Tuesday, May 5, 2015
Filed: April 30, 2015
Opinion by: James K. Bredar
Holding: A basic ordering agreement that provides a framework for future contracts but fails to include mutuality of obligation is not by itself an enforceable contract.
Facts: Contractor and subcontractor entered into a basic ordering agreement, wherein defendant “agreed to provide certain services, pursuant to task orders.” Plaintiff issued various task orders, including three specific task orders mentioned in the complaint. Plaintiff brought suit alleging it incurred significant costs because of defendant’s refusal to perform and its breach of the basic ordering agreement.
Defendant argued the basic ordering agreement was not an enforceable contract and, therefore, the claim of breach of contract failed to state a claim for relief. Defendant conceded that the task orders were binding and legally enforceable contracts, but noted that plaintiff did not rely on breach of the task orders for its breach of contract claims.
Analysis: The “meager case law available” provides that a basic ordering agreement “is not an enforceable contract, despite its use of terms typically used in the language of contracts.” The court likened a basic ordering agreement, which only provides the framework for future contracts, to an agreement to agree because “contractual obligations will arise only after an order is placed.” Under such an agreement “no obligations are assumed by either party until orders are given by the [plaintiff] and accepted by the [defendant].”
The court reviewed the language of the basic ordering agreement in question, concluded it lacked mutuality of obligation and found it to be unenforceable. However, as both parties agreed the task orders were enforceable contracts, the court redefined plaintiff’s count as claiming breach of contract as to those task orders.
The full opinion is available in PDF.