De Los Santos v. Great Western Sugar Co.

Nebraska Supreme Court · Contracts

Contractsmutualityillusory contractquantity termper-unit servicesterminationgood faithpromissory estoppel

Facts

In October 1980, the plaintiff and defendant entered a hauling contract under which the plaintiff, an independent contractor, would transport such tonnage of beets as the defendant loaded onto the plaintiff's trucks between October 1, 1980, and February 15, 1981. The plaintiff was to provide trucks, labor, fuel, maintenance, licenses, and insurance, and he would be paid solely based on the amount of beets actually transported. Both parties knew when they signed the contract that the defendant had identical contracts with other truckers, so the plaintiff was not to haul all of the defendant's beets. After about two months, the defendant told the plaintiff his services were no longer needed, and the plaintiff sued for breach after being paid in full for all beets he had actually hauled.

Issue

Was the hauling contract enforceable as to future hauling where it specified no quantity of beets the defendant had to load onto the plaintiff's trucks, even though it stated an operative term ending February 15, 1981? If not, could the plaintiff nevertheless recover under course of dealing, promissory estoppel, or the duty of good faith and fair dealing?

Rule

Where a promisor agrees to purchase services from a promisee on a per-unit basis but the agreement specifies no quantity and the parties did not intend that the promisor take all of its needs from the promisee, there is no enforceable agreement as to future performance. The promisor is not obligated to accept any services and may terminate the relationship at any time without liability other than paying for services accepted; specifying an operative time period does not create an obligation otherwise absent, and exercising a contractual right to cease using services is not bad faith.

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In Omaha, Prairie Crest Milling hired Lena Ortiz, an independent hauler, under a written agreement to move "such loads of grain as may be placed on Contractor's trailers" from the company's depots to its processing plant between August 1 and November 30. Lena was paid only per load delivered, and both sides understood that Prairie Crest had also signed identical hauling agreements with several other truckers.

After six weeks, Prairie Crest stopped assigning any loads to Lena and paid her for all loads she had already completed. If Lena sues for lost profits on loads she expected to haul through November 30, what is the strongest argument for Prairie Crest?

Explanation. The majority rule is that where services are purchased on a per-unit basis, the agreement states no quantity, and the parties did not intend an exclusive or all-needs arrangement, the promisor is not obligated to accept any future services. The stated time period does not itself create a duty to furnish work. Prairie Crest therefore may stop assigning loads at any time, so long as it pays for services already accepted. (Derived from De Los Santos v. Great Western Sugar Co. (n.d.).)