Citation. 533 N.W2d 542 (Iowa 1995)
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Midland Mfg. Co., (Appellee) entered into a contract with C-Thru Container Corp., (Appellant) to buy bottle-making equipment from Appellant and to make bottles for Appellant to purchase. Appellant sued Appellee for breach of contract after Appellee failed to demonstrate it could produce commercial acceptable bottles for Appellant.
Synopsis of Rule of Law.
Parol evidence may be admitted to add a new term to a complete contract as long as it does not contradict any explicit contractual term.
Facts.
The parties contracted for the sale by Appellant to Appellee of bottle-making equipment, and the sale by Appellee to Appellant of between 500,000 and 900,000 bottles. One term of the contract stated that if Appellee failed to manufacture the bottles, Appellant could require Appellee to pay the entire purchase price plus interest within thirty days. Appellant never made a purchase order but within one month invoked this clause. Then Appellant brought suit alleging Appellee breached the contract by failing to manufacture sample bottles. Appellee claimed that it had not breached the contract because this was not a condition precedent to Appellant’s obligation to place an order. The trial court refused to hear parol evidence of trade usage and granted summary judgment to Appellee.
Issue.
Whether a complete contract may be explained by or supplemented by parol evidence of trade usages.
Held.
Yes,, when parol evidence shows a usage of trade that does not contradict a contract term, the evidence is admissible to supplement the contract.
Discussion.
Usage of trade is admissible regardless of whether the contract is ambiguous. A new term may be added to complete contract by parol evidence of trade usages. That is the definition of “supplement.” The usage of trade evidence proving that the practice in the trade was to provide sample bottles before receiving an order does not contradict any term of the agreement between the parties. Taking this evidence in a light most favorable to Appellant, there is a genuine issue of fact concerning the performance required of Appellee as a prerequisite to Appellant’s obligation to place an order. Therefore summary judgment is not appropriate.
