Summary of Oglebay Norton Co. v. Armco, Inc.
Supreme Ct. of Ohio, 1990.
Facts: P and D formed a K in 1957 where P was to ship D’s iron ore. K stated that shipping rates for each year were to be determined by what the leading iron ore shippers for the season are charging. The secondary option was that the rates were to be mutually by the parties, considering the rates being charged by similar leading independent vessels. Both D and P and a prosperous relationship for years. Relationship was so great that K extended to the year 2010. But in the 1980s, iron ore business went down and rates disputes started taking place between P and D.
Procedure: Trial ct. ruled that the K was binding and came out with a rate for the current season and then for future rate plans, asked to parties to mutually come up with rates and if can’t ct. will assign a mediator.
D’s argument: The breakdown of the primary and secondary methods of rate determination ended the K. Furthermore, trial ct. had no jurisdiction to set rate and order mediation.
Issue: Was there a K between P and D even after price plans not good anymore? Did the ct. have the power to set rate and ask for future mediation?
Holding: Yes, Yes
Rationale: The trial ct. had evidence showing the long and close relationship between P and D. This shows that both parties intended to stay in relationship even if the rate determination plans failed. Furthermore, the ct. had the power to set the rates. According to UCC 2-305, “where the parties intend to conclude a contract for the sale of goods and the price is not settled, the price is a reasonable price at the time of delivery if the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded." The ct. determined the reasonable price and it had the power to do so. Also, the ct’s order for specific performance was necessary because “the undisputed dramatic changes in the market prices of great lakes shipping rates and the length of the contract would make it impossible for a court to award P accurate damages due to D’s breach of the contract." The order to mediate and negotiate rates each season will neither add nor subtract significant contractual responsibilities.