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Essco Geometric v. Harvard Industries | 46 F.3d 718 (1995)
In agency law, an agent is someone authorized to act on behalf of a principal. The agent’s actions thus bind the principal. However, sometimes a principal is bound even if the agent acted without actual authority. In Essco Geometric versus Harvard Industries, a chair manufacturer tried to escape a contract with its foam supplier on the grounds that its agent lacked authority, but the court told the manufacturer to get stuffed.
Harvard Industries manufactured chairs. Essco Geometric, doing business as Diversified Foam Products, sold foam for chairs. For over thirty years, Diversified provided much of the foam that Harvard required.
In nineteen eighty-eight, Harvard’s new president, Ed Kruske, implemented new purchasing policies, requiring him to personally approve all purchase orders and requisitions. Harvard communicated these new requirements to its new purchasing manager, Michael Gray, but not to anyone outside of the company.
In nineteen ninety, Gray signed a written contract making Diversified Harvard’s exclusive foam supplier for two years. After Harvard received a slightly lower bid from a competitor, it stopped purchasing foam from Diversified. Diversified sued Harvard for breach of contract, and the jury awarded four hundred thousand dollars in damages. Harvard appealed to the Eighth Circuit.
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