Maryland Supreme Corp. v. Blake Co.

Orth, J., delivered the opinion of the Court. Maryland Supreme Corporation (Supreme) sued Blake Company (Blake) in general assumpsit in the Circuit Court for Washington County claiming $6,000 damages. Blake filed a counterclaim against Supreme for $12,590.24 as damages for breach of contract. The court, sitting without a jury, found that Supreme owed Blake $6,590.24 and a judgment was entered under the counterclaim in favor of Blake against Supreme in that amount with costs.

Supreme appealed to the Court of Special Appeals. We granted a writ of certiorari before decision by that court. We are called upon to decide whether there was a contract for sale of goods between Supreme and Blake, and if there was, the extent to which it was enforceable. I The controversy stemmed from the construction of the Western Heights Middle School.

In such a building project there are basically three parties involved: the letting party, who calls for bids on its job; the general contractor, who makes a bid on the whole project; and the subcontractors, who bid only on that portion of the whole job which involves the field of its specialty. The usual procedure is that when a project is announced, a subcontractor, on his own initiative or at the general contractor’s request, prepares an estimate and submits a bid to one or more of the general contractors ⁵³⁴ interested in the project. The general contractor evaluates the bids made by the subcontractors in each field and uses them to compute its total bid to the letting party. After receiving bids from general contractors, the letting party ordinarily awards the contract to the lowest reputable bidder. 1 II From the evidence adduced, it is manifest that the usual method of operation in the construction industry was followed in the construction of the Western Heights Middle School.-The letting party, the Board of Education, advertised for bids for the construction of the.

School. Blake was one of the general contractors who responded. Supreme, a manufacturer of ready mixed concrete, learned through a trade journal what general contractors had bid on the job. After examining the specifications relating to concrete for the project, Supreme, as a subcontractor, wrote the interested general contractors with reference to supplying the concrete required.

Its letter to Blake, dated 11 March 1975, read: The Blake Company P. 0. Box 47 Hagerstown, Maryland 21740 Attention: Mr. Vernon Tetlow Re: Western Heights Middle School Dear Sirs: We are pleased to submit a quotation on ready mix for the above mentioned project. Please take note that the price will be guaranteed to hold throughout the job. ⁵³⁵ 3,000 p.s.i. concrete $21.00 per yard, net Hope that you are successful in your bid and that we may be favored with your valued order. Yours very truly, MARYLAND SUPREME CORPORATION /s/ Ben Wicklein Sales Representative Blake was the successful bidder.

About 24 May 1975, fifty-nine days after the bids were opened, it was informed that it had been awarded the job as the general contractor. There was no written notification by Blake to Supreme that Supreme would supply the concrete. Vernon L. Tetlow, Blake’s Engineering Manager, testified that he notified subcontractors “as soon as we get a contract that they are going to get one.” He verbally notified Benjamin F. Wicklein, Supreme’s salesman, that Supreme was to furnish the concrete for the job. “ ‘Ben’ always asked me ‘Are we good on that job? Are we going to furnish that job?’ I said, ‘Yes, give me a mix design.’ Like we always do.” That was the way he had notified Supreme on other jobs for which Supreme was to supply the concrete.

On 27 May a quality control engineer of Supreme wrote Blake, at Wicklein’s request, submitting a concrete mix design and test data in order to obtain the approval of the concrete by the architect as required by the specifications. Wicklein said that he knew when the test data was submitted that Blake was the general contractor for the project. The specifications for the project included a provision that within forty-eight hours after the bids were opened the three lowest bidders must submit a list of subcontractors to the Board of Education. Thereafter, the successful bidder had to obtain the approval of the Board of Education before changing any subcontractor, and, in the case of concrete, new test data would have to be submitted and approved.

In complying with the requirement to name its subcontractors, Blake gave Supreme as the supplier of ⁵³⁶ the concrete, and Supreme was so listed in the contract to build the School. The Engineering Manager for Blake, Tetlow, explained why there was no formal written contract with Supreme. With some subcontractors, for example the electrical subcontractor, Blake “would furnish ... a finite — to do all the electrical work complete for ‘X’ amount of dollars” and enter into a written contract. This cannot be done, said Tetlow, with suppliers of material like stone on the slab, rough lumber or concrete.

There is never a written contract covering all the concrete to be furnished “[b]ecause there is no finite amount of money that I can write it for, because we are working with a variable on the quantity of the concrete that’s going to be delivered; the same way with rough lumber or stone.” He explained that you work it on “a neat yardage, but some would spill over, so I couldn’t write a purchase order [to cover the entire job].” Therefore, according to Kenneth Lee Wilson, Supreme’s Sales Manager, and Wicklein, the procedure in ordering concrete was that “the job superintendent would order what he needed for the next day either by calling our ready mix dispatcher for 10 yards or 20 yards or whatever” or, when Wicklein was on the job site, the superintendent would tell Wicklein. For a time all went well. Supreme began delivering concrete to the job on 11 July 1975, and it is obvious that the procedure outlined by Wilson and Wicklein was followed. As shown by Supreme’s ledger sheets listing invoices to Blake, deliveries were, made a number of times a day on various days to supply the concrete to be poured from time to time. 2 Supreme billed Blake at the rate of $21 per yard in accordance with its letter of 11 March 1975, and the parties were apparently content.

Trouble brewed in late October. On 24 October 1975 Supreme wrote Blake: “Due to numerous increases in the cost of cement and other raw materials absorbed by our company since our last increase, we are forced to raise our ⁵³⁷ ready mix prices effective November 1, 1975 .... We regret we are unable to give any protection on jobs in progress.” The price of the kind of concrete required for the School was increased to $27 per yard. The letter was signed for Supreme by its Sales Manager, and he testified that it was a form letter sent to all of Supreme’s customers.

Blake responded. Under date of 12 November 1975, its Engineering Manager wrote Supreme: I have received your form letter dated October 24, 1975. I assumed then and will continue to assume that this was meant for projects that you have not made a commitment and not, therefore, Western Heights Middle School for which the concrete price is guaranteed for the project duration. If this is incorrect, correspond directly by letter to our office that you intend to default your contract.

As a result of the letter of 12 November, Russell R. Reed, Jr., President of Supreme, called on M. William Dutton, Jr., President of Blake “to further amplify the fact that we were forced to raise our prices and to indicate to him that we would be most delighted to deliver concrete to the . .. School at the price of $27.00.” Dutton testified that Reed explained to him the necessity for the increase in price, intimating that otherwise Supreme might have to discontinue business. Dutton told Reed that Blake could not accept the increase “because we had bid the job on firm prices.” With 2000 to 2500 yards of concrete yet to pour, the $6 per yard increase represented a considerable amount, and there was talk “in the field” that the price “might even go to $29.00.” During Reed’s testimony, the court asked him: “[W]hen you raised the prices, was it that you felt. . . there was no guarantee or that under the law you were advised that you could any way?” Reed replied: “Our increase, it wasn’t because of any legal inquiry that we had made, sir, we just had high costs and we raised the prices.” He added: “And, we felt like there was no contractual obligation in a long term on this project.” On cross-examination, however, he was referred to the letter ⁵³⁸ of 11 March 1975 to Blake from Wicklein, who, Reed conceded, was authorized to “quote projects,” which quoted the price of $21 per yard. Pointing out that the letter said that the price was “guaranteed to hold throughout the job,” counsel for Blake asked: “Now, Mr. Reed, you’ve been in this business and you’ve dealt with the Blake Company for a number of years on many projects, what does that mean to you?” Reed replied: “It would normally mean that you would do it for the whole job.” As of 1 November 1975, Supreme charged Blake $27 a yard for concrete delivered to the job.

Supreme’s last delivery was on 13 November. Blake purchased concrete thereafter from two other firms. The evidence is undisputed, however, that it could do so only upon first obtaining the approval of the architect for the Board of Education after submitting new test data on the concrete to be so purchased. Blake received the necessary approval.

Even though the concrete to finish the job was purchased at the lowest price obtainable, it cost Blake $12,590.24 more than it would have cost at the original price of $21 a yard. Blake withheld $6,000 from the amount Supreme claimed was due for the concrete which it delivered. Ill Supreme advances four contentions on appeal: (1) There was no offer made by Supreme. (2) Assuming there was an offer, there was no acceptance by Blake.

(3) Assuming there was an offer and an acceptance, there was no valid contract. (4) Assuming there was a valid contract, it was only partially enforceable. The Offer It is manifest that what was involved here was a sale of goods within the contemplation of the Maryland Uniform Commercial Code — Sales (hereinafter cited as UCC) Maryland Code (1975), Commercial Law, Title 2. “Offer,” ⁵³⁹ however, is not defined in the UCC, and with respect to it we look to the common law and the law merchant. UCC § 1-103. “An essential feature of every contract is the parties’ mutual assent... .” Peer v. First Fed. S. & L. Ass’n, 273 Md. 610, 614 , 331 A. 2d 299 (1975).

Thus, it is usually necessary for one of the parties to propose to the other a promise which he will make for a certain consideration, or to state the consideration which he will give for a certain promise. The promise is an offer. “An offer necessarily looks to the future. It is an expression by the offeror of his agreement that something over which he at least assumes to have control shall be done or happen or shall not be done or happen if the conditions stated in the offer are complied with. Unless the statement gives to the person to whom it is addressed an assurance that, on some contingency at least, he shall have something, the statement is not an offer.” Williston on Contracts, § 24A (3rd ed.

Jaeger 1957) (hereinafter cited as Williston). So, an offer is always a conditional promise and it may become a contract. It is distinguished from other conditional promises “only because the performance of the condition in an offer is requested as the agreed exchange or return for the promise or its performance, thereby giving the offeree a power, by complying with the request, to turn the promise in the offer into a contract of sale.” Williston, § 25. An offer must be definite and certain.

Peoples Drug Stores v. Fenton, 191 Md. 489, 494 , 62 A. 2d 273 (1948). To be capable of being converted into a contract of sale by an acceptance, it must be made under circumstances evidencing an express or implied intention that its acceptance shall constitute a binding contract. Accordingly, a mere expression of intention to do an act is not an offer to do it, and a general willingness to do something on the happening of a particular event or in return for something to be received does not amount to an offer. Thus, a mere quotation or a statement of a price or prices and an invitation to enter into negotiations, are not offers which may be turned into binding contracts upon acceptance.

Such proposals may be merely suggestions to induce offers by others. See Williston, ⁵⁴⁰ §§ 31-33; 17 Am. Jur. 2d, Contracts §§ 31-33 (1964); 67 Am. Jur. 2d, Sales §§ 73-75 (1973).

What this all boils down to is expressed in 17 Am. Jur. 2d, Contracts § 33 (1964): From the nature of the subject, the question whether certain acts of conduct constitute a definite proposal upon which a binding contract may be predicated without any further action on the part of the person from whom it proceeds, or a mere preliminary step which is not susceptible, without further action by such party, of being converted into a binding contract, depends upon the nature of the particular acts or conduct in question and the circumstances attending the transaction. It is impossible to formulate a general principle or criterion for its determination. Therefore, in its final determination, the question of whether an offer was made seems to be one dependent on the intention of the parties, and, being such, it depends on the facts and circumstances of the particular case.

The UCC changes none of these principles of law. 67 Am. Jur. 2d, Sales § 74(1973). Supreme’s proposal was evidenced by its letter of 11 March 1975 to Blake. Supreme would now have it be merely a price quotation, and claims that did not contain many of the essential terms of an offer “such as the quality and quantity of the product to be supplied, the number and dates of the deliveries, the terms of payment, the costs of shipment and the time for performance.” We do not agree.

Considered in light of the facts and circumstances, the trial court could have found, as it obviously did, that the letter of 11 March 1975 constituted a definite and certain offer with the intent that, if accepted, it would result in a contract. By the letter, Supreme'proposed to furnish Blake with ready mix 3000 p.s.i. concrete at $21 per yard, net, in such quantity as Blake required for the Western Heights Middle School project. The language in the letter stating the quotation was “on ready mix for the above mentioned project [Western Heights Middle School],” and asserting that “the price will ⁵⁴¹ be guaranteed to hold throughout the job” (emphasis supplied) may be considered as measuring the quantity of the concrete by the requirements of the buyer, as recognized in UCC § 2-306 (1). The contingency was that Blake be the successful bidder.

If Blake were awarded the general contract for the construction of the School and accepted Supreme’s offer, there would be a binding contract. When viewed with reference to the method of operation of the construction industry and the prior course of dealings between Supreme and Blake, it is manifest that Supreme’s letter was no mere price quotation or invitation to negotiate. It gave Blake the assurance that if Blake were the general contractor on the School project Blake could obtain from Supreme the concrete necessary for the job at $21 per yard. Thus, it wras an offer, and the trial court did not err in so considering it.

The Acceptance The mutual assent which is the essential feature of every contract is crystallized when there is a knowing and sufficient acceptance to a certain and definite offer. Peer v. First Fed. S. & L. Ass’n, supra, 273 Md. at 614 . Supreme urges that even if it made a certain and definite offer, there was no valid acceptance by Blake so as to give rise to a binding contract. It puts the issue in the context of Maryland Rule 886 and asserts that the judgment of the lower court on the evidence that there was an acceptance was clearly erroneous and should be set aside.

We have no difficulty in determining that the lower court was not clearly wrong in ruling that Blake accepted Supreme’s offer. As we have indicated, what is involved here is the sale of goods within the contemplation of the UCC. We start, therefore, with the basic principles that the contract may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract, and that an agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. UCC § 2-204 (1) and (2).

The Official Comment to subsection (1) states that ⁵⁴² “appropriate conduct by the parties may be sufficient to establish an agreement.” We also note that unless otherwise unambiguously indicated by language or circumstances, “[a]n offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable