## Facts

- A federal construction project required Progressive Enterprises, Inc. (the prime contractor) to procure a cast-iron deaerator; Fidelity & Deposit Co. of Maryland issued the project payment bond.
- Crane Co. (through a trade name) submitted a written proposal on May 3, 1974 to supply the deaerator for $5,238, stated as firm if accepted within 15 days.
- Progressive did not accept within the 15-day period, bid the federal job, and after award confirmed the quoted price for a limited period.
- On July 1, 1974, Progressive issued a purchase order accepting Crane’s offer; after an exclusion, the agreed price at that time was $5,217.
- Crane’s agent later advised Progressive that, due to rapidly increasing material costs, the order would be accepted only at the “current price” at shipment, quoting $7,350.
- Without protesting or attempting to renegotiate, Progressive issued a second purchase order on August 7, 1974 at the $7,350 price.
- Crane delivered the deaerator, which was installed.
- Progressive paid $5,550 but refused to pay the remaining balance based on the $7,350 price.
- The United States, for the use and benefit of Crane, sued Progressive and its surety under the Miller Act to recover the unpaid amount.

## Issues

1. Whether the parties’ post-acceptance price increase was an enforceable contract modification under U.C.C. § 2-209 despite no new consideration.
2. Whether the price increase was demanded and agreed to in good faith, or instead resulted from economic coercion rendering the modification unenforceable.
3. Whether Progressive’s second purchase order at $7,350 constituted voluntary assent barring payment at the earlier price.

## Decision

- The court found that an initial contract was formed at the lower price when Progressive issued the July 1 purchase order.
- The court held the later $7,350 term was a valid modification under U.C.C. § 2-209 because it was made in good faith and accepted by Progressive.
- The court rejected Progressive’s claim that the modification was extortionate or imposed in bad faith.
- The court held Progressive and the surety liable under the Miller Act for the unpaid balance based on the $7,350 modified price, plus applicable interest.

## Legal Principles

- Under U.C.C. § 2-209, a modification of a sales contract need not be supported by new consideration, but must be made in good faith.
- A price increase tied to documented or credible market-driven cost changes may satisfy the U.C.C. good-faith requirement.
- A party’s unprotested issuance of a new purchase order reflecting modified terms can constitute assent to a modification and defeat later attempts to revert to prior terms.
- Economic duress requires wrongful pressure or coercion; a commercially justified request to adjust price, without wrongful threats and followed by voluntary written assent, does not void a modification.
- In a Miller Act payment-bond action, once the supplier proves the enforceable contract price (including any valid modification) and nonpayment, the prime contractor and surety are responsible for the unpaid balance.

## Conclusion

The court enforced a post-formation price increase because it was a good-faith commercial modification accepted through a second purchase order, and it awarded the supplier recovery of the unpaid balance against both the prime contractor and the payment-bond surety under the Miller Act.


United States ex rel. Crane Co. v. Progressive Enters., Inc., 418 F. Supp. 662 (E.D. Va. 1976)