Wachter Management v. Dexter & Chaney

Citation: Wachter Management Co. v. Dexter & Chaney, Inc., 282 Kan. 365, 144 P.3d 747 (2006).

Factual Background
Plaintiff, Wachter Management Company (Wachter), is a construction management company based in Kansas. Dexter & Chaney, Inc. (DCI) is a software service company that develops, markets and supports construction, project management, and service management software.

DCI approached Wachter in April 2002 for the purpose of marketing its construction software to the company. Wachter expressed some interest but delayed negotiations until August 2003. During the negotiation process, a written proposal for the purchase of DCI’s accounting and project management software system was produced. In addition to the software itself, the proposal stated that DCI would aid in the installation of the software, provide a full year of maintenance, and train individuals and provide support on how to use the product.

After signing the agreement, DCI shipped the software to Wachter and aided in the installation process. On the “shrinkwrap” of the software’s installation disc, DCI included an agreement which informed the user that by opening the disc, they agree to be bound by the Terms, which include a forum selection clause in Washington state court.

In February 2005, Wachter sued DCI after encountering problems with the software. Wachter brought suit in Kansas for breach of contract and fraudulent inducement. The company sought damages in excess of $350,000 for DCI’s alleged breach.

DCI moved to dismiss Wachter’s petition, alleging that Kansas district court was an improper venue based on the provision of the software license agreement.

Trial Court Proceedings
The district court denied DCI’s motion to dismiss Wachter’s suit on the basis of improper venue. In reaching this conclusion the court determined that the software license agreement contained additional terms that Wachter had not bargained for or accepted.

DCI requested and was granted an interlocutory appeal.

Appellate Court Proceedings
On appeal, the appellate court affirmed the district court’s denial of DCI’s motion to dismiss and remanded the matter back to the trial court for further proceedings. The court relied on the Washington Supreme Court’s decision in Mortenson Co. v. Timberline Software, in its determination that the initial proposal and subsequent Licensing Agreement were part of a “layered" contract. Since the Licensing Agreement came at a later date than the written agreement, the court treated the Licensing Agreement as a “modification” rather than an addition that required no additional consideration to be given effect. Therefore, even though Wachter accepted the initial written proposal drafted by DCI during the negotiation process, the company was required to give an additional express manifestation of assent in order to be bound by the terms of the later Licensing Agreement.

The court concluded that there was no evidence that Wachter expressly manifested that it agreed to the modified terms (the Licensing Agreement). The appellate court further determined that Wachter’s actions in proceeding with the software’s installation amounted to a continuation of the pre-existing contract and in no way constituted express assent to the terms in the Software Licensing Agreement.