Bacou Dalloz USA v. Continental Polymers Inc. Case Brief Summary | Law Case Explained

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Bacou Dalloz USA v. Continental Polymers, Inc.
United States Court of Appeals for the First Circuit
344 F.3d 22 (2003)

In Bacou Dalloz USA versus Continental Polymers, we explore whether an agreement's price and quality terms were so indefinite that they rendered the agreement unenforceable.

Howard Leight Industries or HLI manufactured foam earplugs. The primary raw material in HLI's earplugs was polyurethane prepolymer.

In October of nineteen ninety seven, HLI's top executives formed a separate company to manufacture prepolymer.

This company later became Continental Polymers.

Bacou Dalloz, a top HLI customer, wanted to purchase HLI.

In January nineteen ninety eight, while negotiations for Bacou's purchase of HLI were ongoing, the parties executed a letter agreement. The letter agreement confirmed that Bacou would enter into a five year agreement to purchase its pre polymer requirements from Continental if the price and quality of Continental's pre polymer was equivalent to the price and quality of pre polymer that HLI then used and that was available from third party suppliers.

The parties executed the final asset purchase agreement in February.

This contract didn't incorporate the January agreement. Thereafter, Bacou and Continental couldn't agree to the supply agreement's terms. Ultimately, Bacousued Continental in Rhode Island state court and asked the court to declare that the January agreement didn't impose any obligations on Bacou. Continental removed the matter to federal district court and asserted several counterclaims.

Among other things, Continental argued that Bacou breached the January agreement and its duty of good faith and fear dealing under that agreement.

The district found that the January agreement was an unenforceable agreement to agree.

Alternatively, the court found that the January agreement was unenforceable because it lacked sufficiently definite price and quality terms. The court thought that Bacou's promises in the January agreement were illusory because Bacou could unilaterally control the raw material that HLI used at any time. Therefore, the court granted summary judgment in Baku's favor on Continental's counterclaims for breach of contract and breach of the duty of good faith and fair dealing.

Following a bench trial, the district court entered judgment in Bacou's favor on all remaining claims. Continental appealed to the first circuit.

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