## Facts

- E.C. Styberg Engineering Co. manufactured custom components and developed an Inertia Brake Assembly (“I-brake”) for Eaton Corp.’s six-speed transmissions.
- From 1998 to 2000, Styberg provided prototypes and then limited quantities of I-brakes while the parties discussed possible large-scale production.
- During negotiations, an Eaton engineer emailed that Eaton was “willing to give” a minimum-unit commitment, referencing “like the 13,000” previously discussed, and suggesting a guarantee sufficient to pay off Styberg’s capital investment.
- Styberg later sent a written proposal contemplating substantially larger production (e.g., 60,000 units) with a pricing structure in which the first 13,000 units would average $544.88 (starting higher and decreasing as production improved).
- Eaton communicated willingness to fund tooling and purchase an initial quantity, but Eaton never issued a purchase order committing to 13,000 units.
- Styberg indicated 13,000 units would not cover its costs and stated it needed a minimum commitment of 25,000–30,000 units.
- The parties continued discussions about price, quantity, and production scheduling; Eaton placed only smaller, specific orders (and cancelled some), which Styberg filled.
- Styberg built inventory believing Eaton was bound to purchase 13,000 units; when Eaton did not buy the inventory, Styberg sued for breach of contract seeking damages exceeding $3 million.

## Issues

1. Whether the parties’ communications and conduct formed an enforceable U.C.C. Article 2 contract obligating Eaton to purchase 13,000 I-brakes.
2. Whether emails, letters, and proposals constituted offer and acceptance (or otherwise established mutual assent) as to essential terms, especially quantity.
3. Whether the parties’ course of performance—limited deliveries and purchase-order transactions—proved a broader 13,000-unit commitment.

## Decision

- The Seventh Circuit affirmed the judgment for Eaton after a bench trial.
- The court held no contract was formed requiring Eaton to purchase 13,000 I-brakes.
- The court concluded the record showed ongoing negotiations rather than a final agreement on essential terms.
- The court rejected Styberg’s reliance on partial performance and limited orders as proof of a 13,000-unit contract.
- Applying clear-error review to post-bench-trial findings, the court found no basis to disturb the district court’s credibility determinations and factual conclusions.

## Legal Principles

- Under U.C.C. Article 2, contract formation requires objective mutual assent; continued negotiation and unresolved essential terms can defeat formation.
- Quantity is an essential term in a goods contract; a claimed “minimum commitment” must be shown by clear assent rather than unilateral belief.
- Price quotations, letters discussing willingness to proceed, and production proposals are commonly treated as invitations to negotiate unless they manifest a definite offer and acceptance.
- A series of discrete purchase orders and deliveries may reflect separate contracts for those orders, not an overarching requirements or minimum-quantity agreement.
- After a bench trial, appellate review of factual findings (including credibility-based findings on assent and intent) is for clear error.

## Conclusion

Because the parties’ communications reflected ongoing negotiation and left quantity, pricing, and scheduling unresolved—and because the parties’ conduct showed only separate purchase-order transactions—the court held Eaton never assented to a binding obligation to buy 13,000 units and affirmed judgment for Eaton.


E.C. Styberg Eng’g Co. v. Eaton Corp., 492 F.3d 912 (7th Cir. 2007)