Maryland Supreme Corp. v. Blake Co.
21 U.C.C. Rep. Serv. (West) 721, 279 Md. 531, 369 A.2d 1017 (1977)
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Rule of Law:
Under the Uniform Commercial Code (UCC), a subcontractor's price quotation can constitute a binding offer for a requirements contract if it guarantees a price for a specific project. This offer can be accepted in any reasonable manner, including verbal notification and subsequent conduct, creating an enforceable contract for all the goods required for that project.
Facts:
- Maryland Supreme Corporation (Supreme), a concrete supplier, learned that Blake Company (Blake), a general contractor, was bidding on the Western Heights Middle School project.
- On March 11, 1975, Supreme sent a letter to Blake quoting a price of $21.00 per yard for concrete and stated, "the price will be guaranteed to hold throughout the job."
- Blake used Supreme's quote in its successful bid for the school project.
- After being awarded the contract, Blake's engineering manager verbally notified Supreme's salesman that Supreme was to furnish the concrete for the job, consistent with their prior course of dealing.
- Blake formally listed Supreme as the concrete subcontractor in its contract with the Board of Education.
- Supreme began delivering concrete to the job site on July 11, 1975, and Blake paid the quoted $21.00 per yard price for approximately four months.
- On October 24, 1975, Supreme sent a form letter to its customers, including Blake, announcing a price increase to $27.00 per yard due to rising material costs, stating it was unable to give protection on jobs in progress.
- After Supreme began charging the higher price, Blake sourced the remaining concrete from other suppliers at a higher cost.
Procedural Posture:
- Maryland Supreme Corporation (Supreme) sued Blake Company (Blake) for $6,000 in the Circuit Court for Washington County (trial court).
- Blake filed a counterclaim against Supreme for $12,590.24, alleging breach of contract.
- After a bench trial, the Circuit Court found in favor of Blake on its counterclaim and entered a judgment against Supreme for $6,590.24.
- Supreme, as appellant, appealed the judgment to the Court of Special Appeals (intermediate appellate court).
- The Court of Appeals of Maryland (the state's highest court) granted a writ of certiorari, agreeing to hear the case before the Court of Special Appeals issued a decision.
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Issue:
Does a subcontractor's letter guaranteeing a price for a specific project, followed by the general contractor's verbal notification of success and subsequent ordering of materials, create an enforceable requirements contract for the entire project under the Uniform Commercial Code?
Opinions:
Majority - Orth, J.
Yes, a subcontractor's price quotation that guarantees a price for a specific project, followed by acceptance, creates an enforceable requirements contract. The court found that Supreme's March 11 letter was not a mere price quotation but a definite offer. The language guaranteeing the price 'throughout the job' for the specific school project indicated an intent to be bound and implicitly defined the quantity as Blake's requirements for that project, as contemplated by UCC § 2-306. Blake accepted this offer in a reasonable manner under UCC § 2-206 through its verbal notification, listing Supreme as the subcontractor, and by its conduct in ordering the concrete. The resulting contract did not lack mutuality; it was a requirements contract obligating Supreme to supply and Blake to purchase all the concrete needed for the project. The court affirmed the finding that a contract was formed but remanded the case for the lower court to determine if the contract was unenforceable beyond the goods already delivered due to the Statute of Frauds, whether that defense was waived, or if Supreme was equitably estopped from asserting it.
Analysis:
This case illustrates the UCC's flexible approach to contract formation, which departs from the rigid requirements of the common law. The court's willingness to find an enforceable requirements contract based on industry custom, course of dealing, and course of performance gives legal weight to informal business practices common in the construction industry. This decision reinforces that price guarantees for specific projects are not mere invitations to negotiate but can be binding offers. The ruling provides clarity for general contractors who rely on subcontractors' bids, while also putting suppliers on notice that such guaranteed bids create binding obligations for the duration of a project.
