Opinion ID: 6515
Heading Depth: 2
Heading Rank: 1

Heading: Implied Restriction on Cutters

Text: 9 Du Pont interprets its contract with Choina to require Choina to use only du Pont-approved cutters to fabricate Spunlaced garments. The district court agreed and entered judgment as a matter of law for du Pont on this issue. We review a district court's interpretation of a contract de novo. 3 10 The starting point in contractual interpretation is the language of the contract itself. 4 Here, the contractual language provides no support for du Pont's position. Specifically, the operative language of the contract between Choina and du Pont is set forth in a letter agreement, which provides that: 11 Du pont has agreed to provide you on an exclusive basis through December 1988 the heavier weight 4 oz./sq. yd. E-89 spunlaced aramid for use in limited wear protective apparel applications ... 12 Although this contract is absolutely silent as to any restrictions on how and by whom Choina's garments may be fabricated, du Pont nonetheless relies on Louisiana Civil Code article 2054--as did the district court--for the proposition that such a restriction must be implied from law, equity, or usage. Article 2054 provides that: 13 When the parties made no provision for a particular situation, it must be assumed that they intended to bind themselves not only to the express provisions of the contract, but also to whatever the law, equity, or usage regards as implied in a contract of that kind or necessary for the contract to achieve its purpose. 5 14 Initially, we observe that the restriction on cutters was an incidental, not a necessary, term of this contract. Simply put, this restriction was not essential to give effect to du Pont's grant of exclusive marketing rights to Choina. 6 Thus, this is not the type of contractual term--such as price--that had to be added so that Choina and du Pont would have a functional contract. Rather, the issue presented here is whether such a restriction should be added to this contract, or, to use the words of the Civil Code, whether such a restriction ought to be regard[ed] as implied from law, equity, or usage. 15 Du Pont has not shown how law, equity, or usage justifies incorporation of this restriction. Du Pont points to no law--and we know of none--that would require Choina's choice of cutters to be limited to those approved by du Pont. An appeal to equity by du Pont fares no better. Du Pont drafted this contract and was certainly in a position to have its wishes regarding any restriction on cutters expressed in the written agreement. Instead, the contract itself explicitly provides that [d]u Pont has agreed to provide you (Choina) with the Spunlaced fabric. 16 Such contractual language offered Choina no clue that he could obtain garments fabricated from Spunlaced fabric only from cutters approved by du Pont. Indeed, Choina's awareness of this practice--if he was aware at all 7 --could come only from his previous dealings with du Pont as buyer for CPR and later as owner of MAC Sales. But even if Choina had such knowledge, neither Choina nor du Pont had a reasonable expectation that the multifarious terms of those various dealings--including the cutter restriction--were incorporated sub silentio into his contract with du Pont. Accordingly, we conclude that, under these circumstances, our regretting du Pont's invitation to insert a cutter restriction into the agreement in the face of contractual silence would not be inequitable; that is, it would not work an unfair advantage in favor of Choina. 8 17 Finally, du Pont failed totally to adduce evidence that its cutter restriction represented a usage. Usage is defined in the Civil Code as a practice regularly observed in affairs ... similar to the object of the contract at issue. 9 The appropriate reference for determining whether a practice is regularly observed is the industry or trade involved. 10 Here, the only evidence offered by du Pont is that du Pont--not the entire industry or trade--unilaterally required that all protective wear garments be fabricated by an approved cutter. 11 We conclude that this evidence is insufficient in itself to show that a usage existed in the relevant industry or trade. 12 18 Du Pont has failed to establish that law, equity, or usage supports insinuation of a term restricting Choina's ability to chose cutters to only those approved by du Pont. We thus reverse and remand so that Choina may have an opportunity to prove the quantum of damages, if any, he suffered from du Pont's unjustified imposition of such a restriction.