United States v. Briggs Manufacturing Co.

Nature of the Case

This lawsuit involved action under an implied contract for the sale of goods.

Facts

Briggs Manufacturing (D) agreed to a contract with Toombs (D1) to ship housing material to Alaska. Briggs quoted estimated costs for freight, long shoring, and lightering. Both parties anticipated that Briggs’s quoted costs for these services would be accurate.

Toombs relied on Briggs’s quotes to decide whether to purchase the housing. Briggs’s estimated charges were highly inaccurate and Toombs refused to pay more than the quoted amounts. The United States (P) sued Briggs for these charges and Briggs counterclaimed Toombs for indemnity. Plaintiff was given a judgment against Briggs.

Issue

If an offeree reasonably relies on the estimates of an offeror, will the offeror be collaterally estopped from demanding costs and charges incurred above the original estimate?

Holding and Rule of Law

Yes. If an offeror makes an estimate and an offeree reasonably relies on that estimate, the offeree will not be liable for the differences between the actual and estimated charges.

A party has the right to rely on estimated costs and should not be held liable for the difference if the actual costs and charges are significantly larger.

Disposition

Judgment for defendant Toombs.

Notes

The doctrine of collateral estoppel can be applied if there was reasonable and justifiable reliance. Under this doctrine, an estimate can become an offer that is a binding when accepted. The custom and usage of the trade played an important part in this decision.