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CONTINENTAL-WIRT ELECS. CORP. v. SPRAGUE ELEC. CO.

June 30, 1971

CONTINENTAL-WIRT ELECTRONICS CORPORATION, a Pennsylvania corporation, Plaintiff,
v.
SPRAGUE ELECTRIC COMPANY, a Massachusetts corporation, Defendant


Ditter, District Judge.


The opinion of the court was delivered by: DITTER

DITTER, District Judge.

 This suit is brought for damages resulting from breach of an alleged contract to buy an industrial machine. In defense of the claim it is asserted that purchaser's employee lacked authority to make such a contract, matters never got beyond the negotiation stage, and if there was any agreement, its enforcement would be barred by the statute of frauds.

 For a period of years prior to the institution of this suit, plaintiff, Continental Wirt Electronics Corporation, supplied defendant, Sprague Electric Company, with carbon rings which were used in the manufacture of certain electrical equipment. In the normal course of business, defendant would purchase the carbon rings from plaintiff by sending a purchase order designating the material desired, the quantity, and the price. However, when the pressure of time required, orders as high as $5000. would be placed verbally over the telephone and subsequent to that a "confirming purchase order" would be sent to plaintiff. On January 19, 1966, Burton S. Lifson, executive vice president of plaintiff, wrote to Roger Kerouac, materials manager of defendant, explaining that plaintiff found it necessary to terminate its manufacturing of these carbon rings. Lifson stated, however, that Continental would not start to dismantle the production equipment until Sprague's current anticipated requirements for the carbon rings had been met.

 In response to Continental's letter, Kerouac wrote Lifson asking, among other things, whether Continental would consider selling the equipment necessary to make the carbon rings. On February 16, 1966, Lifson replied to Kerouac that Continental would be willing to sell the equipment and would supply the technical information necessary to establish a manufacturing procedure for Sprague. Ten days later Kerouac requested an itemized list of the equipment involved, its price, and some idea of the complexity of the operation.

 On March 4, 1966, Lifson answered Kerouac explaining that defendant could purchase the machinery, a formalized manufacturing procedure, instruction in the manufacturing of the rings, and availability of plaintiff's work foreman for a reasonable time for $20,000.

 On April 1, 1966, Kerouac sent John Logan, an engineer employed by defendant, to plaintiff's plant for a day's observance of the work and processes involved in producing the carbon rings.

 On Monday, April 11, 1966, Kerouac called Lifson in Philadelphia and told him that Sprague had decided to buy the equipment, that a purchase order would be forwarded, and that the call was being made in advance because Kerouac knew of Continental's desire to have the equipment removed from its plant. They then reviewed the terms and conditions of the order as contained in the letter of March 4, 1966. Immediately after this telephone conversation, Lifson informed Kalman Lifson, vice president, and William O'Shea, vice president of manufacturing, that the machine had just been sold to Sprague.

 On April 18, 1966, Lifson again wrote Kerouac as follows:

 
This will confirm our telephone conversation of Monday, April 11, concerning the equipment that we have for the manufacturing of carbon rings that we furnish you.
 
We understand that you are now processing your purchase order to cover the material and equipment as described in our letter of March 4, 1966, and consistent with that letter.
 
We appreciate your calling us in advance of your order, in as much as this has allowed us to plan in the direction that permits us to sell the equipment to you. We would presume that your confirming order will follow shortly.

 The next day, Kerouac wrote to Lifson:

 
On April 11, I had advised you that we were definitely interested in purchasing the equipment with which to make carbon rings. My advice to you was based on the best ...

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