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Law School Case Brief

Cont'l Forest Prods. v. Chandler Supply Co. - 95 Idaho 739, 518 P.2d 1201 (1974)

Rule:

As the essence of a contract implied in law lies in the fact that the defendant has received a benefit which it would be inequitable for him to retain, it necessarily follows that the measure of recovery in a quasi-contractual action is not the actual amount of the enrichment, but the amount of the enrichment which, as between the two parties, it would be unjust for one party to retain.

Facts:

Defendant Chandler Supply Company, a wholesale lumber distributor, ordered plywood from North America Millwork, Inc. (supplier), who in turn placed the order with plaintiff Continental Forest Products, Inc. for delivery to defendant. After wood was delivered, defendant paid supplier for the wood, subtracting an amount that supplier owed to defendant. Supplier refused to accept payment, claiming it was owed to plaintiff. Plaintiff refused to accept the amount less the set off, and sued defendant for the price. The district court held in favor of plaintiff, and denied defendant's right to claim the set off. On appeal, defendant denied that it owed plaintiff any money, alleging that it had a contract only with the supplier to whom it had tendered payment.

Issue:

Was there a contract between plaintiff and defendant, thereby entitling plaintiff to demand payment from the defendant for the value of the plywood delivered?

Answer:

Yes, but of a quasi-one.

Conclusion:

The Supreme Court of Idaho held that a quasi-contract existed between the plaintiff and the defendant. According to the Court, a quasi-contract is not technically a contract, but an obligation imposed by law for the purpose of bringing about justice and equity without reference to the intent or the agreement of the parties, and, in some cases, in spite of an agreement between the parties. Here, the Court determined that there was neither an express nor an implied-in-fact contract between the parties; however, under the peculiar circumstances of the case, a quasi-contract existed obligating defendant to pay for the materials that it had received. Consequently, the Court held that the measure of recovery in a quasi-contractual action was not the actual amount of the enrichment, but the amount of the enrichment which, as between the two parties, it would be unjust for one party to retain. According to the Court, the enrichment that the defendant “unjustly received” was the value of the plywood shipped less the trade set off that defendant had against supplier and which it would have been entitled to take had the transaction been completed the way defendant had intended and attempted to complete it. The Court noted that defendant had a right to deal exclusively with supplier and use his trade set off as part of the purchase price. The Court concluded that defendant should not be deprived of this set off in view of the way that plaintiff became involved in this transaction.

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