Watkins Inc. v. Chilkoot Distributing, Inc.
655 F.3d 802
8th Cir.2011Background
- In 1988, Appellants signed a Dealer Agreement with Watkins, incorporating Watkins' Code of Ethics and compensation terms.
- The 1988 Agreement could be terminated by mutual written cancellation, by Appellants’ notice, or by Watkins for prohibited conduct.
- In 2006, Watkins sent a letter requesting Appellants complete an International Associate Agreement and update contact data; the form contained new terms permitting unilateral amending by Watkins.
- Appellants signed and faxed the 2006 form in July 2006 after Cecile Willick inquired about needing to complete it.
- The Lambert Group joined the Appellants’ downline, driving high sales volume and altering commission structure; Watkins later reclassified the Lambert Group, diminishing Appellants’ commissions.
- Disputes arose over whether the 2006 Agreement superseded the 1988 Agreement, leading Watkins to sue for declaratory judgment and Appellants to counterclaim for breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the 2006 Agreement supersede the 1988 Agreement? | Watkins argues the 2006 Agreement reflects a new contract binding the parties. | Appellants contend there was no clear mutual assent to a new contract; the 1988 Agreement may have continued. | Summary judgment improper; genuine issue of material fact exists on intent to supersede. |
Key Cases Cited
- Morrisette v. Harrison Int'l Corp., 486 N.W.2d 424 (Minn.1992) (contract formation depends on parties' intent evidenced by conduct)
- Olson v. Penkert, 90 N.W.2d 193 (Minn.1958) (mutual consent to alter contract; substitution of new contract allowed)
- Ridgway v. Hennepin Cnty., 182 N.W.2d 674 (Minn.1971) (parol evidence rule not controlling on contract formation)
- Cederstrand v. Lutheran Bhd., 117 N.W.2d 213 (Minn.1962) (surrounding facts relevant to contract formation)
- U.S. Fid. & Guar. Co. v. Siegmann, 91 N.W.473 (Minn.1902) (parol evidence rule exception for formation questions)
- Gartner v. Eikill, 319 N.W.2d 397 (Minn.1982) (contract formation considerations; signature not dispositive alone)
- Minn. Supply Co. v. Raymond Corp., 472 F.3d 524 (8th Cir.2006) (contract modification standards under Minnesota law)
- Alpine Glass, Inc. v. Ill. Farmers Ins. Co., 643 F.3d 659 (8th Cir.2011) (standard for reviewing summary judgment decisions)