The Law School Authority

Cyberchron Corp v. Calldata Systems Development, Inc Case Brief

Summary of Cyberchron Corp v. Calldata Systems Development, Inc
US Court of appls 2nd circ 1995

F: Cyberchron provided custom computer hardware. Calldata is asubsidiary of Grumman Data Systems Corp. Grumman had a contract w/ the MarineCorps to provide a system for a defense program called ATACC. The equipmentconsists of a video processor, work station, and monitor. Cyberchron attemptedto produce the equipments via negotiations btwn parties. Cyberchron producedsome of the equipment but none was ever delivered, nor was any payment made.This lawsuit followed. The parties were not able to agree on the weight of the eqpt.,and the penalties to be assessed against Cyberchron for delivery of eqpt thatexceeded the contractually agreed weight of 145 lbs. Cyberchron never agreed tothe terms of the P.O. but commenced production non the less, w/ Grummanand  Calldata’s encouragement (mid July1990).  No agreement was achieved andCalldata requested Cyberchron to show cause w/I 10 days why the P.O. should notbe terminated. Cyberchron responded in a detailed letter, but it was rejectedbe Calldata in a letter in which Calldata “terminated the POfor default effective immediately.” The distr court found that Grumman hadcommenced negotiations w/ alternate suppliers and entered into a contract w/another supplier whose eqpt was supposedly inferior and weighed more aswell.  No enforceable contract had beenmade; however, Cyberchron was entitled to recover for out of pocket expensessuch as material and labor, and under the doctrine of promissory esstopel.

I: Although there was no contract btwn parties, can Cyberchronrecover under the theory of promissory estoppel?

R: Yes, the injury inflicted upon Cyberchron was unconscionable,and injustice can be avoided only by invoking the doctrine of promissoryesstopel on Cyberchron’s behalf.

A: There are three elements here 1) a clear and unambiguouspromise was made. 2) there was a reasonable and foreseeable reliance thereon,& 3)an injury resulted, which could only be remedied by invoking thedoctrine of prom/estop.  Grumman putgreat pressure on Cyberchron to proceed then abruptly terminated thetransaction and began negotiations w/ another company who produced inferior andheavier eqpt. Recovery should not be extended to the period prior to July 1990.

C: Affirmed judgment of dist. court re recovery on the theoryof prom/estp but vacate and remand for determination of damages.


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