## Facts

- Wagner Excello Foods, Inc. (manufacturer) and Fearn International, Inc. (marketer) entered a five-year written agreement for Wagner to manufacture pasteurized fruit drink concentrates using Fearn’s formulas and packaging specifications.
- The agreement required Fearn to purchase minimum annual quantities: 150,000 cases (year 1), 300,000 (year 2), and at least 450,000 (years 3–5).
- The contract used a periodic price-review mechanism rather than a fixed price: every four months Wagner could propose price changes with 30 days’ notice and substantiation; absent objection, the price became effective; if Fearn objected and the parties could not agree, the contract terminated after a specified period.
- The agreement provided for automatic year-to-year renewal after the initial term unless timely written notice of termination was given.
- Wagner alleged it relied on the agreement by adding employees and purchasing packaging equipment and machinery costing approximately $900,286.
- Fearn’s purchases fell far below the stated minimum quantities during the first three years, while Wagner continued performing without timely suit or formal insistence on strict compliance.
- Wagner sued alleging breach of contract and promissory estoppel; the trial court dismissed under Illinois Code of Civil Procedure § 2-615, including dismissal of an amended complaint that proceeded solely on breach of contract.

## Issues

1. Whether a long-term goods contract with an open, periodically negotiated price term and a termination mechanism is enforceable, or an unenforceable “agreement to agree.”
2. Whether Wagner waived enforcement of minimum purchase requirements for prior years by its course of performance (continued performance without timely objection or suit).
3. Whether a promissory estoppel claim is available where an express, enforceable contract governs the same subject matter.
4. Whether dismissal at the pleading stage was improper as to claims turning on the parties’ intent under a later “revised agreement” affecting prospective minimum-quantity obligations.

## Decision

- The appellate court affirmed in part and reversed in part, remanding for further proceedings.
- The court held the written agreement was an enforceable contract despite the open price mechanism and potential termination if price agreement failed.
- The court held Wagner’s course of performance established waiver, as a matter of law, of claims based on Fearn’s failure to meet minimum purchase requirements during the earlier years.
- The court affirmed dismissal of promissory estoppel because an enforceable contract governed the parties’ obligations.
- The court reversed dismissal in part and remanded for factual determination of whether a later “revised agreement” altered or eliminated the minimum purchase requirement going forward.

## Legal Principles

- A contract for the sale of goods may be enforceable even with an open price term if the parties intended to contract and the agreement provides a workable basis for performance and remedies.
- Under U.C.C. course-of-performance principles, a party may waive enforcement of an express contract term through prolonged acceptance of nonconforming performance and continued performance without timely objection.
- Waiver by course of performance may be resolved as a matter of law where the pleadings and undisputed conduct show that a party’s inaction reasonably induced the other party to believe strict enforcement would not occur for prior periods.
- Promissory estoppel is unavailable when an express, enforceable contract covers the same subject matter as the alleged promise.
- Where a later written modification or “revised agreement” creates an ambiguity about prospective obligations, the parties’ intent may present a fact question not suitable for dismissal on the pleadings.

## Conclusion

The appellate court treated the supply agreement as a valid sales contract despite periodic price renegotiation, ruled that Wagner’s prolonged nonenforcement waived recovery for past minimum-purchase shortfalls, rejected promissory estoppel because a contract governed, and remanded to determine whether a later revised agreement changed the minimum-quantity obligation for future performance.


Wagner Excello Foods, Inc. v. Fearn Int’l, Inc., 235 Ill. App. 3d 224, 601 N.E.2d 956 (Ill. App. Ct. 1st Dist. 1992)