Brookside Farms v. Mama Rizzo's, Inc.
873 F. Supp. 1029 (1995)
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Rule of Law:
Under the UCC, an oral modification to a contract for the sale of goods that contains a 'no oral modification' clause can still be enforceable under the doctrine of promissory estoppel or, for goods that have already been received and accepted, under the statutory exception to the Statute of Frauds.
Facts:
- On October 13, 1993, Brookside Farms entered into a one-year requirements contract to sell a minimum of 91,000 pounds of fresh basil to Mama Rizzo's Inc. (MRI).
- The contract contained a 'no oral modification' clause, stating that any modification must be in a writing signed by the party against whom enforcement is sought.
- Shortly after, MRI's vice-president, Mike Franklin, requested Brookside perform additional work by removing more of the basil stems, a task not required by the original contract.
- The parties orally agreed to a $0.50 per pound price increase to compensate for this extra work, and Franklin promised to make a notation of the change on MRI's copy of the contract.
- Following this agreement, the parties orally agreed to two subsequent price increases due to changes in Brookside's supply costs.
- For months, MRI issued dozens of purchase orders at the orally modified, higher prices, and Brookside delivered the basil.
- MRI accepted and paid for numerous shipments at these increased prices without protest.
- Eventually, MRI accepted a final 3,041 pounds of basil but its check for payment was dishonored for insufficient funds, and MRI refused to accept any more basil under the contract.
Procedural Posture:
- Plaintiff Brookside Farms sued Defendant Mama Rizzo's Inc. (MRI) in U.S. District Court for breach of contract.
- MRI filed a counterclaim, asserting that Brookside breached the contract by raising prices.
- Brookside Farms filed a Motion for Partial Summary Judgment.
- Mama Rizzo's Inc. filed a Motion for Summary Judgment.
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Issue:
Does an oral modification to a contract for the sale of goods, which requires all modifications to be in writing, become enforceable with respect to goods that have been received and accepted by the buyer?
Opinions:
Majority - Kent, District Judge
Yes, an oral modification to a contract for the sale of goods becomes enforceable for goods that have been received and accepted, even if the contract contains a 'no oral modification' clause. MRI is estopped from denying the modification because it promised to make a writing and Brookside relied on that promise. To allow MRI to invoke the clause after inducing and participating in the extended course of action would be inequitable and violate the duty of good faith. Furthermore, under UCC § 2.201(c)(3), a contract that does not satisfy the writing requirement is nonetheless enforceable 'with respect to goods for which payment has been made and accepted or which have been received and accepted.' This statutory exception applies to the private Statute of Frauds created by the contract's 'no oral modification' clause, making the modified price enforceable for the 3,041 pounds of basil MRI received and accepted.
Analysis:
This case illustrates how the UCC prioritizes the parties' actual conduct and commercial realities over strict contractual formalities. The court's application of both equitable principles (promissory estoppel) and statutory exceptions (§ 2.201(c)(3)) demonstrates that a 'no oral modification' clause is not absolute. This decision establishes that a consistent course of performance, such as repeatedly ordering and paying at a modified price, can effectively waive a no-oral-modification clause for transactions that have already occurred. It serves as a warning that parties cannot rely on such clauses as a shield after knowingly and repeatedly acting in a manner inconsistent with them.
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