Bacou Dalloz USA v. Continental Polymers, Inc.

Bacou Dalloz USA (Bacou) (plaintiff) was in negotiations to acquire Howard Leight Industries (HLI), an affiliate of Continental Polymers, Inc. (Continental) (defendant). As part of this larger transaction, in a January 12, 1997, letter, Bacou agreed to purchase from Continental all the polyurethane prepolymer Bacou required for a period of five years. The letter required that the quality of the materials be equal to what HLI used, and that the price of the materials be what was available from other suppliers. The letter ultimately was not included in the documents signed at the closing that consummated Bacou’s purchase of HLI. After closing, Bacou and Continental continued to discuss the specifics regarding the requirements contract, including price, quality, and quantity of the polyurethane prepolymer. Bacou submitted multiple purchase orders to Continental, but Continental did not deliver any materials after the parties could not agree on price, quality, or quantity terms. Bacou sued Continental, seeking a declaratory judgment that it did not have any obligations arising from the January 12 letter, because it was merely an agreement to agree and did not set out all material terms of the agreement. Continental countersued for breach of the letter, asserting that the letter was an enforceable contract and that Bacou breached a duty of good faith in finalizing the quality and quantity of materials it required. The district court granted Bacou summary judgment, finding that the letter contained only illusory promises. Continental appealed.