Interform Co. v. Mitchell

United States Court of Appeals for the Ninth Circuit · Contracts

Contractsparol evidenceintegrationUCC 2-202lease versus saleintent of the partiestrade usagequantum meruit

Facts

Mitchell Construction used Interform's concrete forms on two Idaho state construction jobs and paid Interform $32,000. Mitchell claimed that payment bought the forms, while Interform claimed it was rent for the first job only and sought compensation for the second job plus return of the forms. The district court credited Interform's evidence that the parties agreed by telephone on September 13, 1971 to a rental arrangement for the first job, and that the later purchase-order documents were not the final expression of a sale contract. Mitchell then used the forms on the second job despite knowing Interform claimed ownership and additional rent.

Issue

Whether the trial court properly considered extrinsic evidence to determine that the parties' agreement for the first job was a lease rather than a sale, whether Interform could recover for Mitchell's use of the forms on the second job absent an express contract, and whether Interform could recover on the payment bond and obtain attorney's fees.

Rule

Under Idaho law, a writing is integrated only if the parties intended it as a final expression of their agreement, and that intent may be determined from the parties' conduct, language, surrounding circumstances, trade custom, and subsequent documents; therefore parol evidence is admissible to determine whether a writing was intended as final and complete. Where no express contract governs a later use of property, Idaho permits recovery in quantum meruit or unjust enrichment measured in a commercial setting by the fair value of the benefit conferred, and a supplier with an express contractual relationship to a prime contractor may recover on a public payment bond for functionally related later claims arising from retention and use of the supplied materials.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Boise, Ridgeway Builders and Summit Steelworks discussed renting specialty concrete braces for a highway overpass. After a phone call settling quantity and daily rate, Ridgeway sent its standard purchase-order form using the word "furnish," and Summit later sent invoices and delivery slips repeatedly labeling the transaction "rental"; Ridgeway used the braces and never objected to those documents.

In Summit's suit for additional charges, Ridgeway argues the purchase order is a fully integrated sale contract and that the court must exclude all extrinsic evidence. Under Idaho law as applied by the majority, how should the court rule?

Explanation. The majority held that under Idaho law, integration turns on the parties' intent, not merely the apparent completeness of a writing. A court may consider conduct, language, surrounding circumstances, trade custom, and subsequent documents to determine whether the writing was intended as the final expression of the agreement. Idaho Code section 28-2-202 rejects the idea that facial completeness alone establishes integration or that ambiguity is a prerequisite to such evidence.