed that it would order furniture from Westmoreland, would make delivery of it to the school involved and would not do business with any other manufacturer of school furniture.

 (3) The matter of prices was settled and the prices which Willred was to pay Westmoreland for desks to be supplied under the three existing contracts were specifically agreed upon. In addition, a definite and workable formula, the main feature of which was an 8% Discount to Willred on top of the regular 20% Trade discount, was also agreed upon for all future contracts which Willred might obtain in the area of its distributorship.

 (4) Willred was to supply the wood parts, desk tops, chair seats, etc., the cost of same to be deducted from Westmoreland's billing to Willred.

 (5) The parties agreed to share equally the cost of a 2% Commission upon contracts obtained by Willred which would be paid to Westmoreland's dealers in areas in which it had dealers.

 (6) The agreement was to be effective until December 31, 1957, and thereafter terminable by either party on six months notice.

 The defendant's witnesses deny that any agreement at all was arrived at upon many of the foregoing matters but I accept the version of the plaintiff's witnesses and find that an agreement substantially in the terms stated above was arrived at.

 The defendant further contends that even if such agreement was made it is unenforceable for two reasons (1) because indefinite as to price and as to Willred's obligation to purchase any specific quantity of merchandise or to endeavor to promote the sale of the products and (2) because the parties had under consideration the reduction of the agreement to writing at some future time, which was never done.

 The defendant's first contention would have more force if the contract here was an ordinary contract for the sale of goods. However, as pointed out in Laveson v. Warner Mfg. Corp., D.C., 117 F.Supp. 124, there are important differences, particularly as to the element of price, between ordinary contracts of sale and sales agency, or distributorship, contracts. In the latter the parties are primarily interested not in what is to be obtained in a single transaction but in a substantial volume of sales in the future with changing conditions to be met. I do not think that the contract in this case is so indefinite and uncertain as to be unenforceable as a matter of law. As a matter of fact there never was any dispute which could be attributed to any indefiniteness of terms between the parties, who apparently were perfectly able to conduct their business under it. The breach alleged is a breach of the exclusive feature as to which particular term there could be no question of indefiniteness.

 As to the matter of reduction to writing, the law is well settled that the mere fact that such reduction is contemplated does not render an oral contract unenforceable. The whole question is whether the parties intended to be bound by the contract as orally agreed to, contemplating a writing merely as a memorial thereof. The parties in the present case, without waiting for any writing, proceeded immediately to put into effect the terms of their contract and did business under it for almost a year. The case is not one in which the parties were exchanging draft agreements each one suggesting changes -- a circumstance from which it has frequently been inferred that the intention to be ...


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