inadequacy of consideration

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. 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. 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. 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. 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. All deliveries were due in October and November 1981. National Metal Crafters missed the scheduled delivery dates. 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contract or seek damages for delay; instead, on July 1, 1982, it issued a new set of purchase orders that were later rescinded. 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. Wisconsin Knife Works sued National Metal Crafters in federal district court for breach of the delivery terms. 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. The district court held that a contract existed. It submitted to the jury the question whether the contract had been modified. The jury found modification and no breach, resulting in dismissal of the complaint and judgment for National Metal Crafters on the counterclaim. Wisconsin Knife Works appealed to the United States Court of Appeals for the Seventh Circuit. 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. The record and argument confirmed the headquarters was in Maryland.

Interactive Data Corporation hired John Foley in June 1976 as an assistant product manager at a starting salary of $18,500. As a condition of employment Foley signed a confidential and proprietary information agreement. The company's president told Foley that if he performed his job well he would have a long and rewarding employment with the firm. Over the next six years and nine months Foley received steady salary increases, promotions, bonuses, awards, and superior performance evaluations, rising to branch manager of the Los Angeles office with an annual salary of $56,164 plus a merit bonus. In January 1983 Foley learned that his new supervisor, Robert Kuhne, was under investigation by the FBI for embezzlement from his former employer, Bank of America. Foley reported the information to Vice President Richard Earnest because he was worried about working for Kuhne in a supervisory position. Earnest told Foley not to discuss rumors and to forget what he had heard. In early March 1983 Kuhne informed Foley that the company had decided to replace him for performance reasons and offered a transfer to another division. Foley was later told he could continue as branch manager if he agreed to a performance plan, but when Kuhne met with him the next day Kuhne instead gave Foley the choice of resigning or being fired. Foley was discharged on March 13, 1983. Foley filed suit against Interactive Data Corporation alleging three causes of action: tortious discharge in violation of public policy, breach of an implied-in-fact contract to terminate only for good cause, and tortious breach of the implied covenant of good faith and fair dealing. The superior court sustained the company's demurrer without leave to amend and dismissed the action. The Court of Appeal affirmed the judgment. The Supreme Court granted review.