Question

Southbend School District searched for a new learning management system for use in its school district that serves approximately 60,000 public school students.  After a formal bid process, Southbend entered into an agreement with ZYX, LLC, a Maryland limited liability company. In pertinent part, the agreement provided that “87. Waiver and Modification. Conduct of the parties shall not be construed to waive any provision of this agreement. This agreement may be modified by a writing, signed by both parties, indicating the subject matter of the modification.”

 

Four years later, Southbend decided to renew its agreement with ZYX for a subsequent three year term. ZYX provided a written quote, which provided an annual cost for the system, and indicated that there was no additional cost if Southbend added additional faculty, students or other users beyond the average users during the initial four years of the term. Neither party signed the quote, but Southbend made payments to ZYX based on the prices in the quote, which were accepted by ZYX.

 

During the renewal period, the world experienced a pandemic, resulting in substantial shutdowns of businesses in Southbend’s region. However, Southbend experienced an overall increase in activity on the LMS. ZYX subsequently sent a demand to Southbend to pay for the additional costs of the system as a result of the additional students and users of the system during the pandemic.

 

Discuss whether Southbend is contractually obligated to pay ZYX’s demand above the renewal quoted price. Be sure to identify and define the applicable rule of contract law in your response.