Recent contract-related cases

Incorporating by reference? Be clear about it!

The Department of Veterans Affairs asked for quotes to lease an item of surgical equipment. The winning vendor’s quote included a term requiring the VA to exercise some renewal options. But the VA didn’t do that, so the vendor filed a claim — which was denied. On appeal, the Federal Circuit noted that it wasn’t enough for the winning vendor’s representative to have said, in a transmittal email, “I have attached the quote with the terms and conditions; this needs to be part of the contract.” Affirming dismissal of the vendor’s claim, the Federal Circuit commented:

The contract’s expressly incorporated FAR clauses provided the agency with complete discretion in exercising the option years. If Beacon Point intended to vary the terms of these FAR clauses by incorporating its Quote’s terms and conditions into the contract, it should have ensured that the contract expressly identified that the Quote’s terms and conditions were incorporated into the contract. Beacon Point did not do so. Instead, Beacon Point accepted a contract that references the Quote but does not clearly communicate that the purpose of the reference was to incorporate the Quote’s terms into the contract. Thus, we hold that the contract does not incorporate by reference Beacon Point’s Quote.

Beacon Pt. Assoc. v. Dept. of Veteran Affairs, No. 2024-1076, slip op. at 8 (Fed. Cir. Jun. 5, 2025) (emphasis added).

The “term” — of what, exactly? (Be consistent!)

Sometimes contract drafters don’t pay enough attention to the different possible meanings of the term “term.”  Example: In an Eighth Circuit case:

• A company sought to enforce a noncompetition covenant in the employment agreement of a long-time employee. The employee had joined the company when the company acquired his former employer. After long service, the employee quit and went to work for a competitor of the company.
• The company sued to enforce the noncompete and other restrictive covenants. A federal court denied the company’s motion for preliminary injunction, on grounds that the company was unlikely to succeed on the merits.
• Affirming, the appeals court agreed that, because of the employment agreement’s inconsistent use of the term “term,” the noncompetition covenant had expired long before the employee’s resignation — this, even though the noncompete explicitly said that it would run for three years “following the date his employment is terminated, for whatever reason ….”

See  Wilbur-Ellis Co., LLC v. Jens, No. 23-3749, slip op. at 2 (8th Cir. May 30, 2025) (affirming denial of preliminary injunction).

Exclusion of “lost profits” damages
doesn’t apply to UCC “cover” damages

The Eleventh Circuit vacated and remanded denial of a (counter)claim, by a buyer of bulk tapioca powder, against a supplier:

• During COVID, the supplier had stopped providing the powder on the agreed terms.
• The buyer obtained replacement product, at higher than the agreed price.
• The sales contract — on the supplier’s paper, excluded the buyer’s incidental- and consequential damages — including the buyer’s “lost profits.”
• The buyer sought to recover the price increase it had to pay for tapioca powder from alternative sources.
• A federal district court held that the lost-profits exclusion precluded the buyer from recovering that price increase.
• The Eleventh Circuit disagreed, holding that the higher price constituted “cover” damages that weren’t encompassed by the lost-profits exclusion, and so the buyer could recover “lost profits and the costs of substitute products to the extent that those damages are direct and otherwise satisfy the provision’s total cap on recoverable damages.”

See Sweet Additions Ingredient Processors, LLC v. Meelunie America, Inc., No. 24-10335, slip op. at 20-26 (11th Cir. Jun. 2, 2025) (vacating and remanding district-court judgment).