Webcor Packaging Corp. v. Autozone, Inc.

Autozone, Inc. (defendant), an automotive retailer, had numerous vendors supplying it with prepackaged parts ready to be placed on shelves at Autozone’s stores. Webcor Packaging Corp. (Webcor) (plaintiff), a manufacturer of commercial packaging, contracted with Autozone’s vendors to manufacture packaging for parts under the name Duralast. Autozone provided Webcor with the specifications and artwork needed for Duralast brake-parts packaging. Autozone never entered into a direct contract with Webcor, but Autozone occasionally purchased some of the packaging for its own use. In 1990, as demand for Duralast products grew, Joel Liggett, a Webcor sales representative, informed Joe Turman, an Autozone employee, that its inventory would need to be increased from a 30-day supply to a 60-day supply to keep up with demand. According to Liggett, Turman assured him that Autozone would pay for the 60-day inventory if it became obsolete. Turman denied that any such promise was made. There was no signed writing memorializing this agreement. In July 1993, Autozone decided to switch to a new brand name, and it directed Webcor to stop manufacturing Duralast packaging. Webcor was unable to sell a large portion of its Duralast packaging, and it filed suit against Autozone to recover damages. Webcor argued that the packaging fell under the specially-manufactured-goods exception to the statute of frauds in § 440.2201 of the Michigan Commercial Code, so that the oral promise was enforceable. A trial court sided with Autozone, finding that the specially-manufactured-goods exception to the statute of frauds did not apply, given that there were multiple buyers of Duralast packaging. As a result, the statute of frauds precluded enforcement of the oral agreement. Webcor appealed.