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Seaman's Direct Buying Service, Inc. v. Standard Oil Co.

686 P.2d 1158 (1984)

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Seaman’s Direct Buying Service, Inc. v. Standard Oil Co.

California Supreme Court
686 P.2d 1158 (1984)

SC

Facts

Seaman’s Direct Buying Service, Inc. (Seaman’s) (plaintiff) began negotiating with Standard Oil Company (Standard) (defendant) to be its oil supplier. Standard sent Seaman’s a letter outlining proposed terms of an agreement. The letter contemplated a marine dealer agreement with an initial 10-year term. The letter stated that it was subject to the parties agreeing on specific language in the contracts that the letter contemplated. Seaman’s signed the letter and believed it had a binding agreement. Seaman’s signed a 40-year lease on waterfront property. Thereafter, the oil industry transformed into a seller’s market, and Standard decided not to take on new business. Prior to signing a more detailed contract or otherwise performing under the letter agreement, Standard denied the existence of any agreement with Seaman’s. Seaman’s sued Standard for breach of the implied duty of good faith and fair dealing. The trial court instructed the jury in a manner that enabled the jury to find in favor of Seaman’s if Standard denied that a contract existed, even in good faith. The jury returned a verdict in favor of Seaman’s. Standard appealed. Seaman’s argued for a rule permitting a plaintiff to recover in tort for breach of the implied covenant of good faith and fair dealing in a noninsurance, commercial contract.

Rule of Law

Issue

Holding and Reasoning (Per curiam)

Concurrence/Dissent (Bird, C.J.)

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