781 F.2d 1285, 1286
In 1981 Wisconsin Knife Works, a division of Black & Decker (U.S.), Inc., a Maryland corporation whose headquarters is in Maryland, sought to manufacture spade bits for its parent and therefore needed a supply of spade bit blanks.1 National Metal Crafters, a division of Keystone Consolidated Industries, Inc., a Delaware corporation with its principal place of business in Illinois, agreed to supply the blanks.2
Wisconsin Knife Works issued six purchase orders, each containing printed conditions stating that no modification of the contract would be binding on the buyer unless made in writing and signed by the buyer's authorized representative.3 National Metal Crafters acknowledged the first two purchase orders, placed August 21, 1981, by letters listing delivery dates; Wisconsin Knife Works inserted those dates into the orders.4 The remaining four orders, placed September 10, 1981, were accepted by performance after National Metal Crafters supplied oral delivery dates that Wisconsin Knife Works wrote into the forms.5 All deliveries were due in October and November 1981.6
National Metal Crafters missed the scheduled delivery dates.7 Wisconsin Knife Works did not cancel the contract or seek damages for delay; instead, on July 1, 1982, it issued a new set of purchase orders that were later rescinded.8 By December 1982 National Metal Crafters was producing adequate quantities of blanks, yet only 144,000 of the more than 281,000 blanks ordered had been delivered when Wisconsin Knife Works notified National Metal Crafters on January 13, 1983, that the contract was terminated.9
Wisconsin Knife Works sued National Metal Crafters in federal district court for breach of the delivery terms.10 National Metal Crafters counterclaimed for damages, including $30,000 stipulated as the amount owed for breach of a separate oral agreement concerning expenses of maintaining machinery used to fulfill the contract.11 The district court held that a contract existed.12 It submitted to the jury the question whether the contract had been modified.13 The jury found modification and no breach, resulting in dismissal of the complaint and judgment for National Metal Crafters on the counterclaim.14
Wisconsin Knife Works appealed to the United States Court of Appeals for the Seventh Circuit.15 The court first examined whether diversity jurisdiction existed, noting that the complaint alleged the plaintiff's corporate parent was a Maryland citizen but failed to state its principal place of business.16 The record and argument confirmed the headquarters was in Maryland.17
Whether the record establishes diversity of citizenship between the parties despite incomplete allegations in the complaint regarding the plaintiff's principal place of business?18
Under 28 U.S.C. § 1332(c), a corporation is a citizen of every state where it is incorporated and of the state where it has its principal place of business.19 An allegation of citizenship proper in form and not contested establishes a party's citizenship for purposes of diversity jurisdiction.20 The court may examine the record to confirm the principal place of business when the complaint is deficient.21
Yes. The complaint alleges that the corporation that owns it is a citizen of Maryland but fails to allege in what state it has its principal place of business.22 The record shows and counsel confirmed at argument that Black & Decker's headquarters is in Maryland.23 The test in this circuit for principal place of business is "nerve center," which ordinarily locates the corporation's brain at its headquarters.24
There is no reason to think that Black & Decker's principal place of business might be in Illinois or Delaware.25
Diversity jurisdiction is established on the record despite the incomplete complaint allegations.26
Whether a clause in purchase orders requiring that modifications be made only in a writing signed by the buyer's authorized representative precludes a jury from finding an oral or conduct-based modification of delivery terms?27
UCC § 2-209(2) provides that a signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded.28 Between merchants the clause need not be separately signed by the other party.29 The clause is valid when contained in a signed agreement between merchants.30
Yes. Wisconsin Knife Works issued six purchase orders containing the no-oral-modification clause on the reverse side.31 National Metal Crafters acknowledged the first two orders in writing and accepted the remaining four by beginning performance, thereby forming contracts that included the clause.32 No signed writing by Wisconsin Knife Works modified the October and November 1981 delivery dates; the pert charts supplied by National Metal Crafters were not signed by the buyer and did not purport to modify the contract.33
The jury therefore should not have been permitted to find an oral or conduct-based modification of the delivery terms.34
The no-oral-modification clause is valid and enforceable, precluding the jury from finding modification by means other than a signed writing.35
Whether an attempted modification that fails to satisfy a contractual writing requirement can operate as a waiver under UCC § 2-209(4) without a showing of reliance by the party claiming the waiver?36
Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) it can operate as a waiver under UCC § 2-209(4).37 To preserve the force of subsection (2) the attempted modification operates as a waiver only when the party claiming waiver reasonably relied on the other party's conduct or expressions.38
No. The jury instruction on modification contained no reference to reliance by National Metal Crafters.3940 National Metal Crafters must have incurred expenses in producing spade bit blanks after the original delivery dates, but whether these were reliance expenses is a separate question.41 The stipulated counterclaim damages appear limited to the separate oral agreement concerning machinery maintenance.42 Because the instruction omitted the reliance element required to reconcile subsections (2) and (4), the judgment must be reversed and the case remanded.43
An attempted modification operates as a waiver under UCC § 2-209(4) only upon a showing of reasonable reliance; the jury instruction was therefore erroneous.44
Related opinions on this issue
Waiver under § 2-209(4) means an intentional relinquishment of a known right and does not require detrimental reliance.45 Subsection (5) separately addresses reliance when a waiver affects the executory portion of the contract.46 The structure of the statute treats waiver and reliance as different concepts.47
The jury's finding that Wisconsin Knife Works induced a reasonable belief that strict enforcement was not required supports a waiver that Wisconsin Knife Works later retracted.48 This discharges National Metal Crafters from liability for delay without the need for a new trial on reliance.49