Continental Laboratories, Inc. v. Scott Paper Co.

Continental Laboratories, Inc. (Continental) (plaintiff) and Scott Paper Company (Scott) (defendant) entered into negotiations for Scott to purchase hotel-amenity products from Continental, which was a new market for Scott. During the negotiations, Scott prepared and submitted several drafts of a written contract to Continental, each of which included revisions based on the parties’ negotiations. The agreements contained numerous detailed terms and were for a large amount of money. It was Scott’s practice to require all significant business transactions to be memorialized in writing. The parties held a phone conference in August 1987. Continental believed that a binding oral contract was reached during that phone conference. After the phone conference, Scott presented another revised written contract to Continental. The parties conducted additional meetings to discuss unresolved terms regarding manufacture and distribution of products, and Scott presented yet another written contract to Continental. However, Scott subsequently informed Continental that it was no longer interested in the transaction, at which point Scott terminated any further negotiations. Continental sued Scott for breach of the oral contract that Continental believed was created during the August phone conference. Scott moved for summary judgment, arguing that there was no binding contract.