Hamilton Hauling, Inc. v. GAF Corp.

Hamilton Hauling, Inc. (Hamilton) (plaintiff) entered into a contract with John Bajt, a purchasing agent of GAF Corporation (defendant), whereby GAF would purchase a minimum of over $800,000 of raw materials annually from Hamilton for a 10-year period. Bajt and Hamilton had negotiated for several months, and Hamilton was hesitant because supplying raw materials was costly and GAF had previously canceled two purchase orders for raw materials from Hamilton. On February 1, 1979, Bajt and Hamilton entered into the contract, executing the agreement at Hamilton’s office. Bajt did not send a copy of the contract to GAF’s corporate headquarters, and nobody at GAF knew about the contract except Bajt’s secretary. Bajt continued to issue purchase orders for all raw materials sold to GAF by Hamilton. The terms of the purchase orders differed from those of the contract because the purchase orders were not long-term contracts and included the right to cancel. Bajt had not entered into long-term contracts on behalf of GAF. In September 1980, Bajt was terminated by GAF. In December 1980, GAF notified Hamilton that no further deliveries of raw material would be accepted. Hamilton produced the contract to GAF, but GAF disclaimed knowledge of the contract and notified Hamilton that Bajt did not have authority to enter into such a contract. Hamilton sued GAF for breach of contract. A jury returned a verdict for GAF. Hamilton appealed, alleging error in the jury instructions. Hamilton argued that the jury instructions erroneously required that the jury find Hamilton knew GAF had knowingly permitted Bajt to enter long-term contracts. GAF’s internal policy permitted buyers at Bajt’s level had authority to make purchase orders not exceeding $25,000 in a month or one year in duration. Hamilton claimed that requirement should not have been included, because Bajt’s apparent authority arose from his position as a buyer and his actions in that position.