Ragus Co. v. City of Chicago

Brief Fact Summary. Petitioner appeals trial court ruling granting Respondent’s motion to dismiss. Petitioner claims that trial court erroneously referred to usage of trade at the hearing had on this motion.

Synopsis of Rule of Law. In order to eliminate ambiguity from a contract it is necessary to exclude other reasonable interpretations.

Facts. Respondent accepted bid from Petitioner for 75 cases, “12/case,” of small rodent traps and 150 cases, “24/case” of large rodent traps. Respondent expected this to mean 12 pairs of small traps per case and 24 pairs of large traps per case. Respondent refused to accept shipment from Petitioner containing half the expected amount of traps per case. Further, Respondent banned Petitioner from the bidding process. Petitioner refused to cure claiming to be in compliance with the contract’s terms for quantity. Petitioner brought suit seeking declaratory relief and money damages. However, the trial court granted Respondent’s motion to dismiss after a hearing at which Respondents presented affidavits to show that usage of trade supported their interpretation of the quantity terms. Petitioner claims that the contract is unambiguous on its face and therefore the court erred in referring to usage of trade.

Issue. Whether the court erred by referring to usage of trade pursuant to the UCC Section:1-205(4) (Section:1-303(e) as amended).

Held. No. The usage of trade was proper.

Discussion. The terms “24/case” and “12/case” do not exclude the reasonable interpretation that 24 pairs and 12 pairs per case are the number of traps called for in the contract. Therefore the contract is ambiguous and the usage of trade was proper.
Petitioner also argued that Respondent failed to present sufficient evidence to establish usage of trade. Respondent offered undisputed proof establishing that the sole manufacturer packages and sells the traps in pairs, middlemen purchase and resell the traps in pairs, and the Respondent buys and receives the traps in pairs. Therefore there was sufficient evidence establishing usage of trade.