Contract – Statute of Frauds – Oral Agreement – Breach of Contract – Unjust Enrichment

Thermal Design Inc. v. M&M Builders Inc. (Lawyers Weekly No. 10-07-0880, 19 pp.) (Robert N. Hunter, J.) Appealed from Guilford County Superior Court. (Catherine Eagles, J.) N.C. App.

Holding:When a defendant fails to show issues of material fact on a breach-of-contract claim, summary judgment for the plaintiff is correct.

Facts

In 2007 the defendant-contractor purchased a custom roof from the plaintiff-supplier on credit by executing a contract. The roof was meant to be installed at a recreation center in High Point that the contractor was building at the time. The parties later revised the purchase order, decreasing the size of the roof and reducing the price. The contract stated that it was to remain in effect and be non-cancellable for any charges and interest incurred until paid in full.

The roof was delivered to the construction site. The supplier invoiced the contractor for the full contract price. The contractor sent no payment but contacted the supplier and said the steel erection subcontractor told him the use of materials delivered by the supplier would require changes and that a substitute insulation system should be used instead. The contractor’s representative claimed that the supplier’s representative said he would accept a return of the roof in exchange for a restocking fee and 35 percent of the purchase price.

The supplier sent the contractor a past-due invoice for the full amount, while the contractor’s representative told the architect on the project that a cheaper substitute would be used. The contractor sent a fax to the supplier saying they had decided to use another product and said, “You need to make arrangements to pick up your material.” Other communication to the supplier failed to mention the earlier agreement to accept the return of the roof. After additional correspondence, the supplier filed the current action alleging breach of contract and unjust enrichment.

Discussion

The contractor argues there is a genuine issue of material fact as to whether the parties are bound by the contract because of the later oral agreement regarding a return of the roof. We disagree.

Both the terms of the contract and the statute of frauds of the Uniform Commercial Code are hurdles to this argument. The oral agreement is unenforceable under the terms of the contract. The UCC’s statute of frauds, in general, requires contracts for the sale of goods over $500 to be in writing.

The contractor argues that because this transaction took place between merchants, it is entitled to an exception under G.S. § 25-2-201(2). We disagree.

We can ascertain no genuine issue of material fact showing that the alleged oral agreement resulted in either a modification of the contract or a new contract between the parties for the return of the roof. The contract expressly forbids such oral agreements, and the contractor has failed to satisfy the UCC’s statute of frauds.

The contractor also argues that there is a genuine issue of material fact as to whether the supplier took reasonable steps to mitigate its damages. We disagree.

The only evidence is a letter in which the supplier explains that he intended to file suit to recover the full price of the contract. No part of the letter shows an intent to increase damages by failing at its duty to mitigate. Given that the contractor had accepted the specifically manufactured roof and kept it at its jobsite for six weeks before attempting to return it, we conclude that the supplier satisfied its burden of due care to mitigate damages.

Affirmed.