Is a Contract Formed at Agreement, Modification or By Payment Adjustments?

The Tenth Circuit Court of Appeals untangled the arguments in Obermeyer v. CSI Calendering, (No. 16-108).

Obermeyer (“Obermeyer”) is a Colorado-based, family-owned business that designs and manufactures water-control structures. It bought fabric from CSI (“CSI”), a Texas-based company, and paid CSI to compress, or calender, rubber into the sheets.  The parties had a contract for the most recent purchases, but the parties read the document quite differently. CSI claims that the quote unambiguously states that the combined price is $5.97 for each pound of calendered fabric. Obermeyer, on the other hand, views the quote as reflecting prices that the parties had previously agreed to when CSI prepared separate quotes for the fabric sheets and for the calendering of those sheets: $3.74 per pound of untreated fabric and $2.23 per pound of calendered product.

Obermeyer got a huge contract with a Chinese project, and needed to order hundreds of thousands of pounds of calendered fabric. After the better part of the year, Mrs. Obermeyer compared the project costs to the project budget and determined that Obermeyer had been charged much more than it had budgeted. Although Obermeyer was expected to pay CSI within 30 days after invoicing, its payments were typically late because of delayed payments from its customers—usually 20 to 50 days late, but occasionally as much as 60 to 91 days late.

Obermeyer notified CSI of its objection to the bills, and it then refused to pay. In January 2014, Obermeyer filed suit in the United States District Court for the District of Colorado for breach of contract, promissory estoppel, the money it had not received, unjust enrichment, and violation of the Texas Deceptive Trade Practices Act. CSI counterclaimed for breach of contract and unjust enrichment. CSI moved for summary judgment, and Obermeyer moved for partial summary judgment on liability for its breach-of-contract claim. The district court denied Obermeyer’s motion and granted summary judgment for CSI.

Obermeyer appealed. They appealed the summary judgment. After looking at all the facts, the Tenth Circuit Court of Appeals said there were still questions as to when exactly the contract was formed, which was for a jury to determine. The case was reversed and remanded.

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