Opinion ID: 3001487
Heading Depth: 3
Heading Rank: 2

Heading: Breach of the 2003 Blanket Purchase Order

Text: Keck Garrett next submits that the district court erred when it held that Nextel had no obligation to pay it $1 million, the amount that Keck Garrett characterizes as the full value of the 2003 blanket purchase order. In Keck Garrett’s view, Nextel breached the 2003 blanket purchase order by failing to assign it any work and by refusing to pay what it considers to be the full value of the contract. Keck Garrett characterizes the 2003 blanket purchase order as a commitment by Nextel to assign it $1 million worth of work in 2003. Alternately, Keck Garrett contends the 2003 blanket purchase order was a commitment to pay Keck Garrett $1 million, regardless of the amount of work Nextel assigned to or accepted from Keck Garrett. Keck Garrett believes that Nextel effectively repudiated the contract. Therefore, Keck Garrett reasons, it was not required to perform any work before becoming entitled to the $1 million value of the contract. In reply, Nextel asserts that the 2003 blanket purchase order controlled the relationship between Keck Garrett and Nextel. The blanket purchase order was created in connection with Nextel’s budgeting process and reflected its estimate that, during 2003, it would spend $1 million on packaging projects with Keck Garrett. In Nextel’s view, the 2003 blanket purchase order does not guarantee any amount of work or any payment to Keck Garrett. ConseNo. 07-1350 15 quently, Nextel contends, it did not breach the contract when it assigned the Falcon Project to another company. Nextel is correct in its view that no term or condition of the 2003 blanket purchase order guarantees a minimum payment to Keck Garrett. The 2003 blanket purchase order simply authorized specific Nextel employees to release funds to Keck Garrett against the purchase order, up to a total of $1 million over the course of 2003. The blanket purchase order provided that Keck Garrett would be paid according to its terms only when Keck Garrett submitted proper invoices. A proper invoice was for work accepted by Nextel. Specifically, the 2003 blanket purchase order required Nextel to pay Keck Garrett only upon “submission of proper invoices or vouchers, the prices stipulated herein for work completed and/or Articles delivered and accepted, less any proper deductions or setoffs.” R.1 at 4. No provision of the contract can be read to require that Nextel pay $1 million to Keck Garrett regardless of the amount of work that Nextel actually assigned to it. In the absence of “proper invoices” for work that Nextel had assigned and that Keck Garrett had completed and delivered, Nextel had no obligation to Keck Garrett. Indeed, Keck Garrett has pointed to no term or condition in the 2003 blanket purchase order that guarantees that Nextel would assign any amount of work to Keck Garrett. Moreover, no provision of the document requires Keck Garrett to accept and perform any work. It did not prohibit Keck Garrett from accepting work on other projects, including projects for Nextel’s direct competitors. Rather, the blanket purchase order required Keck Garrett to perform work in a particular manner and within a particular time frame if it accepted, throughout the 16 No. 07-1350 course of the year, a project from Nextel. It also provided remedies to Nextel in the event that Keck Garrett agreed to do particular work and failed to deliver it in a timely fashion. We cannot accept Keck Garrett’s assertion that these conclusions amount to a ruling that Keck Garrett can only recover under the purchase order in quantum meruit. Nor does analysis render the contract illusory. Once Nextel assigned work to Keck Garrett, the 2003 blanket purchase order guaranteed payment to Keck Garrett under the contract’s terms. The document also established the conditions under which Nextel was required to accept work from Keck Garrett and regulated the manner in which it could change or modify its work requests once it had authorized Keck Garrett to begin working. Keck Garrett also contends that Nextel breached an oral understanding that supplemented the 2003 blanket purchase order. Such evidence is not properly before the court, however, because the alleged oral agreement predated the fully-integrated 2003 blanket purchase order. Delaware law gives effect to integration clauses when the contract is a formal written one between sophisticated parties. J.A. Moore Constr. Co. v. Sussex Assocs. Ltd., 688 F. Supp. 982, 987 (D. Del. 1988). “The parol evidence rule bars evidence of prior or contemporaneous agree- ments or negotiations that contradict the terms of an ‘integrated’ . . . writing.” Id. In such circumstances, parol evidence may only be used “to show fraud, accident or mistake as a ground for rescission.” Id. Of course, if contract language is ambiguous, parol evidence may be used to construe ambiguous terms that require extrinsic proof to determine their meaning. E.I. du Pont de Nemours & Co. v. Allstate Ins. Co., 693 A.2d 1059, No. 07-1350 17 1061 (Del. 1997). However, “[c]ontract language is not ambiguous simply because the parties disagree on its meaning.” Id. Ambiguity arises “only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings.” Id. The alleged oral agreement constituted parol evidence under Delaware law. J.A. Moore, 688 F. Supp. at 987. Keck Garrett has not pointed to any ambiguous terms in the 2003 blanket purchase order whose meaning may be clarified by parol evidence. Moreover, the district court independently determined, and we agree, that there were no ambiguous terms in the contract because the 2003 blanket purchase order’s provisions are not reasonably susceptible to different interpretations. Therefore, any evidence of a prior oral agreement cannot be used for clarification of the blanket purchase order, either. Keck Garrett also asks the court to compare purchase orders that Nextel had assigned to Keck Garrett in 2001 and 2002 with the 2003 blanket purchase order. Such evidence, like evidence of the prior oral agreement, is prohibited by the parol evidence rule. Id. The district court properly concluded that Nextel did not breach the 2003 blanket purchase order.2 2 In a similar vein, Keck Garrett submits that Nextel’s assignment of the Falcon Project to another company repudiated the 2003 blanket purchase order. Because we hold that Nextel did not breach the 2003 blanket purchase order, there is no need to examine whether Nextel’s alleged “anticipatory repudiation” excused Keck Garrett’s performance. 18 No. 07-1350