## Facts

- A vessel operator and a steel manufacturer entered a long-term Great Lakes iron-ore shipping contract in 1957, later extended through 2010.
- The carrier agreed to dedicate capacity sufficient to meet all of the shipper’s Great Lakes ore-shipping needs.
- The contract set a flexible rate using (1) a primary formula tied to published benchmark rates and (2) a secondary benchmark based on rates charged by leading independent vessel operators if the primary source failed.
- The parties had a long-standing, closely connected business relationship, including joint ventures, interlocking directorates, and stock ownership ties.
- The carrier made substantial investments in vessels and facilities tailored to the shipper’s needs.
- In the mid-1980s, industry conditions changed and the specified pricing sources became unavailable, making both pricing mechanisms impracticable to apply.
- The parties negotiated a rate for one season but could not agree on later rates, yet they continued performance while disputing price.
- The carrier sought declaratory relief to establish an enforceable rate; the shipper argued the contract became unenforceable due to the failure of the pricing provisions.

## Issues

1. Whether the failure of the contract’s primary and secondary pricing mechanisms rendered the agreement unenforceable for indefiniteness, or whether the parties intended to remain bound.
2. If the parties intended to remain bound, whether a court may supply a reasonable rate when the contractual pricing formula fails.
3. Whether the trial court could retain equitable jurisdiction and require negotiation and, if necessary, mediation to resolve future annual rate disputes.

## Decision

- The Supreme Court of Ohio affirmed the judgment enforcing the contract.
- The Court held there was competent, credible evidence that the parties intended to remain bound despite the collapse of the specified pricing mechanisms.
- The Court upheld the trial court’s authority to determine a reasonable rate for the 1986 season and affirmed the specific rate set ($6.25 per gross ton) as supported by the evidence.
- The Court approved the trial court’s continued equitable supervision, including an order requiring the parties to negotiate and submit unresolved future rate disputes to mediation.

## Legal Principles

- A contract is not unenforceable solely because a pricing formula becomes inoperable; the key question is whether the parties intended to be bound notwithstanding the failure of the mechanism.
- When the parties’ intent to contract is established and performance continues, a failed price mechanism may be treated as an omitted term that a court can supply rather than a defect voiding the agreement.
- If a price term cannot be determined under the contract but the agreement remains enforceable, a court may set a reasonable price at the relevant time using objective evidence such as market conditions and industry rates.
- Equitable remedies, including specific performance and forward-looking supervision, may be appropriate where monetary damages would be difficult to measure and ongoing performance requires a workable pricing process.
- A trial court may structure a process (negotiation followed by mediation) to resolve future pricing disputes in a long-term commercial relationship when necessary to implement the parties’ agreement.

## Conclusion

The Ohio Supreme Court enforced a long-term shipping agreement even though its pricing benchmarks failed, permitted the trial court to supply a reasonable rate based on objective evidence, and approved continued equitable oversight including mediation to manage future rate disputes where damages were difficult to calculate and the parties’ intent to remain bound was supported by the record.


Oglebay Norton Co. v. Armco, Inc., 52 Ohio St. 3d 232, 556 N.E.2d 515 (Ohio 1990)