Southern Concrete Services, Inc. v. Mableton Contractors, Inc.
407 F. Supp. 581 (1975)
Rule of Law:
Under UCC § 2-202, evidence of trade usage or consistent additional terms is inadmissible to interpret a contract when it directly contradicts or negates the express and essential terms of the written agreement, such as quantity and price.
Facts:
- In September 1972, a plaintiff seller and a defendant buyer entered into a written contract for the sale of concrete for a power plant construction project.
- The contract specified that the seller would supply 'approximately 70,000 cubic yards' of concrete between September 1, 1972, and June 15, 1973.
- The contract set the price at $19.60 per cubic yard.
- The agreement included a merger clause stating, 'No conditions which are not incorporated in this contract will be recognized.'
- During the contract period, the defendant buyer ordered only 12,542 cubic yards of concrete, which was the total amount the buyer needed for its project.
- In preparation to fulfill the contract, the plaintiff seller had purchased and delivered raw materials to the jobsite.
Procedural Posture:
- The plaintiff seller initiated a diversity action against the defendant buyer in federal district court, seeking damages for breach of contract.
- In the course of pre-trial proceedings, the plaintiff filed a motion asking the court to rule on the admissibility of parol evidence that the defendant intended to introduce at trial.
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Issue:
Under UCC § 2-202, may a party introduce evidence of trade usage and consistent additional terms to show that a specific quantity term in a written contract for the sale of goods was not a binding obligation but merely a non-binding estimate subject to renegotiation?
Opinions:
Majority - Edenfield, Chief Judge
No. Evidence of trade usage and consistent additional terms is inadmissible when it directly contradicts the essential terms of a clear and explicit written contract. While UCC § 2-202 liberalized the common law parol evidence rule, it was not intended to permit a 'frontal assault' on the core terms of an agreement like quantity and price. The court reasoned that construing express terms as consistent with a trade usage that negates them is 'patently unreasonable' under UCC § 1-205(4). Unlike the situation in Columbia Nitrogen Corp. v. Royster Co., this case involved no prior dealings or inequitable contract provisions that might justify admitting extrinsic evidence. Admitting such evidence would undermine the certainty of contracts and their primary function of allocating market risks. Furthermore, the alleged additional terms were deemed inconsistent with, not supplementary to, the written agreement, and the contract's merger clause indicated it was intended as a complete and exclusive statement.
Analysis:
This decision places a significant limit on the liberal approach to the parol evidence rule under UCC § 2-202, particularly as interpreted in cases like Columbia Nitrogen Corp. v. Royster Co. It establishes that while trade usage can be used to explain or supplement ambiguous terms, it cannot be used to negate clear, express, and essential terms like quantity. The ruling reinforces the primacy of the written contract, providing commercial parties with greater certainty that the core obligations of their agreements will be enforced as written. This creates a precedent that favors the express text of a contract over industry customs that might suggest those terms are not binding, thereby protecting the contract's function as a tool for risk allocation.
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