By-Lo Oil Co., Inc. v. ParTech, Inc.

ParTech, Incorporated (defendant) supplied By-Lo Oil Company (By-Lo) (plaintiff) with software used to manage By-Lo’s various businesses. The contract between the parties stated that ParTech would provide By-Lo with ongoing monthly support and maintenance of the software to ensure that it would be compliant for the year 2000, referred to as Y2K. On January 7, 1998, a By-Lo executive wrote to ParTech demanding details of when and how ParTech would make By-Lo’s software Y2K compliant before December 31, 1999. The By-Lo executive was told by ParTech that the company was reviewing data and information about how to make the software Y2K compliant and that By-Lo would be immediately informed once a decision had been made. Concerned that it was running out of time, By-Lo purchased a new Y2K-compliant computer hardware and software system in mid-1998. Unaware of By-Lo’s purchase, ParTech informed By-Lo that it would supply the needed software at no cost. Subsequently, ParTech sent By-Lo the necessary software with detailed instructions for loading it, but because By-Lo had purchased a different system, it did not install the software. By-Lo filed suit against ParTech in Michigan state court alleging ParTech’s actions amounted to an anticipatory breach of the contract under Michigan’s Uniform Commercial Code §§ 2-609 and 2-610. ParTech removed the suit to federal district court and filed a motion for summary judgment. The district court granted ParTech’s motion and held that there was no basis to believe that ParTech had breached the contract under §§ 2-609 or 2-610. By-Lo appealed.