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JO-ANN, INC. v. ALFIN FRAGRANCES

October 23, 1989

JO-ANN, INC., Plaintiff,
v.
ALFIN FRAGRANCES, INC., Defendant



The opinion of the court was delivered by: ACKERMAN

 Jo-Ann, Inc., a corporation incorporated under the laws of Iceland, brought this diversity action against Alfin Fragrances, Inc., a New Jersey corporation, for breach of an alleged exclusive distributorship agreement to import and distribute the defendant's beauty care products.

 Now, Jo-Ann, Inc. has moved for partial summary judgment on the issue of liability for breach of the agreement.

 In turn, Alfin Fragrances has cross-moved for summary judgment, contending that there was never an exclusive distributorship agreement between the plaintiff and itself under common law or the Uniform Commercial Code ("UCC"), New Jersey version. Moreover, Alfin posits that if an agreement did exist, then it was void for vagueness, indefiniteness or complete nonexistence of essential terms. Last, the defendant argues in support of its motion that if a contract did exist, then the agreement was terminable at will and, further, the plaintiff suffered no ascertainable loss on account of the termination.

 On July 12, 1989, the parties were before me to argue their respective motions for summary judgment. At that point in time, I indicated my concerns that the provisions of the Uniform Commercial Code might be pertinent to this action. Accordingly, I ordered the parties to answer two questions for me in their supplemental briefs: (1) whether I should apply the New Jersey provisions of the Uniform Commercial Code to mete out the disputes raised in conjunction with the instant action and (2) if the first issue was answered affirmatively, I called upon them to show me what exact provisions of the Code are outcome-determinative of their respective positions. Picking up the legal guantlet which the Court threw down, both parties have ably brought forth their positions. It is now time for the Court to decide this matter.

 The elemental facts of this matter are not disputed. What is hotly contested, however, is what these facts mean as a matter of law. I will first detail the elemental facts.

 On September 3, 1986, Anna Bjornsdottir of the plaintiff sent a letter to Irwin Alfin soliciting Alfin to enable Jo-Ann to distribute Glycel products, a line of beauty care products, to Iceland consumers. The correspondence asked for information regarding other Alfin products, as well.

 Evidently, an earlier telephone conversation spawned this correspondence, but there is no detailing of that conversation in the record before me.

 Another telephone conversation occurred between a representative of the plaintiff and Alfin and, thereafter, Alfin sent samples of the Glycel products to the plaintiff. See Alfin Affidavit, Paragraph 3.

 Ms. Jona Sigurjonsdottir, another representative of the plaintiff, then replied to Alfin's delivery by way of a September 23, 1986 telex which stated in full:

 "Thank you so much for your quick response. We have received the Glycel samples you sent us and are very impressed. We also like the fragrance Ombre Rose very much. We are very excited to be the exclusive distributors for these products in Iceland. We have not received any prices yet. Please send us your net prices on each item as soon as possible. For our market introduction, it will also be helpful to have brochures or whatever other sales material you usually provide such as introductory miniature samples and display materials for shelves and windows. This is what we need to start our introduction of your excellent products in Iceland."

 The defendant responded to this telex by way of a September 29, 1986 telex from Mr. Alfin which stated:

 "In response to your Telex dated Sept. 22, the following prices are the prices you will be invoiced at -- FOB Zurich for Glycel and FOB Paris for Ombre Rose. . . . Glycel - 21 percent of U.S. retail. Ombre Rose - 22 percent of U.S. retail. We will provide an allowance of five percent on your net purchases for free goods. This will cover samples, displays, brochures, etc. Under separate cover I am sending you selection of this material. All advertising and display material will be invoiced to you at our cost plus 10 percent for handling. Please advise how many points of sale you expect to open for each of the brands and also forward your opening orders as soon as convenient for you. I look forward to a pleasant and mutually profitable arrangement. Our understanding is that you will be the exclusive distributor for the domestic market in Iceland."

 It appears from the record that the parties did not specifically agree upon (1) the duration of the alleged contract (Sigurjonsdottir Dep. at 26-27); (2) the quantity of product that would be purchased (Id. at 61); (3) the timing of payments (Id. at 99); (4) how much inventory the plaintiff would maintain (Id. at 100); and (5) the methodology of termination (Id. at 101).

 It appears that after Alfin sent this telex, the plaintiff thought that it had an agreement for an exclusive distributorship with the defendant. It does not appear that Alfin had the same internal understanding as the plaintiff. Two of the defendant's interoffice memoranda state respectively:

 "Per Ms. Anna Bjornsdottir's call yesterday, FP sent her, to Iceland address, one Ombre Rose and one Glycel U.S. order form.

 "She had received IA's telex 6087 Sept. 29th but the order forms were not included in the materials she received from Art Ludwig. She asked for the names of the contacts in both Switzerland and France but told her, until we had an agreement, this info would not be pertinent."

 That memo was dated October 16, 1986.

 Further, another internal memorandum dated October 8, 1986, stated that:

 "Please advise whether you are going to ship."

 In late 1986, Mr. Moreau, a representative of the defendant, was to travel to Iceland to examine the plaintiff's operations. After a delay, Mr. Moreau met with the plaintiff's representatives and, in view of this meeting, recommended that Alfin utilize another company as its distributor in Iceland. Mr. Moreau did not believe that using Jo-Ann would be in Alfin's best interest.

 In this regard, he Telexed Mr. Alfin on January 16, 1987, stating:

 "1) Jo-Ann / Mrs. Jona Sigurjonsdottir.

 "As I told you this company is not the right one to distribute Glycel in Iceland. Considering the various contacts you have had with this lady since months please Telex her ASAP that you regreet to be unable to accept her proposal.

 "2) Other companies I met: Artica / M. Kristmanns and Helgason / M. Half Danarson. I Telex them a negative answer. Klassik - they are not interested.

 "3) Gasa Import / Mrs. Rosa Matthiasdottir - manager

 "She is the right distributor. Products she imports and distributes:

 " - Sothys Treatment = mass market (90 outlets)

 " - Stendahl Treatment make up (selective distribution)

 " - Atkinsons Perfumes from Italy.

 " - Jewelry and handbags from Italy as well as ties and scarves."

 On the same date, Ms. Sigurjonsdottir telexed Mr. Alfin, stating:

 "I have been trying to reach you on the phone since my meeting with Mr. Moreau. There are certain points that I need to discuss with you regarding preparations for the intro of Ombre Rose and Glycel in Iceland because like Mr. Moreau ...


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