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Law School Case Brief

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

Rule:

In the context of a lengthy, on-going business relationship, seeking modification of a sales price is not uncommon and, given increased costs, is a fair method of doing business in order to preserve the desirability of the relationship for both parties. In such a situation, the parties must be able to rely on objective, unequivocal manifestations of assent. 

Facts:

On May 3, 1974, Crane Company submitted a written proposal to furnish a cast iron deaerator to Progressive Enterprises, Inc. for $ 5238, the price quoted as firm for acceptance within fifteen days. On July 1, 1974, Progressive accepted the offer to sell by submission of a purchase order. However, Crane, through its authorized selling agent, advised Progressive that because of rapidly escalating material costs, the purchase order could only be accepted subject to current price in effect at time of shipment. The communication included a quote for $7350. The parties agree that the July 1, 1974 purchase order was an effective acceptance of Crane's offer to sell. However, apparently without protest to or discussion with Crane or its agent, Progressive agreed to the higher price and, on August 7, 1974, submitted a second purchase order for the machine, this time at $7350. Therafter, the machine was delivered and Progressive only paid $5,550 and asserting that the balance was not due because the increased price was not a valid modification of the contract. Crane then instituted this suit to recover $2,218 plus interest from March 2, 1975, representing the difference between the higher agreed price with interest and the amount paid by the defendant.

Issue:

Was there a valid modification of the contract?

Answer:

Yes

Conclusion:

The Court found in favor of Crane in the amount of $2,218 plus interest from March 2, 1975. The Court held that the letters of from Crane's agent support a finding that the seller's costs had increased, justifying a request for modification of the price to Progressive. Although Progressive possessed the contractual right to refuse to modify and to demand performance on the original terms, it failed to do so and gave objective assent to the higher price. It added that in the context of a lengthy, on-going business relationship, seeking modification of a sales price is not uncommon and, given increased costs, is a fair method of doing business in order to preserve the desirability of the relationship for both parties. In such a situation, the parties must be able to rely on objective, unequivocal manifestations of assent. The secret intention of Progressive never to pay the higher price is hardly in keeping with the good faith requirement of the U.C.C. of honesty in fact.

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