Cases—Implied Terms—Buyer not responsible for seller’s supplies

A supplier who was stuck with a lot of perishable inventory when the supply contract ended could not recover those costs from the buyer, according to a the Washington Court of Appeals.

The supplier, Seneca Beverages, had a deal to supply beverage concentrate to Starbuck’s for its “Tiazzi” line of fruit beverages.  To ensure a ready supply, it stocked up on many of the ingredients, which were perishable.  Starbuck’s and Seneca had been negotiating an agreement regarding who would be responsible for such stocks, but Seneca never signed it.  After Seneca eventually terminated the agreement, it sued, claiming (among other things) (a) an implied-in-fact contract based on trade usage and the parties’ prior dealings, and (b) a claim that the parties had an oral agreement that Starbuck’s to buy the ingredients.

The court rejected the claims.  Reviewing the evidence, the court found no “meeting of the minds” that Starbuck’s would be responsible for the unused ingredients.  Moreover, the oral statements during negotiations did not create a contract because the parties intended to create a written document that Seneca subsequently refused to sign.

Seneca Foods Corp. v. Starbucks Corp., 2005 Wash. App. LEXIS 211 (Feb. 3, 2005).