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Medical Buyer Fails to Prove That Letter Evidenced a Valid Requirements Contract Karina Zabicki

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Medical Buyer Fails to Prove That Letter Evidenced a Valid Requirements Contract Karina Zabicki Loyola Consumer Law Review Volume 10 | Issue 3 Article 5 1998 Medical Buyer Fails to Prove that Letter Evidenced a Valid Requirements Contract Karina Zabicki Follow this and additional works at: http://lawecommons.luc.edu/lclr Part of the Consumer Protection Law Commons Recommended Citation Karina Zabicki Medical Buyer Fails to Prove that Letter Evidenced a Valid Requirements Contract, 10 Loy. Consumer L. Rev. 217 (1998). Available at: http://lawecommons.luc.edu/lclr/vol10/iss3/5 This Recent Case is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Loyola Consumer Law Review by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. Recent Cases And, part three required that the Unlike the defendant in EDIAS, companies in Arizona. Moreover, "exercise ofjurisdiction must be Cybersell FLs only contact with there was no evidence that any reasonable." Arizona was the information it Arizonan had enlisted Cybersell FL's Cybersell AZ relied on several posted on its web page. As a result, web assistance. Essentially, cases for support, but the court the court found EDIAS unpersuasive Cybersell FL's presence in Arizona found the cases unpersuasive for Cybersell AZ. was negligible. because the holdings were broader Instead, the Ninth Circuit The court concluded that posting than Cybersell AZ suggested. For determined that Cybersell FL took information on the Internet without example, Cybersell AZ relied on an no steps to "purposefully avail" taking steps to purposefully avail Arizona case where the court stated itself of Arizona's benefits, whereas oneself of the laws of the forum that a defendant should not "escape the defendant in EDIAS did. The state did not establish personal traditional notions of jurisdiction" court found that Cybersell FL did jurisdiction. Since the court con- because of modem technology. not conduct any commercial activity cluded that Cybersell FL's contacts EDIAS Software International, over the Internet in Arizona. with Arizona did not amount to L.L. C. v. BASIS InternationalLtd., Cybersell FL did not form contracts purposeful activity in the state, the 947 F. Supp. 413 (D. Ariz. 1996). with anyone in the state. Moreover, court stopped its analysis without In EDIAS, Plaintiff claimed that the court found that the company did examining the second and third Defendant promulgated advertise- not actively encourage Arizona prongs of its test. The case did not ments and defamatory assertions via residents to use its site, there was no change any preexisting laws about the Internet. Defendant had a evidence that Cybersell FL pursued personal jurisdiction simply because contract with Plaintiff, and it business in Arizona, Cybersell FL this case involved an Internet. solicited business in the Arizona, the did not advertise in Arizona, and it Instead, the court demanded the forum state. Additionally, derived no any income from same level of minimum contacts that Defendant's employees traveled to Arizona. it would in other cases. Accordingly, Arizona for business engagements The court also noted that Arizona the court concluded that Cybersell with Plaintiff. Hence, Defendant's citizens had no interaction with FL did not establish the requisite contact with the forum state was not Cybersell FL's web page. Not one minimum contacts with Arizona, and limited to Internet correspondences. person in Arizona "hit Cybersell FL's affirmed the lower court's dismissal. The Ninth Circuit distinguished web site." Cybersell FL never sent this case from the present one. electronic messages to people or EUli Medical Buyer Fails to Prove that Letter Evidenced a Valid Requirements Contract by Karina Zabicki In Orchard Group, Inc. v. and conclude contract negotiations Incorporated agent was not a valid Konica Medical Corp., 135 F.3d between the principal and third contract because it neither contained 421 (6th Cir. 1998), the United parties without further approval, the a quantity term in compliance with States Court of Appeals for the Sixth doctrine of apparent authority will the Statute of Frauds, nor met the Circuit reversed the decision of the bind the principal to the contract definition of a "requirements district court holding: (1) when a formed by its agent; (2) the letter contract" because nothing in the principal allows its agent to modify sent by the Konica Medical Corpo- letter indicated how a quantity term existing contracts, confirm contracts ration agent to an Orchard Group could be implied, and (3) the letter 1998 Loyola University Chicago School of Law • 217 did not evidence an exclusive OGI is an Ohio corporation In early April 1992, Ms. Hunter relationship between the two parties formed in order to act as a buying put the OGI representative in touch which would circumvent the need group whose goal was to obtain with Robert Weaver, Konica's for either an implied quantity group discounts on medical supplies Southwest Regional Manager. estimate, which could be derived for small non-hospital health care Regional managers were two tiers from the parties' prior dealings, or a providers. During March of 1992, an below the top position at Konica. real quantity estimate. OGI representative held discussions Mr. Weaver relayed to the OGI Orchard Group Incorporated with Barbara Hunter, a Konica sales representative that a 45% discount to ("OGI") commenced litigation representative, regarding the OGI customers for the x-ray film proceedings against Konica Medical Cleveland marketplace. The negotia- would be more competitive. Subse- Corporation ("Konica") on Septem- tions centered around Konica quently, Mr. Weaver told Ms. Hunter ber 3, 1992 in the United States possibly supplying x-ray film at a that he and the OGI representative District Court in the Northern discounted price to OGI members. had negotiated a 45% discount. Ms. District of Ohio Eastern Division, On March 31, 1992, Ms. Hunter, Hunter delivered these new terms in claiming breach of contract and the agent for Konica, sent a written a letter dated April 13, 1992 to the fraudulent misrepresentation. On proposal to an OGI representative OGI representative "in return for a May 27, 1994, upon the close of which set forth Konica's agreement film commitment of 36 months." discovery, Konica filed a motion for to offer x-ray film to OGI members The OGI representative orally summary judgment, which the at a 40% discount. The two parties accepted this new offer and Ms. district court denied on January 8, orally agreed to the terms of the Hunter again informed the OGI 1996. The case proceeded to trial on letter and the OGI representative representative that the offer stood February 26, 1996 and culminated in asked whether OGI needed to sign without any need for further a $1,000,000 jury verdict in favor of off on any document. Ms. Hunter approval. OGI on its breach of contract claim claimed this was unnecessary, A few weeks following Ms. and a verdict in favor of Konica on stating that the letter was the written Hunter's April 1992 letter and with the fraudulent misrepresentation agreement. Ms. Hunter received her Ms. Hunter's knowledge, OGI began claim. OGI then filed a motion for boss's approval of this letter and soliciting group membership for the pre-judgment interest on March 12, subsequently relayed this informa- discounted price. During this time, 1996. On March 21, 1996, Konica tion to the OGI representative. Robert Weaver, the Konica regional filed a motion for judgment as a Previously, while employed by a manager who had initiated the 45% matter of law, which essentially different company, the OGI repre- discount, told a potential OGI repeated all of the claims made in its sentative had dealt with both Ms. member of the 45% discount that motion for summary judgment filed Hunter and her boss on similar Konica had agreed to offer OGI in 1994. The district court denied written proposals. These proposals members. Nonetheless, three weeks both the motions of OGI and Konica did not indicate that the OGI following the April 13 letter, Konica on May 13, 1996 without filing a representative needed approval for informed OGI that there was no written opinion. The Sixth Circuit the offered terms from anyone with deal- Konica did not enter into any Court of Appeals only reviewed the a higher position than Ms. Hunter such agreements and would not district court's denial of Konica's and no one at Konica had told the approve of this type of deal. Unable motion for judgment as a matter of OGI representative that Ms. Hunter to find another supplier, OGI was law filed in March of 1996, as it was had limited authority; in fact, forced to close its doors. based upon the complete trial Konica knew that Ms. Hunter was record. making such proposals. OGI Files Suit For Breach Of ContractAnd Fraudulent Konica Agrees To Sell X-Ray Konica Agent Sends A New Misrepresentation Film To OGIAt Discounted Letter To OGI Which Modi- Prices To OGI Members fies The PreviousDeal OGI initiated this lawsuit 218 - Loyola Consumer Law Review Volume 10, number 3 Recent Cases claiming that Konica breached its requisite authority to bind the authority to bind it, just as Konica contract with OGI and that Konica principal. When these two factors never expressly informed OGI that had made fraudulent misrepresenta- are met, the agent binds its principal its agent's authority was limited. tions. Following the close of to a contract. A third analogous set of facts was discovery, Konica moved for The Court then proceeded to found in the contract modifications. summary judgment on these claims. analogize the facts of General Just as the manager in GE continu- Konica stated that the alleged Electric Co. v. G Siempelkamp ally signed contractual modifica- contract was invalid as it did not GmbH& Co., 29 F3d 1095 (6th Cir.
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