Commercial Bag Company v. Land O'Lakes, Inc., No. 22-3036 (8th Cir. 2023)
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Land O’Lakes and Commercial Bag entered into a “Packaging Materials Supply Agreement.” Under the Agreement, Land O’Lakes agreed to “make best reasonable efforts” to buy fifteen to twenty percent of its annual polypropylene bag volume from Commercial Bag. Due to concerns with the new manufacturer, however, Land O’Lakes decided to purchase a portion of its polypropylene bags from a domestic manufacturer instead. Land O’Lakes informed Commercial Bag of this decision, and said that it would “result in a discontinuation of the business relationship between Land O’Lakes and Commercial” for polypropylene bags. Land O’Lakes gave Commercial Bag 90 days’ notice that it was terminating the Agreement. Commercial Bag sued, alleging that Land O’Lakes breached the contract by terminating the Agreement without cause, reducing its purchases of polypropylene bags from Commercial Bag, and refusing to pay Commercial Bag’s invoice for plates and artwork. The district court granted summary judgment for Land O’Lakes.
The Eighth Circuit affirmed. The court explained that it agreed with the district court that the term “Agreement” in Amendment #2 is not ambiguous. Land O’Lakes was permitted under the contract to terminate the agreement without cause. Amendment #1 added the “without cause” termination provision to Section 2 of the Agreement, and Amendment #2 did not remove that provision. So the “Agreement” to which Amendment #2 referred was necessarily the original agreement as amended by Amendment #1. The court concluded that because Commercial Bag produced no evidence that it actually incurred costs for plates and dies, the district court correctly granted judgment for Land O’Lakes on this claim.
Court Description: [Colloton, Author, with Wollman and Benton, Circuit Judges] Civil case - Contracts. The term "Agreement" in the amendment to the parties' contract was not ambiguous and permitted defendant to terminate the agreement without cause; there was no ambiguity that warrants a trial on whether the contract obligated defendant to purchase a specific amount of bags; the provision of the contract obligating defendant to pay for printing plates and dies anticipated that there would be costs for those items before any payment obligation was incurred; as plaintiff failed to produce any evidence that it incurred costs for plates and dies, the district court properly entered judgment for defendant on the claim; the district court did not err in denying plaintiff's request to reform the contract based on mutual mistake as the record was not sufficient to create a submissible case on mutual mistake.
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