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Contracts: Withdrawal Charge Provision?

In September 1973, Auburn Plastics (defendant) submitted price quotations to CBS (plaintiff) for the manufacture of eight cavity molds to be used in making parts for CBS's toys. Each quotation specified that the offer would not be binding unless accepted within fifteen days. Furthermore, CBS would be subject to an additional 30 percent charge for engineering services upon delivery of the molds. In December 1973 and January 1974, CBS sent detailed purchase orders to Auburn Plastics for cavity molds. The purchase order forms stated that CBS reserved the right to remove the molds from Auburn Plastics without an additional or "withdrawal" charge. Auburn Plastics acknowledged the purchase order and stated that the sale would be subject to all conditions contained in the price quotation. CBS paid Auburn for the molds, and Auburn began to fabricate toy parts from the molds for CBS. Later, Auburn announced a price increase, and CBS demanded delivery of the molds. Auburn refused to deliver the molds unless CBS paid the additional charge for engineering services. CBS claimed that the contract did not provide for a withdrawal charge. Who will prevail? Why?

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Problem: In September 1973, Auburn Plastics (defendant) submitted price quotations to CBS (plaintiff) for the manufacture of eight cavity molds to be used in making parts for CBS's toys. Each quotation specified that the offer would not be binding unless accepted within fifteen days. Furthermore, CBS would be subject to an additional 30 percent charge for engineering services upon delivery of the molds. In December 1973 and January 1974, CBS sent detailed purchase orders to Auburn Plastics for cavity molds. The purchase order forms stated that CBS reserved the right to remove the molds from Auburn Plastics without an additional or "withdrawal" charge. Auburn Plastics ...

Solution Summary

Auburn refused to deliver the molds unless CBS paid the additional charge for engineering services. Based on the scenario, CBS claimed that the contract did not provide for a withdrawal charge. Who will prevail? Why?

$2.19