C-Thru Container Corp. v. Midland Mfg. Co.

Midland Manufacturing Co. (Midland) (defendant) contracted with C-Thru Container Corp. (C-Thru) (plaintiff) to buy bottle-making equipment from C-Thru. Midland also agreed to manufacture bottles of commercially acceptable quality that C-Thru would then purchase. In addition, the contract declared that instead of directly paying for the equipment, Midland would give C-Thru a credit for future bottle purchases. It was the trade usage in the bottle industry for somebody in Midland’s position to produce sample bottles to the prospective purchaser as evidence that the bottles were commercially acceptable prior to the purchase actually taking place. The contract did not contain any reference to this trade usage. After Midland purchased the bottle-making equipment from C-Thru, it failed to provide any sample bottles to C-Thru. C-Thru took this failure to mean that Midland could not produce commercially acceptable bottles, and as a result C-Thru never purchased any bottles from Midland. C-Thru filed suit against Midland for breach of contract under the Uniform Commercial Code (UCC), claiming that Midland could not produce commercially acceptable bottles. Midland moved for summary judgment, arguing that the contract did not require, as a condition precedent to any purchases, that it prove to C-Thru it could manufacture commercially acceptable bottles, and that the UCC’s parol-evidence rule barred consideration of the trade usage. The trial court granted summary judgment to Midland, but the Iowa Court of Appeals reversed. Midland then sought further review in the Iowa Supreme Court.