Wis. Knife Works v. Nat'l Metal Crafters

781 F.2d 1280 (7th Cir. 1986)

 

RULE:

An attempted modification is effective as a waiver only if there is reliance. Reliance, if reasonably induced and reasonable in extent, is a common substitute for consideration in making a promise legally enforceable.

FACTS:

Parties entered into a contract to provide raw materials to manufacture power tools. The parties were diverse; the plaintiff was incorporated in Maryland and had a principle place of business in Wisconsin, the defendant was incorporated in Delaware and had a principle place of business in Illinois. The plaintiff began by sending the defendant a series of purchase orders, on the back of which was printed that acceptance of the order constitutes agreement to, among other things, only written modification. The defendant failed to deliver the goods on time, but the plaintiff did not initially consider it a breach. Instead, the plaintiff issues more purchase orders which again went unfilled. The plaintiff then terminated the contract. The defendant argued that the contract was modified, thus the plaintiff waived its ability to sue for non-delivery. The trial court held that the contract could be modified orally, or by conduct. Thus, the lower court dismissed the plaintiff’s suit.

ISSUE:

Was the plaintiff’s conduct sufficient to modify the contract, despite the no oral modification clause in the agreement?

ANSWER:

No, the court held the contract could only be modified in writing.

CONCLUSION:

The court held that the contract could only be modified in writing. It reasoned that the clause forbidding non-written modification was valid and applicable. Further, the defendant did not offer enough evidence to show that the parties successfully modified the contract, or that it detrimentally relied on the modification. Thus, its waiver argument was unsuccessful. The court reversed the trial court’s order and remanded for a new trial.

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