Read The Fine Print! – SST Bearing Corp. v. Twin City Fan Co., Ltd., 2012-Ohio-2490

July 13, 2012 in Creditors Rights, Ohio Courts, UCC by Brad Council

On June 8, 2012, The Ohio First District Court of Appeals affirmed the trial court’s decision that Twin City had breached the contract between the parties and agreed with the court’s awarded attorney fees.  The awarding of late fees, however, was reversed since it was not part of the contract and was later “added-on” in the terms and conditions.

TwinCityand SST entered into a contract for the production of bearings. TwinCitysent SST a contract proposal outlining the details of each bearing to be ordered.  The contract was considered a blanket purchase order where the parts would be shipped in installments with separate purchase orders.

The contract language read, “Please formally accept this order subject to Twin City Fan’s terms and conditions per Form No. 1-1113 Rev 6-2007”.  The parties argue whether these terms and conditions were actually sent along with the contract.  The contract included an appendix that stated similar language stating all sales by SST were subject toTwinCity’s terms and conditions on order form 1-1113.  SST salesman, David Lindberg signed the contract.  When he sent the signed contract to Twin city, he included a form with SST’s terms and conditions.  This form stated “seller hereby accepts, with thanks, your offer to purchase the goods described on the reverse side hereof on the terms and condition specified thereon and on the additional terms and conditions specified below”. SST’s terms and conditions specified that any other terms and conditions would have no force or effect.  After a dispute over the product SST commenced legal action.

TwinCityargued that it had a right to cancel the contract at any time, and SST’s recovery was limited to actual costs incurred at the time of termination.  SST’s terms and conditions entitled them to late payment charges and attorney fees.  The court held that since TwinCityacted in bad faith, they were liable for the full contract price for all bearings, late fees, attorney fees, and legal costs. TwinCity appealed, stating the trial court erred in judgment in favor of SST by awarding SST late fees and attorney fees.

Both parties argue that its own respective terms and conditions were a part of the contract and that the other parties’ terms had no effect.  R.C. 1302.10(C) states that “the terms of the particular contract consist of those terms on which the writings of the parties agree”.

The appeal court found that SST’s terms and conditions had not become part of the contract and thus had no legal force or effect, and as a result, the terms and conditions could not be used to support an award of late fees or attorney fees.  However, becauseTwinCityacted in bad faith, the court was justified in awarding attorney fees to SST.  But the court erred in the granting of late fees to SST since such an award was not authorized by the contract.  As a result the appeals court overturned the award of $69,323.46 in late fees to SST.

 

To view the case in its entirety go to:

http://www.supremecourt.ohio.gov/rod/docs/pdf/1/2012/2012-ohio-2490.pdf

 

Slovin & Associates Co., LPA is a regional law firm serving clients in Ohio, Kentucky, and Indiana, which provides legal services to commercial and consumer credit grantors. Our client’s needs include commercial litigation, collection of past due accounts, landlord tenant matters, bankruptcy services, and compliance with and litigation involving federal and state consumer laws.

Many thanks to Stacey Zeschin for her contributions to this article.  Stacey is a paralegal with Slovin & Associates Co., L.P.A.