Florafax International, Inc. v. GTE Market Resources, Inc.

Florafax International, Inc. (Florafax) (plaintiff) was a company that handled the placement and receipt of orders between florists. Florafax additionally entered into agreements with companies that sold floral arrangements, agreeing to handle communication with customers regarding orders for the arrangements. Florafax entered into such an agreement with Bellarose Floral, Inc. d/b/a Flora Plenty (Bellarose) in October 1989 (the Bellarose contract). Bellarose had been in business for about 16 years and received 100,000 to 200,000 orders annually, a number that was increasing. The agreement provided that Florafax would be paid a fee per order. The contract term was for one year but would be automatically renewed on a month-to-month basis. Additionally, the agreement provided that either party could terminate the agreement upon 60 days’ written notice. Two weeks later, Florafax subcontracted out certain portions of the Bellarose contract to GTE Market Resources, Inc. (GTE) (defendant). GTE agreed to handle calls for floral orders, including those for Bellarose, for which it would be provided a fee (the GTE contract). Prior to entering into the contract, GTE did a market analysis that showed that GTE would not make a profit from its contract with Florafax. GTE entered into the contract despite this information. A termination clause in the GTE contract provided that GTE would pay Florafax consequential damages and lost profits should GTE breach the contract or provide notice of termination of the contract for any reason. GTE was aware that it was providing services as a subcontractor on the Bellarose contract and was aware of the extent of Bellarose’s orders. From December 1989 through Valentine’s Day of 1990, GTE had difficulties fulfilling its obligations under the contract. These difficulties worsened by Mother’s Day of 1990. Bellarose terminated its agreement with Florafax in July of 1990. Bellarose’s president stated that he considered the contract with Florafax to be a long-term one but he terminated the agreement due to GTE’s poor performance. Florafax terminated its agreement with GTE. Florafax filed suit, seeking lost profits from the termination of the Bellarose contract. The jury determined that Florafax was entitled to recover lost profits. GTE appealed to the Oklahoma Supreme Court.