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Bharat Overseas Ltd. v. Dulien Steel Products, Inc.
Citations: 321 P.2d 266; 51 Wash. 2d 685; 1958 Wash. LEXIS 488Docket: 34245
Court: Washington Supreme Court; February 7, 1958; Washington; State Supreme Court
In the case Bharat Overseas Ltd. v. Dulien Steel Products, Inc., the Supreme Court of Washington addressed an appeal concerning a breach of an oral contract for the sale of 7,000 tons of used railway rails at $78.50 per ton, made on November 17, 1955. The plaintiff, Bharat Overseas Ltd., won a judgment, prompting Dulien Steel Products, Inc. to appeal while Bharat cross-appealed. The court found that sufficient written memoranda existed to satisfy the statute of frauds, despite Dulien's claims to the contrary. Specifically, the court referenced a cablegram and a telegram from Dulien, which confirmed the sale terms and required Bharat to establish a letter of credit by a specified deadline. Both parties were experienced in such transactions and understood the language used, with no claims of ambiguity. The court applied the rule that a memorandum must disclose essential contract elements, including subject matter, parties, terms, and sometimes the price. Dulien argued there were discrepancies between the oral contract and the memoranda, particularly regarding freight costs and guarantees against dead freight. However, the court found no merit in these claims, noting that the memoranda supported Bharat's position and that the trial court correctly determined the essentials of the oral contract were ascertainable from the memoranda. The appellant argues that the respondent's agent, Hoon, testified to an oral agreement regarding a written contract necessary for obtaining a letter of credit. The respondent waived the requirement for a formal instrument intended for their benefit. The appellant does not claim that a formal writing was essential for contract formation but asserts that its omission from written memoranda constitutes a significant deviation from the oral agreement. A contract may exist without a formal writing unless both parties explicitly require it as a condition precedent. The appellant also claims that the memoranda specified a posting time of 10 a.m. for the letter of credit, which was not reflected in the respondent's oral testimony. However, the letter of credit was provided before this time, aligning with the appellant's cablegram, and the respondent's compliance indicated acceptance of these terms. The appellant believes that posting the letter of credit was a condition precedent to its shipping obligation, arguing that discrepancies between the contract and the letter rendered it ineffective. The trial court determined that the letter of credit substantially complied with the contract and that the appellant waived any objection by accepting it. The court found that both parties acted as if they had mutually agreed upon the terms. The appellant's claims were further undermined by its actions, including assurances made to a bank regarding the contract's existence. The court ruled that damages for breach would be limited to 10% of the total contract value, based on the maximum quantity of rails the appellant was obligated to sell, which is the correct perspective since the breach was by the seller. The respondent's contention that this limitation should include freight charges was not favored by the court, which concluded the limitation referred only to the purchase price of the rails. The judgment was affirmed, with costs awarded to the respondent.