Facts
- Empire Machinery Co. sought to purchase and install an “interconnect” telephone system for its facilities.
- Litton Business Telephone Systems, through its national accounts manager, solicited Empire and negotiated system terms over several months.
- On July 30, 1973, Litton sent a letter stating that, upon receipt of a signed order and deposit, Litton would install a specified system and later replace it with a newer switching system when available.
- Empire’s president signed Litton’s printed “Equipment Sales Agreement” and paid a deposit of $8,546, which Litton accepted and deposited.
- The printed agreement included a “home office acceptance” clause providing the agreement would not be effective until approved, accepted, and executed in writing by Litton’s home office; no home-office representative signed.
- After the deposit, both parties acted as though a contract existed, including sending letters to the telephone service provider stating they had formed a “contractual relationship” for installation.
- At Litton’s request, Empire purchased about $12,000 in electrical equipment to support the planned installation.
- Litton personnel coordinated implementation steps, including requesting a new telephone number to be placed in service on a specified date.
- Litton ultimately did not ship or install the system, and Empire sued for breach of contract.
Issues
- Whether the absence of written home-office approval and execution under a “home office acceptance” clause conclusively prevented contract formation.
- Whether the parties’ communications and performance created at least a triable fact question on mutual assent, making summary judgment improper.
Decision
- The Court of Appeals reversed the grant of summary judgment for Litton and remanded.
- The court held that a home-office acceptance clause was not necessarily the exclusive means of forming a binding contract.
- The court concluded that the parties’ words and conduct could permit a factfinder to determine that a contract existed despite the lack of a home-office signature.
- Because reasonable inferences from the record could support contract formation, the existence of a contract could not be decided as a matter of law on summary judgment.
Legal Principles
- Contract formation turns on objective manifestations of mutual assent as shown by the parties’ communications and conduct.
- A form clause requiring home-office approval may be treated as evidence of intent, but it is not automatically conclusive where subsequent conduct indicates the parties regarded themselves as bound.
- Where material facts or competing inferences exist on intent to contract, summary judgment is improper and the issue should be resolved by the trier of fact.
Conclusion
The appellate court held that the parties’ post-agreement conduct and mutual representations could support a finding of contract formation notwithstanding an unsigned home-office acceptance clause, requiring reversal of summary judgment and remand for factfinding.