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Nordyne v. Intl. Controls, 00-4063 (2001)

Court: Court of Appeals for the Eighth Circuit Number: 00-4063 Visitors: 5
Filed: Aug. 22, 2001
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals FOR THE EIGHTH CIRCUIT _ No. 00-4063EM _ Nordyne, Inc., * * Appellant, * * On Appeal from the v. * United States District Court * for the Eastern District * of Missouri. International Controls & * Measurements Corporation, * * Appellee. * _ Submitted: June 15, 2001 Filed: August 22, 2001 _ Before McMILLIAN and RICHARD S. ARNOLD, Circuit Judges, and DAWSON,1 District Judge. _ RICHARD S. ARNOLD, Circuit Judge. 1 The Hon. Robert T. Dawson, United States District Judge
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                   United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                _____________

                                No. 00-4063EM
                                _____________

Nordyne, Inc.,                        *
                                      *
            Appellant,                *
                                      * On Appeal from the
      v.                              * United States District Court
                                      * for the Eastern District
                                      * of Missouri.
International Controls &              *
Measurements Corporation,             *
                                      *
            Appellee.                 *
                                 ___________

                            Submitted: June 15, 2001
                                Filed: August 22, 2001
                                 ___________

Before McMILLIAN and RICHARD S. ARNOLD, Circuit Judges, and DAWSON,1
      District Judge.
                           ___________

RICHARD S. ARNOLD, Circuit Judge.




      1
        The Hon. Robert T. Dawson, United States District Judge for the Western
District of Arkansas, sitting by designation.
       Nordyne, Inc., appeals from the District Court's2 order granting the motion of
International Controls & Measurements Corporation (ICM) to dismiss Nordyne's
breach-of-warranty action for improper venue. Nordyne, as buyer, and ICM, as seller,
had been doing business for approximately ten years when the current dispute arose.
Nordyne argues that the District Court erred in holding that a forum-selection clause
on the reverse side of ICM's invoices was enforceable. We affirm.

                                         I.

       Nordyne, a Delaware corporation with its principal place of business in St.
Louis, Missouri, manufactures heating, ventilation, and air conditioning equipment.
ICM, a New York corporation, manufactures electronic defrost control boards for use
in such equipment. Before the dispute underlying this law suit, Nordyne had purchased
control boards from ICM for approximately ten years. In shipping products to
Nordyne, ICM would forward a Customer Service Invoice with the following printed
immediately below the heading: "CUSTOMER'S ORDER IS ACCEPTED ON THE
EXPRESS CONDITION THAT THE TERMS AND CONDITIONS SET FORTH ON
THE FACE AND REVERSE SIDE OF THIS INVOICE . . . SHALL APPLY AND
THEY SHALL CONSTITUTE THE COMPLETE AGREEMENT BETWEEN THE
PARTIES."

      One of the Terms and Conditions of Sale printed on the reverse side of the
Customer Service Invoice was a forum-selection provision: "In any action or
proceeding brought pursuant to this agreement venue shall be laid in Onondaga, New
York." Another term provided that ICM warranted its products for one year from the
date of shipment. On several occasions, Nordyne availed itself of this one-year
warranty.


      2
        The Hon. Stephen N. Limbaugh, United States District Judge for the Eastern
District of Missouri.

                                         -2-
        In 1997, ICM began marketing a new version of the control panel Nordyne had
been purchasing. ICM sent the first quotation for this product to Nordyne on May 13,
1997. Upon Nordyne's determination that one of the new features was not necessary
for its purposes, ICM modified the control panel, and on July 29, 1997, tendered a new
quotation for the unit as modified. This quotation was for Nordyne's estimated annual
usage of 40,000 units at $9.87 per unit. The quotation provided that it was valid until
December 31, 1997, that "[b]lanket orders must be fully released within one year," that
standard commercial packaging would apply, that shipment would be "net 30 days;
FOB Syracuse, NY," and that all orders were non-cancelable and non-returnable.

       Printed on the bottom of the quotation was the following: "CONDITIONS ON
REVERSE ARE PART OF THIS QUOTATION." These conditions included the
following: "This quote is subject to the Seller's standard terms and conditions
contained on the order acknowledgment." The conditions also included the statement,
"All orders are subject to acceptance by the Seller at its home office in Cicero, New
York."

       Nordyne asked to see manufactured samples of the new control panel. On
September 12, 1997, ICM sent five such samples to Nordyne with a letter from ICM's
home office stating, "Full blown manufacturing of this device is awaiting your sign off
of these check samples as approved for production. Please review the samples and
'sign off' this document and send it back by return fax so that we may fulfill your
production requirements in a timely manner." On September 15, Nordyne signed the
production approval.

       Two days later Nordyne issued a purchase order for 20,000 units at the quoted
price, and under the shipping, payment, and packaging terms set forth in the quotation
of July 29. The purchase order form stated, "Please enter our order for the above,
subject to terms and conditions printed on reverse side. . . . Please acknowledge by
signing and returning the attached acknowledgment form giving date of shipment." On

                                          -3-
the reverse side of the purchase order appeared Terms and Conditions, including the
following: "Buyer shall not be bound by this order until Buyer receives the
acknowledgment copy of this order executed by Seller, and acceptance of the order
constitutes an acceptance of all of the conditions stated herein." None of the conditions
related to choice of forum in case of a dispute. The acknowledgment form, which ICM
signed on September 22, stated, "This order is acknowledged and accepted subject to
the expressed terms and conditions thereon. Any exceptions are noted under vendor
remarks at left." ICM did not insert any exceptions into the provided space.

       ICM made its first shipment on September 30, 1997. Between that date and
mid-August 1998, ICM shipped Nordyne's entire order of 46,151 units at the rate of
approximately one shipment per week. With each shipment, ICM included the
Customer Service Invoice described above, as had been the practice between the
parties. Nordyne paid in full for all the units it ordered.

       Thereafter, Nordyne began experiencing difficulties with the ICM control panel
and filed a breach-of-warranty action in the District Court. ICM moved to dismiss the
complaint for improper venue, invoking the forum-selection clause on the reverse side
of its Customer Service Invoices.

                                           II.

       The District Court agreed with ICM that the forum-selection clause was part of
the contract between the parties. Applying Missouri law, the Court held that the July
1997 price quotation was an offer because it was the result of negotiations between the
parties and it was sufficiently complete and detailed. It stated price per unit, estimated
quantity, and a description of the product. It also stated the date the quote would
expire, the packaging to be used, and terms regarding delivery and payment. The Court
held that the "order acknowledgment" referred to in this quotation was ICM's invoice,
which as noted above, begins with the statement, "CUSTOMER'S ORDER IS

                                           -4-
ACCEPTED . . . ." Nordyne accepted the offer by signing the production approval on
September 15, 1997. Thus, the terms and conditions, including the forum-selection
clause, on the reverse side of ICM's invoices were incorporated by reference in ICM's
offer, and Nordyne accepted these terms when it accepted ICM's quotation.

      On appeal, Nordyne argues that the District Court erred as a matter of law in
holding that the contract between the parties included the forum-selection clause. It
argues that the July 1997 quotation did not amount to an offer because (1) it was not
for immediate acceptance, but was subject to ICM's approval at its home office, and
to ICM's providing acceptable samples, and (2) it did not specify quantity and did not
include a delivery schedule. Nordyne proposes that its September 1997 purchase order
was the offer, which ICM accepted by signing and returning Nordyne's
acknowledgment form. Nordyne argues that the terms and conditions on ICM's
invoices were not part of the contract because the first invoice arrived after the contract
had been made. These terms and conditions were thus simply proposals for modifying
an existing contract and not binding on Nordyne without its express consent.

                                           III.

      In this diversity case, we review de novo the District Court's application of state
law, predicting how the highest court in Missouri would resolve the issues. See Salve
Regina College v. Russell, 
499 U.S. 225
, 231 (1991). The transaction between
Nordyne and ICM for the sale of goods is governed by Article 2 of the Uniform
Commercial Code (UCC), as adopted by Missouri, Mo. Rev. Stat. § 400.1-201 et seq.
A determination of the terms of the contract between ICM and Nordyne must begin
with identification of the offer and acceptance. Because the UCC does not define
"offer," Missouri looks to its common law and to the Restatement of Contracts for the
definition. See Brown Machine, Division of John Brown, Inc. v. Hercules, Inc., 
770 S.W.2d 416
, 419 (Mo. App. 1989).


                                           -5-
       Under Missouri case law, an "offer is made when the offer leads the offeree to
reasonably believe that an offer has been made." 
Id. The Restatement
(Second) of
Contracts § 24 defines offer as "the manifestation of willingness to enter into a bargain,
so made as to justify another person in understanding that his assent to that bargain is
invited and will conclude it." The general rule is that a price quotation, such as one
appearing in a catalogue or on a flyer, is not an offer, but is rather a suggestion to
induce offers by others. 
Brown, 770 S.W.2d at 419
. However, a price quotation, "if
detailed enough, can amount to an offer creating the power of acceptance; to do so it
must reasonably appear from the price quote that assent to the quote is all that is
needed to ripen the offer into a contract." Id.; see also The Boese-Hilburn Co. v. Dean
Machinery Co., 
616 S.W.2d 520
, 524 (Mo. App. 1981). Factors relevant in
determining whether a price quotation is an offer include the extent of prior inquiry, the
completeness of the terms of the suggested bargain, and the number of persons to
whom the price quotation is communicated. Restatement (Second) of Contracts § 26,
comment c.

       Here all factors weigh in ICM's favor. ICM and Nordyne had been
communicating for several months regarding the contract at issue before the July 29,
1997, quotation was sent, this quotation was sent only to Nordyne, and the quotation
included quantity, price, and time in which to accept, as well as packaging, shipping,
and payment terms. We note that the quotation was for a product specifically designed
for Nordyne. We find Nordyne's argument that the quotation was not an offer because
it did not contain a delivery schedule to be without merit. The quotation included
sufficient terms to constitute an offer under Missouri law.

     The fact that ICM's home office issued the letter of September 12, 1997, asking
for Nordyne's production approval, i.e., Nordyne's acceptance of ICM's offer,
undermines Nordyne's argument that the quotation was not an offer because it required
ICM's home office approval. This approval in fact occurred, and thereafter Nordyne
approved the beginning of production.

                                           -6-
        We also reject Nordyne's argument that the quotation could not be the offer
because the quantity was not definite. The quoted price-per-unit was based on
Nordyne's own estimated annual usage of 40,000 units. Once Nordyne signed the
production approval, we believe it was bound to purchase approximately this many
units, just as ICM was bound to provide them at the quoted price. In fact, each party
lived up to its side of the bargain in these respects. Nordyne ordered and paid for
46,151 units; ICM shipped the units ordered and charged Nordyne $9.87 apiece. Each
purchase order issued by Nordyne, including the first one for 20,000 units, was not a
new offer, but rather part performance of the contract between the parties. This
contract included the terms and conditions under which the parties had been dealing for
approximately ten years. The forum-selection provision had been part of the parties'
course of dealing and incorporated by reference into the present contract. Lastly, we
perceive no unfairness in enforcing one term of the terms and conditions on ICM's
invoices, when Nordyne itself had been taking advantage of another such term —
namely, the one-year warranty. Thus the District Court correctly granted ICM's motion
to dismiss on the basis of improper venue.

      Accordingly, we affirm.

      A true copy.

             Attest:

                       CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                          -7-

Source:  CourtListener

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