Overland Machined Products, Inc. v. Swingline, Inc.

Two agreements, one referred to as “Basie Agreement” and the other as “Secrecy Agreement,” dated January 8, 1960, were executed by respondent and appellant (collectively referred to herein as Basic Agreement). Under the terms of the Basic Agreement, appellant issued a purchase order calling for the manufacture by respondent of 2,500 pneumatic nailers or guns in accordance with appellant’s prints and authorizing the manufacture of 500 complete units as well as the manufacture or purchase of all the necessary parts to complete the entire order.

Respondent subsequently received instructions from time to time, oral and in writing, changing and modifying the design of many parts to such an extent that they no longer fit the guns. These parts became obsolete. Mr. LeSage, appellant’s former president, testified he had inspected the parts changed and made obsolete by the instructions and had agreed on behalf of appellant to pay for them at an agreed price. In addition to the obsolete parts created by the subsequent oral and written instructions, appellant, to obtain a cheaper quantity price, did per Mr. LeSage, authorize respondent from time to time to manufacture a larger number of…