Opinion ID: 551885
Heading Depth: 3
Heading Rank: 2

Heading: Breach of the Oral Contract

Text: 187 The last of General Poly's arguments which we address is that the district court incorrectly directed a verdict in favor of Allied on the claim for breach of oral agreements. General Poly alleges that Allied and General Poly entered into an oral agreement whereby Allied would: (i) deliver an HMW resin by the end of 1979; (ii) develop a Hoescht-quality resin by that time; (iii) sell the new resin to General Poly on 90-day credit terms; and (iv) sell it to General Poly for one to two cents over the price of injection molding. Appellee's Br. at 86. According to General Poly, Allied breached these agreements because the prime resin was not ready for delivery by the end of 1979, Hoescht-quality was not reached until May 1981, and then Allied cut off all credit. Id. 188 The text of the district court's ruling is set forth in the previous subsection. The district court concluded that because General Poly accepted the off-grade resin without notifying Allied that it considered delivery of such goods to constitute breach, General Poly's claim for breach of the oral agreement was barred under sections 2-606 through 2-608 of the U.C.C. In addition, the district court stated, 189 As to the oral contract, which is suggested here as terms reached in January of '79, and which go hand in glove with the written agreement, I have also said in this case, again in the commercial setting, that there is no showing here that Defendants, through their representatives, have accepted them, particularly that portion which would address price or time of delivery. Simply said: there has been no meeting of minds shown. 190 R. Vol. 41 at 4588. 191 General Poly argues that the following evidence presented at trial constituted direct evidence of Allied's agreement to the terms of the oral contract. According to the testimony of General Poly's Hans Traver, Allied's Bonin stated that the ninety-day credit terms were deliberately omitted from the secrecy agreement to avoid the risk of other Allied customers discovering General Poly's favorable relationship with Allied. R. Vol. 11 at 664. On January 11, 1979, Allied's Bonin drafted a file memorandum in which he wrote that the General Poly representatives indicated they would buy at least 50% and possibly all their resin requirements from Allied if we have a satisfactory product when they start up in October 1979. Plaintiff's Ex. 129 (First Addendum to Appellee's Br., Doc. 6 at 2). On January 23, W.P. Prince, a technical manager at Allied, wrote an Allied internal memorandum in which he stated General Poly has agreed to work with us in developing HDPE film resins. Indications are that we can obtain 50% of their business if we have a suitable material by the time they start up in late 1979. Plaintiff's Ex. 138, Addendum to Appellee's Br., Doc. 9; see R. Vol. 11 at 650 (testimony of Hans Traver); R. Vol. 24 at 2231-32 (same). Finally, a promotional article approved by Allied's Paul Heath claimed that General Poly received a promise from Allied Chemical that a domestic supply of HMW HDPE would be available by the time the company began operation. Plaintiff's Ex. 1364, Addendum to Appellee's Br., Doc. 28; see R. Vol. 31 at 2981 (testimony of Paul Heath). 192 This evidence is not sufficient to establish specific terms of an oral argument, particularly with regard to price, terms of delivery, quality, and quantity, such that a jury could conclude that the parties had a meeting of the minds on an oral agreement. Further, the oral agreement that General Poly now asserts is contrary to the written agreement and the conduct of the parties. In addition, the district court's ruling may be affirmed because General Poly accepted the off-grade resin without notifying Allied that delivery of the nonconforming goods constituted a breach. 193 The district court determined that General Poly ordered and reordered time and again certain off-weight resins from Allied, received them, knowing they were offweight, accepted them as off-weight, used them without any remonstration or complaint or attempts to set aside the terms of the agreement or to claim that the terms had been breached. R. Vol. 41 at 4587-88. The court concluded that such conduct barred General Poly's action for breach of the oral contract under U.C.C. provisions Secs. 2-606, 2-607 and 2-608. 194 The U.C.C., as incorporated by Kansas, 11 provides: 195 Where a tender has been accepted the buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy. 196 Kan.Stat.Ann. Sec. 84-2-607(3)(a) (1983) (emphasis added). As the district court noted, General Poly repeatedly ordered the off-grade resin from Allied without ever suggesting that the failure to deliver prime resin on favorable terms by the fall of 1979 breached the oral agreements. General Poly is unable to direct our attention to any evidence in the record demonstrating that it notified Allied that it regarded delivery of the off-grade resin to constitute a breach. Instead, General Poly argues that its acceptance of the off-grade resin was cover under Kan.Stat.Ann. Sec. 84-2-712(1) (1983). 197 Although a buyer may obtain cover from the breaching seller, that in no way removes the buyer's obligation to notify the seller of the alleged breach after a tender under Section 2-607(3)(a). Moreover, Section 2-712(1) states that a buyer may seek cover only after a breach under Section 2-711. A breach within Section 2-711 only occurs where the seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance. Kan.Stat.Ann. Sec. 84-2-711(1) (1983). General Poly is unable to point to evidence in the record upon which a reasonable jury could properly find that it rejected the off-grade resin tendered by Allied because it was in violation of the asserted oral contract or otherwise notified Allied that it regarded delivery of such goods as a breach of the asserted oral contract. For all these reasons, we affirm the district court's ruling directing a verdict in favor of Allied on this claim. SUMMARY AND CONCLUSION 198 We REVERSE the judgment in favor of General Poly on the claim for breach of fiduciary duty. We AFFIRM the district court's ruling directing a verdict in favor of Allied on General Poly's claims for fraud. We AFFIRM the directed verdict on the conversion claim. We AFFIRM the district court's ruling directing a verdict in favor of Allied on General Poly's claim for breach of the written agreement. Finally, we AFFIRM the directed verdict on the oral contract claim. We do not reach any of the other issues raised by the parties because the foregoing rulings and the subsidiary rulings contained therein are dispositive of these appeals. Accordingly, the case is REMANDED to the district court with orders that judgment be entered consistent with this opinion.