Cyberchron Corp. v. Calldata Systems Development, Inc.

47 F.3d 39 (2nd Cir. 1995)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

Cyberchron (P) deals in customized computer hardware for military and civilian use. Calldata (D) is a subsidiary of Grumman. P and D wished to do business relating to a contract D had with the Marine Corps for ATACC. From 1989-1990, P and D were involved in negotiations. They never really reached a contract as there were continual disputes over the weight of the equipment and the penalties to be assessed P if they delivered a unit over that proscribed weight. D did deliver a purchase order to P dated May 15, 1990, that set forth the weight requirements of the equipment and which also specified severe penalties for exceeding that weight of 145 pounds. P never agreed to the terms of the purchase order but had previously begun production of the equipment despite the absence of any agreement regarding the matter. D encouraged P in its efforts to produce the equipment and in a letter June 9, 1990, even insisted that P continue to perform its contractually binding obligations under the purchase order. In July 1990, P submitted a progress payment of $495,207.58 which was about 80% of claimed costs including overhead charges that were incurred by P through July 20, 1990. At trial, D's business manager testified that the full amount of that invoice would have been paid had D not been prohibited from making such payments by court order in other related matters with Digital Equipment Corporation. Eventually, that court order in the other case was vacated. An agreement between the parties was never achieved. On September 6, 1990, D directed P to show cause why the purchase order should not be terminated. P's detailed response letter was rejected, and D terminated the purchase order on September 25, 1990. This lawsuit resulted. The court found that D had commenced negotiations with other supplier in August 1990 and entered into a contract with Codar for equipment which was conceded to be inferior to the P design and weighed more. The court found that no enforceable agreement ever existed between the parties based on the disagreement on essential weight terms and penalties. P's contract claims were dismissed, and D's counterclaim based on contract was dismissed. P's claim of quantum meruit was also dismissed; there was no benefit to D and no unjust enrichment. The trial court then awarded P reliance damages of $162,824.10 for out of pocket labor and materials based on promissory estoppel but gave no recovery of lost profits for admin and general overhead expenses. Both parties appealed.