Macke Co. v. Pizza of Gaithersburg, Inc.
270 A.2d 645, 259 Md. 479 (1970)
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Rule of Law:
Rights and duties under a bilateral executory contract may be delegated unless it is a contract for personal services or one where the personal skill, credit, or reputation of the original party is a material part of the bargain.
Facts:
- Pizza of Gaithersburg, Inc. and its affiliates (the Pizza Shops) entered into contracts with Virginia Coffee Service, Inc. (Virginia) for the installation and maintenance of cold drink vending machines in their six restaurant locations.
- The contracts, which were for one-year automatically renewable terms, required Virginia to install the equipment, maintain it in good operating order, and keep it stocked with merchandise.
- In exchange, the Pizza Shops would receive a commission based on a percentage of the machines' gross monthly sales.
- The Macke Company (Macke) purchased the assets of Virginia, and as part of the transaction, the six contracts with the Pizza Shops were assigned to Macke.
- Upon learning of the assignment, the Pizza Shops notified Macke that they were terminating all six contracts.
- The Pizza Shops contended that they had specifically chosen Virginia based on its personalized service and reputation, which they believed Macke would not provide.
Procedural Posture:
- The Macke Company brought suit against each of the Pizza Shops in the Circuit Court for Montgomery County, a state trial court, for damages for breach of contract.
- The trial court entered judgments in favor of the defendants (the Pizza Shops).
- The Macke Company, as appellant, appealed the judgments to the Court of Appeals of Maryland, the state's highest court.
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Issue:
Does the assignment of contracts for the installation and maintenance of vending machines constitute a prohibited delegation of duties under a personal services contract when the obligor preferred the service style of the original provider?
Opinions:
Majority - Singley, J.
No. The assignment of the vending machine contracts was permissible because the duties under the contract were not for personal services and did not involve a unique skill or relationship that would prohibit delegation. In the absence of a contrary provision, rights and duties under a contract are assignable and delegable, with the primary exception being contracts for personal services where unique skill or a relationship of personal confidence is central to the agreement. The court determined that the task of installing, stocking, and maintaining a vending machine does not require rare genius or extraordinary skill. Citing the Restatement of Contracts, the court reasoned that delegation is permissible so long as performance by the delegate does not vary materially from the performance expected from the original party. Any subjective preference for Virginia's service style, such as cash commission payments or providing keys for minor adjustments, was not part of the written agreement and did not amount to a material change in the contractual performance that would justify refusing the assignment.
Analysis:
This case provides a clear example of the modern judicial approach to the assignment and delegation of contractual duties, distinguishing between delegable commercial services and non-delegable personal services. The ruling establishes that routine service contracts are generally assignable, even if the customer has a subjective preference for the original provider's specific methods, so long as those methods are not explicit contractual terms and the assignee's performance is not materially different. This decision reinforces commercial predictability by allowing companies to transfer contractual assets during mergers and acquisitions, limiting the ability of the other party to void a contract based on a change in ownership unless the service is genuinely unique or personal.
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