## Facts

- C-Thru Container Corp. sold bottle-making equipment to Midland Mfg. Co. under a 1989 written agreement.
- Midland agreed both to purchase the equipment and to manufacture “commercially acceptable” bottles for C-Thru; Midland would pay for the equipment through credits against C-Thru’s bottle purchases.
- The contract stated C-Thru expected to order 500,000–900,000 bottles in 1989 and included a clause allowing C-Thru, if Midland failed to manufacture bottles, to demand the full equipment purchase price plus interest within 30 days.
- Midland retrieved the equipment and told C-Thru it was ready to begin production, but C-Thru never placed any bottle orders and instead bought from another supplier at a lower price.
- C-Thru claimed Midland indicated in repeated phone calls that it could not produce commercially acceptable bottles and that Midland did not provide sample bottles.
- In 1992 Midland gave written notice rescinding the contract based on C-Thru’s failure to order bottles; C-Thru did not respond.
- Midland asserted an artisan’s lien for costs associated with moving, rebuilding, and repairing the machinery, foreclosed the lien, and sold the equipment.
- After the lien sale, C-Thru demanded Midland pay the equipment price plus interest under the contract’s failure-to-manufacture clause and then sued for breach, relying on asserted industry practice that suppliers provide sample bottles demonstrating commercial acceptability before orders are placed.
- The district court granted Midland summary judgment, ruling trade-usage evidence was barred by the U.C.C. parol-evidence rule; the court of appeals reversed.

## Issues

1. Whether Iowa Code § 554.2202 (U.C.C. § 2-202) permits evidence of usage of trade to explain or supplement a final written sales contract by adding a consistent additional term.
2. Whether admissibility of trade-usage evidence requires an initial finding that the written contract is ambiguous.
3. Whether the asserted trade usage (requiring sample bottles before orders) contradicts any express term of the parties’ written agreement, such that summary judgment was proper.

## Decision

- The Iowa Supreme Court affirmed the court of appeals, reversed the district court’s grant of summary judgment for Midland, and remanded.
- The court held trade-usage evidence was admissible under Iowa Code § 554.2202 to supplement the written contract, even if the writing appeared complete and unambiguous, so long as the usage did not contradict an express term.
- The alleged industry practice regarding sample bottles did not contradict the written agreement, which was silent on samples and on the sequence for demonstrating “commercial acceptability.”
- Viewing the record in the light most favorable to C-Thru, the trade-usage evidence created a genuine issue of material fact about Midland’s performance obligations and whether C-Thru’s duty to order was conditioned on receipt of acceptable samples.

## Legal Principles

- Under Iowa Code § 554.2202 (U.C.C. § 2-202), a final written sales agreement may be explained or supplemented by course of dealing, usage of trade, and course of performance.
- Trade-usage evidence may be admitted to add a consistent additional term; the controlling question is inconsistency with an express contractual term, not whether the proffered term is “new.”
- Admissibility of usage-of-trade evidence does not depend on a threshold finding that the written contract is ambiguous.
- Summary judgment is improper when admissible trade-usage evidence would allow a reasonable fact-finder to determine that additional performance obligations or conditions precedent exist consistent with the written agreement.

## Conclusion

The Iowa Supreme Court held that, in a U.C.C. sale of goods, trade usage may supplement a final written contract without any ambiguity requirement and may add consistent terms; because the asserted sample-bottle practice did not conflict with the written agreement and created a fact dispute over performance duties, summary judgment for Midland was reversed and the case was remanded.


C-Thru Container Corp. v. Midland Mfg. Co., 533 N.W.2d 542 (Iowa 1995)