Comput. Network, Ltd. v. Purcell Tire & Rubber Co. - 747 S.W.2d 669 (Mo. Ct. App. 1988)

Rule:

The essential elements of an enforceable contract are parties competent to contract, a proper subject matter, legal consideration, mutuality of agreement and obligation. Under Mo. Rev. Stat. § 400.2-204 (1986), it provides that a contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract, this section continues the common-law principle that the intent of the parties to make a contract must be manifested. 

Facts:

Appellant Purcell Tire & Rubber Company was engaged in the business of the sale and distribution of motor vehicle tires. In 1983 and 1984, appellee Computer Network Ltd., engaged in the general business of selling and developing computer hardware and software. It obtained hardware from several sources, including IBM. In this regard, appellee acted as a broker in purchasing from IBM and other companies. In the fall of 1983 and early 1984, appellee’s president and certain personnel of appellant entered into discussions concerning the possibility of selling and purchasing personal computers. Appellee’s president entered into discussions with the data processing manager for appellant and helped them develop a configuration of IBM Personal Computers to go to their retail stores. Thereafter, the president entered into discussions with appellant’s comptroller to arrive at the exact price and number of computers to be sold to them. After these discussions were held, appellee’s president prepared a letter that served as written confirmation of the purchase of 21 IBM personal computer over the next 12 months, took it to appellant’s comptroller to which the latter signed and was given a copy. After the expiration of the agreement, appellee president called appellant’s officer concerning the delivery of the remaining computers to which the latter denied having such agreement. Appellee filed a petition for damages alleging that appellant breached a written contract to purchase a fixed number of computers by purchasing fewer computers than agreed upon. The trial court entered a judgment awarding damages in favor of appellee concluding that there was a legally binding contract. Appellant challenged the judgment. On appeal, appellant claimed that the trial court erred in its conclusion because the court failed to consider the surrounding circumstances and facts that demonstrated a lack of mutual assent and intent to form a contract, the parties' previous conversations and their lack of intent to contract; the ambiguity and incompleteness of the letter; and the parties' practical construction of the letter. 

Issue:

Was there a legally binding contract between the parties?

Answer:

Yes.

Conclusion:

The court affirmed the judgment and held that it was supported by substantial evidence. The court ruled that the trial court’s judgment was not contrary to the weight of the evidence and that the court did not erroneously apply the law. The court determined that the trial court correctly ruled that there was a valid and binding contract between the parties for the purchase of 21 computers since the objective manifestation of mutual assent was present. That the contract was not ambiguous as the trial court correctly found that the contract for the sale of computers was not indefinite. Also, the court held that the trial court fully considered whether there was an objective manifestation of consent to enter into a contract, and did consider appellant’s intention to purchase computers for the number of stores owned by them.