Graulich Caterer Inc. v. Hans Holterbosch, Inc.

243 A.2d 253 (1968)

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Nature of the Case

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Facts

D, an American importer, and distributor of Lowenbrau beer, was granted the franchise to operate the Lowenbrau Pavilion at the 1964 New York World's Fair. D engaged a metropolitan-based industrial design consultant to formulate a feasible production plan for serving the required beer and, as a desired adjunct, platters of German food. The goal was the 'quality concept of merchandising.' The Raytheon Corporation, eager to market their microwave concept of cooking, suggested P's name to the consultant. The consultant entered into preliminary negotiations with P regarding the feasibility of the Raytheon microwave cooking concept as related to the superior quality of food desired by D. The frozen, nearly 'done' food platter was to be placed in the Raytheon microwave oven, which 'reconstitutes' the frozen food to the desired degree of 'doneness.' The consultant reviewed with approval ten general food samples submitted by P. D did not personally attend this initial meeting. P presented eight platters at a second meeting that was attended by the consultant, a chef from a German-based steamship company, D, and P. D was impressed by six of the samples; 'the food was good, the quality was obvious. It was well prepared.' The figure of 1,000,000 units was used in estimating the tentative demand for the initial year. Service of the food was to be made on specially designed and colored plastic platters which were required by D. P requested a deposit of $ 50,000 as contract security. D refused. P submitted a letter of general intention, dated April 1, 1964, requesting D's signature as approval. This letter purported to be an interim agreement demonstrating the bona fides of the parties to be bound until a formal contract documenting the specifications could be executed at a later date. D signed the letter but before the signing, a 'rider' was incorporated stating that the letter indicated 'intent only.' It also reiterated the desire for an early drafting of the menu specifications and provided for a cancellation clause in the event the product fell below the established standards. In reliance on this agreement, P contracted with suppliers for platters, trays, and dollies, which, coupled with labor expenses, totaled $29,937 after adjustments. This sum, plus a projected profit figure of $35,950, was claimed by P. A firm order for April 23, 1964, was placed. Upon delivery, the members of D's organization were stunned by the product and complained immediately that the tendered units did not, in any way, match the contract samples. D described the food as 'bland,' unpresentable, tasteless, and 'just wasn't the type of food that we could sell.' P made an effort to improve with everyone's help. A second delivery, made on April 25, 1964, was likewise unacceptable. The complaints in response to the food were many and varied. D converted the microwave cooking area into a conventional kitchen using pot burners to successfully prepare the food served for the duration of the Fair. P sued D in New Jersey. New Jersey had just adopted the UCC. The trial court on these facts determined the relationship of the parties to be noncontractual under the common law mirror image rule. P appealed.