Facts
- In 1991, the City of Chicago solicited bids to supply “Gotcha Glue Boards,” a rodent trap, specifying “150 cases of five-and-a-half-inch traps with ‘24/case’” and “75 cases of 11-inch traps with ‘12/case.’”
- Ragus Company submitted a bid, and the City awarded Ragus the contract.
- Ragus tendered delivery of 150 cases containing 24 individual 5½-inch traps per case and 75 cases containing 12 individual 11-inch traps per case.
- The City rejected the shipment, stating that in the trade the product was handled in pairs and that “24/case” and “12/case” meant 24 pairs and 12 pairs per case, not 24 or 12 individual traps.
- After Ragus refused to provide additional traps, maintaining it had met the written quantity terms, the City excluded Ragus from bidding on future City projects.
- Ragus sued the City and three City employees (Walter Brueggen, Mark Pofelski, and Alexander Grzyb) seeking money damages and a declaration that it had not breached the contract.
- The City moved to dismiss under 735 ILCS 5/2-619 and submitted affidavits to show trade usage: the manufacturer packaged and sold the traps in pairs, resellers bought and resold in pairs, and the vendor that later filled the order delivered cases containing the paired quantities.
- The trial court accepted the City’s interpretation, treated the trade usage evidence as undisputed for purposes of the motion, and dismissed the complaint.
- Ragus appealed, arguing the contract was unambiguous and that the court should not have relied on usage-of-trade evidence.
Issues
- Whether the bid terms “24/case” and “12/case” were ambiguous such that the court could consider usage of trade under UCC § 1-205 (now § 1-303) to interpret those terms.
- Whether the City’s affidavits were sufficient, at the § 2-619 stage, to establish a usage of trade that the quantity terms referred to pairs per case, leaving no factual issue requiring trial.
Decision
- The appellate court affirmed the dismissal of Ragus’s complaint.
- The court held the terms “24/case” and “12/case” did not rule out a reasonable interpretation that the counts referred to pairs, so the agreement was ambiguous.
- Because the agreement was ambiguous, the court held it was proper to consider usage of trade under the UCC to give meaning to the quantity language.
- The court held the City’s affidavits and supporting materials established a consistent trade usage that the traps were packaged, sold, and purchased in pairs, making “24/case” and “12/case” mean 24 pairs and 12 pairs per case.
- With no genuine factual dispute about the meaning supplied by trade usage, the contract could be interpreted as a matter of law, and dismissal under § 2-619 was appropriate.
Legal Principles
- Contract language is ambiguous when it supports more than one reasonable meaning; to treat language as unambiguous, other reasonable readings must be excluded.
- Under UCC § 1-205 (now § 1-303), usage of trade may give particular meaning to, and may supplement or qualify, the terms of an agreement when the written language allows more than one reasonable interpretation.
- Uniform, regular commercial practice shown through competent affidavits can establish usage of trade for purposes of contract interpretation.
- When contract interpretation presents no genuine issue of material fact, a court may decide the meaning of the contract as a matter of law and may resolve the case on a § 2-619 motion.
Conclusion
In Ragus Co. v. City of Chicago, the Illinois Appellate Court held that the procurement terms “24/case” and “12/case” were ambiguous because they could reasonably refer either to individual traps or to pairs, and that the trial court properly used UCC trade-usage evidence showing the industry dealt in pairs to interpret the contract as requiring 24 pairs and 12 pairs per case; because that interpretation left no factual dispute, dismissal under § 2-619 was affirmed.