I. FINDINGS OF FACT
1. Plaintiff, Productos Metalicos "America" S.A., is a corporation incorporated under the laws of Mexico, with its principal place of business in Mexico City, Mexico.
2. Defendant, Microsonic Corporation, is a Pennsylvania corporation with its principal place of business in Philadelphia, Pennsylvania.
3. The amount in controversy, exclusive of interest and costs, exceeds $ 10,000.
4. In 1977, plaintiff was in the business of manufacturing watch cases, men's jewelry and jewelry boxes, and had been in such business for approximately 18 to 20 years prior thereto.
5. In 1977, defendant was engaged in the business of manufacturing and trading in electronic watches for worldwide distribution.
6. On October 11, 1976, a meeting took place in the offices of defendant between William A. Hilliard ("Hilliard"), General Manager of defendant, and Leo Kean ("Kean"), President of plaintiff, to explore the possibility of the parties doing business together. Defendant was looking for additional sources of supply of watch cases for its products, and plaintiff was looking for additional customers to purchase watch cases manufactured by it.
7. At the meeting, Hilliard gave to Kean six samples of watch cases currently being manufactured for defendant by existing suppliers (Ex. P-3). The purpose of this action was to enable defendant to obtain price quotations from plaintiff on said cases, in order that defendant could compare these prices with those from its existing suppliers, and determine if plaintiff's prices were favorable.
8. By letter dated December 29, 1976 (Ex. P-6), plaintiff gave its price quotation on two of the requested items, style numbers 3640 and 3715, and these prices were substantially less than those then being charged defendant by its existing suppliers.
9. On March 1, 1977, Kean met with Hilliard at defendant's offices in Philadelphia.
10. At that meeting, they continued to discuss the possible purchase by defendant from plaintiff of watch cases and Hilliard indicated an interest in doing business with plaintiff in the future.
11. At that meeting, Kean advised Hilliard that his company was a major watch case supplier for Timex and a major portion of plaintiff's production capacity was used for the Timex work. Kean said Timex had cancelled their orders and plaintiff was very seriously hurt financially and, therefore, needed additional business soon.
12. Kean pressed Hilliard for an order, but Hilliard advised him it was not possible for defendant to give him any orders unless defendant had a firm commitment from their customers.
13. At the end of that meeting, Hilliard advised Kean that if they would get a commitment from their customers, they would send plaintiff an order.
14. Kean returned to defendant's offices the next day without an appointment and once again pressed for an order. Hilliard repeated that he did not have any basis for ordering unless he received orders from his customers.
15. Kean then advised Hilliard that, if Hilliard could give him what only appeared to be a purchase order, it would be possible for plaintiff to obtain funds in Mexico and that such order, even though noncommittal to defendant, would be helpful to plaintiff.
16. The precise nature of Kean's financial needs was not clear. In addition, it was not clear to Hilliard what Kean was planning to do with the purchase order in his dealings with Mexican financial institutions.
17. Hilliard did believe, based on Kean's representations, that, due to some unusual practices by financial institutions in Latin America, Kean would be able to derive some sort of financial assistance if he could present a document evidencing an intention by a firm to transact business with Productos Metalicos.
18. Hilliard, based on Kean's representations, believed that the evidence of an intention to transact business did not need to be a binding, enforceable contract or purchase order.
19. Hilliard prepared and executed his standard purchase order form, numbered 000480 ("Order 480") (Ex. P-7), which contained numerous terms but did not contain certain other information.
20. Order 480 stated that the payment terms were to be "90 to 120 days"; that delivery was "F.O.B." the Productos Metalicos plant in Mexico City; and, that the goods were to be shipped to Microsonic in Philadelphia.
21. Under "Quantity," there was listed "5000 pcs" (pieces) for each of four styles of watch cases used by defendant. Under the heading "Net Unit Price," prices were separately listed for the gold and white versions of each style.
22. Order 480 did not list any date for shipment, delivery or order, and there was no statement of what proportion of the 5000 pieces of each style was to be gold or white, even though there was a substantial difference in price between the two colors.
23. Hilliard typed various additional clauses, including the following:
Quantities shown above represent planned initial quantities only, thus are subject to revision, with adequate notification. Details will be confirmed with particular delivery orders.
Tooling schedule is to be provided, allowing approximately 90 days.