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United States District Court for the Northern District of Georgia - 407 F. Supp. 581
Tags: Contracts, Interpretation, Parol evidence
tl;dr:
A company failed to buy the amount of concrete specified in their contract. The court refused to admit evidence of industry customs and additional terms because it contradicted the express terms of the agreement.Video Summary
Case Summary
In Southern Concrete Services, Inc. v. Mableton Contractors, Inc. (1975), the U.S. District Court for the Northern District of Georgia ruled on a contract dispute related to the sale of concrete.
Southern Concrete entered into a contract with Mableton in September 1972 to supply “approximately 70,000 cubic yards” of concrete for Mableton’s construction project. The contract stipulated, “No conditions which are not incorporated in this contract will be recognized.” Mableton only ordered 12,542 cubic yards of concrete during the contract period, saying that was all they required for their construction work.
Southern Concrete brought suit to recover lost profits as well as the costs incurred in purchasing and delivering over $20,000 in raw materials to Mableton’s construction site. Mableton tried to introduce evidence of both custom of the trade and additional contract terms purporting to show that it was understood by the parties that the specified quantity was subject to renegotiation, but Southern Concrete argued this evidence should be inadmissible because it negates the express terms of the contract.
The key issue was whether the defendant's evidence of custom and additional terms could be admitted under U.C.C. § 2-202. The court decided that such evidence was inadmissible due to the parol evidence rule. The contract was deemed clear and definite, containing a merger clause that prevented the consideration of conditions not included in the document.
The defendant's evidence was seen as contradicting or altering the contract terms rather than clarifying or supplementing them. The custom and additional terms proposed by the defendant would alter the contract's essential and material terms related to quantity and price.
This case highlights the principle of definiteness in contract law, which states that contracts must possess clear and certain terms to be enforceable. It also shows that courts will apply the parol evidence rule to exclude evidence that conflicts with or alters the terms of a written contract, especially when a merger clause is present. Furthermore, it clarifies the difference between evidence that explains or supplements a contract, which is allowed under U.C.C. § 2-202, and evidence that negates or modifies a contract, which is not permitted.
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The plaintiff is suing the defendant for breach of contract in a diversity action, seeking to recover lost profits and expenses incurred in delivering raw materials to the jobsite. The defendant only ordered 12,542 cubic yards of concrete, which is the total amount needed for their construction work. The defendant is claiming that the written contract should be interpreted in light of the custom of the trade and additional terms allegedly intended by the parties. The court is tasked with determining whether the defendant's evidence explains or contradicts the contract in question, specifically in relation to trade usage and additional terms. While customs of the trade may be relevant to interpreting certain terms of a contract, the court does not believe that section 2-202 was intended to allow a direct challenge to the essential terms of a clear and explicit contract.
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