Zemco Manufacturing, Inc. v. Navistar International Transportation Corp.

Brief Fact Summary.

Plaintiff and Defendant entered into a written one-year contract where Plaintiff would sell parts to Defendant. The original contract was extended by written agreements until 1987, after which Plaintiff and Defendant orally agreed to extend the contracts. Defendant purchased all of its parts requirements from Plaintiff until 1995. Plaintiff sued Defendant for breach of contract after Defendant began purchasing parts from someone other than Plaintiff. The trial court granted summary judgment for Defendant.

Synopsis of Rule of Law.

If a contract must be in writing under Uniform Commercial Code § 2-201, then any modification to it must be in writing.

Facts.

In 1983, Zemco Manufacturing, Inc. (Plaintiff) entered into a written, one-year contract to sell parts to Navistar International Transportation Corp. (Defendant). The original contract was extended by written agreements until 1987, after which Plaintiff and Defendant orally agreed to extend the contracts. Defendant purchased all of its parts requirements from Plaintiff until 1995. Defendant then began buying parts from another company, and Plaintiff sued for breach of contract. Defendant argued that the oral contract extensions were unenforceable, because they violated the statute of frauds. Plaintiff argued that the time extensions did not need to be in writing, because they were modifications of a non-definite contract term. The district court granted summary judgment for Defendant, finding that the oral renewals of the contract did not comply with the statute of frauds.

Issue.

Whether any modification to a contract must be in writing if the contract must be in writing under Uniform Commercial Code § 2-201.

Held.

Yes. The trial court’s ruling is reversed and the case is remanded. If a contract must be in writing under Uniform Commercial Code § 2-201, then any modification to it must be in writing.

Discussion.

Uniform Commercial Code (UCC) § 2-209(3), adopted in Indiana, states that the requirements of the statute of frauds under UCC § 2-201 must be met “if the contract as modified is within its provisions.” The majority of courts interpret this to mean that if the modified contract is one that must be in writing under UCC § 2-201, then any modification to it must be in writing. Other courts, and most commentators, interpret UCC § 2-209(3) to mean that only modifications of terms that are required to be in writing under UCC § 2-201 must be in writing. Those courts and commentators argue that it would be inconsistent to require the modification of a term to be in writing when that term in the original contract could have been proven by parol evidence. The length of a contract is not a term that is required to be in writing under UCC § 2-201. In this case, the district court correctly adopted the majority position. UCC § 2-201 applies to this contract modification, and the time extensions were required to be in writing. Plaintiff argues that various documents between the parties meet the requirements of UCC § 2-201. Defendant argues that it is not responsible for any parts from Plaintiff in addition to what was listed in those documents, because under UCC § 2-209(3), an authenticated memo modifying an original contract is limited to the quantity of goods set forth in the memo. However, this quantity limitation does not apply to requirements contracts. There is a material issue of fact as to whether the contract in this case is a requirements contract. Defendant also argues that the documents are not signed as required under UCC § 2-201. However, a signature may include a symbol adopted by a party with the intent to authenticate a writing. There is a material issue of fact as to whether the name Defendant, which is stamped or typed on some of the documents, constitutes a sufficient signature.