C&K Trucking, LLC v. AGL, LLC, 2015 WL 6756282, features a narcotic fact pattern and this legal issue: Can boilerplate “legalese” in an invoice create binding contract rights against the invoice recipient?
Whether the mere mention of this topic is sleep inducing will depend on the person. But what I can say is that the question is a pertinent one from a commercial litigation standpoint since it continues to crop up pretty regularly in practice.
I’ve represented parties trying to enforce favorable invoice language while at other times, defended against one-sided invoice terms. The main issue there, like in today’s featured case, is whether there was a meeting of the minds on the disputed invoice language.
The plaintiff transportation broker in C&K Trucking sued to recover damages for unpaid cargo brokerage services. The broker’s damages action was based on invoices that provided it could recover unpaid amounts in addition to interest and attorneys’ fees.
The problem was that the broker didn’t send its invoices until after it performed under a series of oral contracts with the trucking firm defendants.
The contracting chronology went like this: plaintiff broker verbally hired the defendant to transport cargo for the plaintiff’s clients. Once the defendants delivered the cargo and was paid by the broker’s clients, the broker sent the defendants invoices that contained the disputed fee-shifting terms.
Defendants moved for summary judgment that the invoice attorneys’ fees provision weren’t enforceable since they (defendants) never agreed to fee-shifting at the outset. The Northern District agreed and granted defendants’ summary judgment motion. In doing so, the court relied on some fundamental contract formation principles and reiterated the quantum of evidence needed to survive a summary judgment motion.
In Federal court, the summary judgment movant must show the court that a trial is pointless – that there’s no disputed issue of fact. Once the movant meets this burden, the non-moving party must then show that the affidavits, depositions and admissions on file do in fact show there are “material” disputed facts that should be resolved at trial.
A disputed fact is material where it might affect the outcome of the suit. But a metaphysical doubt isn’t enough. If the evidence doesn’t show a true factual dispute, a summary judgment will be granted.
To establish the formation of a valid contract in Illinois, the plaintiff must prove there was an offer, an acceptance and valuable consideration. The plaintiff must also establish that the contract’s main terms were definite and certain.
Any one-sided attempt to change terms of a contract by sending an invoice with additional terms that were never discussed by the parties will normally fail to create an enforceable contract.
An exception to this applies where there is a course of dealing between the parties. A course of dealing is defined as a continuous relationship between parties over time that, based on the parties’ conduct, reflects a mutual understanding of each party’s rights and duties concerning a particular transaction. A course of dealing under contract law can inform or qualify written contract language.
In this case, the plaintiff argued that the defendants’ years-long pattern of accepting and paying plaintiff’s invoices established a course of dealing and evinced defendant’s implied acceptance of the invoice contents. The court rejected this argument since there was no evidence that defendants ever paid the plaintiff’s attorneys’ fees through the life of the verbal contracts. The court also pointed to the fact that defendants disputed many of plaintiff’s invoices as additional proof that there was no tacit acknowledgement by defendants that it was responsible for plaintiff’s attorneys’ fees.
The key lesson from the factually unsexy C&K Trucking case is that boilerplate fee-shifting invoice terms sent after the contract is performed generally aren’t enforceable. There must be a meeting of the minds at the contract formation stage to allow fee-shifting.
A course of dealing based on the parties’ past conduct can sometimes serve as a proxy for explicit contract terms or a party’s acceptance of those terms. However, where the parties’ prior transactions do not clearly show mutual assent to disputed language, the breach of contract plaintiff cannot rely on the course of dealing rule to prove a defendant’s implied acceptance.