Terry Barr Sales Agency, Inc. v. All-Lock Company, Inc.

Facts

Plaintiff and Defendant entered into an oral agency agreement in 1973. Under the agreement, Plaintiff would make sales to, and/or obtain orders from auto manufacturers to purchase Defendant’s locks and latches for use in new cars. In exchange, Plaintiff received a commission on sales to these customers, including Ford, GM, and Chrysler. The commission rate for new business was 3.5%, and Plaintiff agreed to inherit pre-existing sales at a 2% rate. As a result, the relationship flourished, and by 1992, Plaintiff had a purchase order for Defendant to supply locks and latches for an entire auto line.

However, in March 1994, Defendant terminated Plaintiff as its manufacturers’ sales representative on the “latch” line. At the meeting, Terry Barr, president of Plaintiff, indicated his belief that Plaintiff was due commissions on continuing order for the “life of the part.” Ron Hermann, president of Defendant, stated that Defendant would only pay commissions for 90 days after the termination of the relationship. Soon after, the VP of Plaintiff sent a letter to Defendant that requested Defendant abide by the industry standards and pay for the “life of the part” commissions.

Plaintiff claimed this letter reaffirmed its position that it was due commissions on all sales for the “life of the part.” Yet, Defendant contends that Plaintiff refused to work on the accounts it retained, and this letter was evidence that Plaintiff was attempting to force Defendant into a new agreement.