PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

AUDIO VISUAL ASSOCIATES,
INCORPORATED, t/a Ritz Audio Visual
Associates, Incorporated,
Plaintiff-Appellant,

v.
                                                                    No. 98-2113
SHARP ELECTRONICS CORPORATION,
Defendant-Appellee.

and

DOUGLAS STEWART COMPANY,
Defendant.

Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Peter J. Messitte, District Judge.
(CA-97-3816-PJM)

Argued: February 29, 2000

Decided: April 20, 2000

Before NIEMEYER, MICHAEL, and TRAXLER, Circuit Judges.

_________________________________________________________________

Affirmed by published opinion. Judge Niemeyer wrote the opinion,
in which Judge Michael and Judge Traxler joined.

_________________________________________________________________

COUNSEL

ARGUED: Sylvia Jiva Rolinski, Silver Spring, Maryland, for Appel-
lant. Brett Ingerman, PIPER & MARBURY, L.L.P., Baltimore, Mary-
land, for Appellee. ON BRIEF: Henry R. Lord, Anthony L. Meagher,
PIPER & MARBURY, L.L.P., Baltimore, Maryland, for Appellee.

_________________________________________________________________

OPINION

NIEMEYER, Circuit Judge:

Based on its efforts to purchase 1,400 calculators from Sharp Elec-
tronics Corporation, Audio Visual Associates, Inc., filed this action
against Sharp for breach of contract, tortious business conduct, and
violation of the antitrust laws. On Sharp's motion to dismiss filed
under Federal Rule of Civil Procedure 12(b)(6), the district court dis-
missed Audio Visual's amended complaint. We affirm.

I

The allegations of Audio Visual's amended complaint, which at
this stage of the proceedings we take to be true even though the alle-
gations relate a somewhat incoherent series of events, state that Audio
Visual contacted Sharp with the intent to purchase a number of Sharp
brand, graphing calculators (Model EL-9200C). Audio Visual
planned to resell the calculators to Corporate Systems Resources, Inc.
("CSR"), a "socially and economically disadvantaged small business
concern" under § 8(a) of the Small Business Act, 15 U.S.C. § 637(a),
which had received an award from the United States Navy to supply
the Navy with 1,400 calculators. Sharp, which was aware of Audio
Visual's arrangement with CSR and CSR's award from the Navy,
quoted Audio Visual a price of $62.99 per calculator. Based on this
quotation, Audio Visual contracted with CSR to provide it with the
1,400 calculators for $71.00 each, and CSR contracted to provide the
Navy with the calculators at a sum not alleged in the complaint. Two
days later, on January 25, 1995, Sharp orally informed Audio Visual
that it had decided to "dump" the EL-9200C calculators and "quoted
a price of $31.00 per unit." Pursuant to a "typical long-standing busi-
ness practice" with Sharp, Audio Visual thereupon faxed Sharp a pur-
chase order for 1,400 calculators at $31.00 per unit. The purchase
order included the following language:

                    2
          PLEASE ADVISE OUR COST IF CASH IS PROVIDED
          WITH ORDER

          * * * * *

          DO NOT RELEASE ORDER BEFORE YOU [HAVE]
          RECEIVED WRITTEN OR VERBAL AUTHORIZATION
          FROM GARY LUNSFORD OR BOB DVORAK

The purchase order was signed by Bob Dvorak as Audio Visual's
executive vice president and owner.

On the same day that Audio Visual faxed Sharp the purchase order,
a Sharp employee called Audio Visual demanding "to know the iden-
tity of the customer buying the calculators [and] asking whether it
[was] the Navy and whether [Audio Visual] was acting as a broker
for an `underprivileged firm.'" Sharp then advised Audio Visual that
it "was not going to obtain the order at any price." When Audio
Visual contacted another employee at Sharp to inquire about the sta-
tus of its order, the employee stated that the calculators were "sold
out." The complaint alleges that at that time Sharp actually had "at
least 30,145 units then in stock."

During this same period, Audio Visual alleges, Sharp approached
the Navy directly and offered to provide it with the calculators, along
with some projectors, if the Navy would cancel its contract with CSR.
Audio Visual alleges that the Navy did cancel the CSR contract and
that this caused CSR to cancel its contract with Audio Visual. When
Audio Visual called Sharp again, Sharp again stated that the calcula-
tors were sold out and that, in any event, it would not ship Audio
Visual the calculators.

Less than two weeks later, Sharp informed Audio Visual that its
EL-9200C calculators were now available at $31.00 each. Accord-
ingly, Audio Visual faxed Sharp a purchase order for 1,400 calcula-
tors at this price. When Audio Visual followed up with a telephone
call, however, Sharp stated that the calculators were sold out and that
Audio Visual's order would not be filled. But Sharp referred Audio
Visual to the Douglas Stewart Company ("DSC") in Wisconsin, one
of Sharp's distributors.

                    3
When Audio Visual called DSC, DSC quoted a price of $29.95 per
calculator. Shortly after providing this quotation, however, DSC told
Audio Visual that the calculators had a new price of $31.00 because
"Sharp says $31.00 is the fixed price." Ultimately, Audio Visual com-
pleted a transaction with DSC and purchased 1,400 calculators at the
price of $31.00 each. Audio Visual then sold the calculators to CSR,
which in turn provided them to the Navy.

Audio Visual filed this action against Sharp and DSC, alleging
(1) breach of a contract to sell Audio Visual calculators at $31.00
each, (2) intentional interference with existing contractual relations
between Audio Visual and CSR, (3) intentional interference with
prospective economic advantage and business relations, (4) fraud and
misrepresentation, (5) negligent misrepresentation, and (6) price fix-
ing. Audio Visual sought $100,000 in compensatory damages, treble
damages on the antitrust claim, $3 million in punitive damages, and
attorneys fees.

On the defendants' motion to dismiss made under Federal Rule of
Civil Procedure 12(b)(6), the district court dismissed the complaint.
It concluded that Audio Visual's faxed purchase order was at most an
offer that was rejected by Sharp and that no contract between Sharp
and Audio Visual for the sale of calculators ever came into existence.
On the intentional interference claims, the court concluded that
because the alleged interference involved a contractual relationship
between Sharp, Audio Visual, CSR, and the Navy,"effectively what
you've got is, one of the parties to the contract alleging interference
with the contract by another party to the contract, to the overall con-
tract, which essentially you cannot do." With respect to the fraudulent
and negligent misrepresentations, the court concluded that the state-
ment by Sharp that it was sold out was not a representation upon
which Audio Visual could have reasonably relied. The court con-
cluded that the statement was simply a refusal to deal, which is not
actionable. Finally, the court dismissed the price-fixing claim because
there was no indication of agreement or concerted action between
Sharp and DSC.

Because Audio Visual settled its claims against DSC, it filed this
appeal only with respect to the district court's order dismissing its
complaint against Sharp.

                     4
II

For its principal argument on appeal, Audio Visual contends that
it adequately alleged the formation of a contractual relationship
between it and Sharp under which Sharp agreed to sell Audio Visual
1,400 calculators at $31.00 each and that Sharp illegally refused to
honor the contract. Audio Visual points to its allegations that Sharp
"quoted a price of $31.00 per unit" and that"pursuant to typical long-
standing business practice, it faxed a purchase order to Sharp," a copy
of which it attached to the complaint. As Audio Visual characterizes
this exchange in its complaint, "[Audio Visual] accepted an offer of
Sharp to provide the calculators at a specified price. A complete con-
tract between the parties was created."

Sharp contends that Audio Visual's purchase order amounted to
"nothing more than an offer requiring acceptance of its terms to create
a contract" and that Sharp was fully within its rights to reject the pur-
chase order. It argues that if we were to rule otherwise, purchasers
would be able "to create legally enforceable contracts simply by send-
ing or faxing a purchase order to the seller." Moreover, Sharp notes,
if sending a purchase order were held to create a contract, then a seller
would never be able to reject an order or refuse to deal.

The commercial exchange between Audio Visual and Sharp was
not unusual as far as it went, and the significance of each exchange
is readily defined either by common law or the Uniform Commercial
Code. Daily, sellers provide quotations on prices and delivery, and
daily, buyers place purchase orders to acquire goods pursuant to these
quotations. Often, the terms of proposed transactions are modified by
oral or written communications and transactions are finalized simply
by performance and payment in accordance with the latest proposals.
This facility and flexibility in commercial transactions involving the
sale of goods is specifically contemplated by the Uniform Commer-
cial Code. See Md. Code Ann., Com. Law § 1-102(2).*
_________________________________________________________________
*Section 1-102(2) provides that the purposes of the Uniform Commer-
cial Code are:

          (a) To simplify, clarify and modernize the law governing com-
          mercial transactions;

          (b) To permit the continued expansion of commercial practices
          through custom, usage and agreement of the parties;

          (c) To make uniform the law among the various jurisdictions.

                    5
Under the Code, buyers and sellers may freely exchange purchase
orders, faxes, and telephone calls relating to a proposed transaction
without incurring contractual obligations unless and until the essential
requirement for contract formation is satisfied-- i.e. that there be an
objective manifestation of mutual assent by the parties (sometimes
referred to as a "meeting of the minds"). See Maryland Supreme
Corp. v. Blake Co., 369 A.2d 1017, 1023 (Md. 1977); World Ins. Co.
v. Perry, 124 A.2d 259, 267 (Md. 1956); Restatement (Second) of
Contracts § 17(1) ("the formation of a contract requires a bargain in
which there is a manifestation of mutual assent to the exchange and
a consideration"). The manifestation of mutual assent ordinarily takes
the form of an offer by one party followed by an acceptance by the
other party. See Blake, 369 A.2d at 1025. In determining whether a
proposal by one party amounts to an offer, we must ask whether it can
be accepted to create an enforceable arrangement. See Restatement
(Second) of Contracts § 24 ("An offer is the manifestation of willing-
ness to enter into a bargain, so made as to justify another person in
understanding that his assent to that bargain is invited and will con-
clude it").

In this case, Sharp quoted a price of $31.00 per unit, a quotation
that Audio Visual claims it "accepted" to form a binding contract.
This argument, however, does not withstand closer scrutiny. Audio
Visual cannot maintain that upon its receipt of a price quotation from
Sharp, it could have formed a binding contract to purchase, for exam-
ple, 1.5 million units -- a proposition yet more untenable if it turned
out that Sharp were unable to deliver 1.5 million units. Price quota-
tions are a daily part of commerce by which products are shopped and
commercial transactions initiated. Without more, they amount to an
invitation to enter into negotiations, but generally they are not offers
that can be accepted to form binding contracts. See Blake, 369 A.2d
at 1024; see also Dyno Constr. Co. v. McWane, Inc., 198 F.3d 567,
572 (6th Cir. 1999) (noting that a price quotation is usually consid-
ered an invitation for an offer); Interstate Indus., Inc. v. Barclay
Indus., Inc., 540 F.2d 868, 870-73 (7th Cir. 1976) (discussing distinc-
tions between a price quotation and an offer). It would bring an end
to the competitive practice of shopping products if every quotation
exposed the "quoter" to an enforceable contract on whatever terms the
"quotee" chose, regardless of product availability.

                    6
Typically, a seller's price quotation is an invitation for an offer,
and the offer usually takes the form of a purchase order, providing
product choice, quantity, price, and terms of delivery. The Uniform
Commercial Code provides that the seller can accept such an offer in
any of several ways, often determined by custom and practice. See
Md. Code Ann., Com. Law §§ 2-204(1), 2-206(1), 2-208. Frequently,
the seller accepts the offer of a purchase order by a written acknowl-
edgment, which also provides a shipping date for the product. The
seller may also accept simply by performance and delivery of the
goods. A seller, however, must also be free to reject the terms of the
purchase order and to propose alternative terms. In this case, Sharp
did reject Audio Visual's purchase order, stating explicitly that it
would not fill the order. Audio Visual has not alleged the existence
of any evidence that would suggest otherwise.

While Audio Visual alleges that custom and practice governed its
purchases from Sharp, this allegation does not indicate that it was
Sharp's practice to treat Audio Visual's purchase orders as binding on
Sharp. And logic would dictate otherwise. Just because Sharp quotes
a price, it cannot be said to have agreed to other essential terms that
a purchaser might propose in its purchase order with respect to quan-
tity, delivery, and payment. The most that the custom and practice as
alleged in this case could suggest is that when Sharp filled Audio
Visual's purchase orders, it thereby signaled its acceptance of those
orders.

But in the specific transaction before us, it is yet more apparent that
a contract was never formed. Audio Visual's purchase order in this
instance was conditional, and it did not amount to an offer that could,
without satisfaction of the condition by Audio Visual, be accepted by
Sharp. Audio Visual's purchase order was conditioned on receipt
from it of "written or verbal authorization from Gary Lunsford or Bob
Dvorak." Until such authorization was received, Sharp could not bind
Audio Visual to the order submitted.

Despite Audio Visual's inability to demonstrate a meeting of the
minds with Sharp on the essential terms of a transaction, Audio
Visual contends, in conclusory terms, that its purchase order became
the basis of a contract "pursuant to typical long-standing business
practice," as recognized by the Uniform Commercial Code. It points

                    7
first to § 2-207(3), which provides that "[c]onduct by both parties
which recognizes the existence of a contract is sufficient to establish
a contract for sale although the writings of the parties do not other-
wise establish a contract." But this section"contemplates contract for-
mation through performance." Avedon Engineering, Inc. v. Seatex,
126 F.3d 1279, 1284 n.10 (10th Cir. 1997) (quoting 1 White & Sum-
mers, Uniform Commercial Code § 1-3, at 25-26 (4th ed. 1995)).
Here, the complaint does not allege that Sharp performed pursuant to
the purchase order -- it did not ship the goods to Audio Visual -- and
Audio Visual alleges no other conduct by either party to evidence a
contract.

Audio Visual also points to § 2-204(1), which allows that a "con-
tract for the sale of goods may be made in any manner sufficient to
show agreement, including conduct by both parties which recognizes
the existence of such a contract." This provision, however, is not
helpful to Audio Visual because again it has failed to allege "conduct"
by Sharp that "recognizes the existence" of an agreement.

Finally, Audio Visual points to § 1-205(3), which provides that "[a]
course of dealing between parties . . . give[s] particular meaning to
and supplement[s] or qualif[ies] terms of an agreement." This section,
however, does not suggest that a course of dealing may in and of itself
provide the basis for a contract. Rather, it supplies a mode of interpre-
tation for construing existing contracts. See, e.g., Snyder v. Herbert
Greenbaum & Assocs., Inc., 380 A.2d 618, 622 (Md. 1977) ("`course
of dealing' is an interpretative device to give meaning to the words
and terms of an agreement"). In short, Audio Visual does not allege,
either by course of conduct or otherwise, that it and Sharp mutually
assented to a transaction for the purchase and sale of 1,400 calculators
at $31.00 per calculator.

In addition to its failure to allege any manifestation of mutual
assent, Audio Visual's complaint also demonstrates on its face that
any alleged contract would be unenforceable because it did not satisfy
the Uniform Commercial Code's statute of frauds. Section 2-201(1)
provides:

          Except as otherwise provided in this section, a contract for
          the sale of goods for the price of $500 or more is not

                    8
          enforceable by way of action or defense unless there is some
          writing sufficient to indicate that a contract for sale has been
          made between the parties and signed by the party against
          whom enforcement is sought.

Undisputedly, Sharp did not sign any document agreeing to sell calcu-
lators at $31.00 each (for a total of $43,400) and did not return any
writing to Audio Visual acknowledging or purporting to accept, even
in an imperfect manner, Audio Visual's purchase order. Yet Audio
Visual argues that its claim falls within the exception to the statute of
frauds included in § 2-201(2), which provides:

          Between merchants if within a reasonable time a writing in
          confirmation of the contract and sufficient against the sender
          is received and the party receiving it has reason to know its
          contents, it satisfies the requirements of subsection
          (1) against such party unless written notice of objection to
          its contents is given within ten days after it is received.

Audio Visual maintains that its purchase order was in fact the "writ-
ing in confirmation" of a preexisting contract referred to in § 2-
201(2). However, Audio Visual never alleges that it had, before trans-
mission of the purchase order, accepted Sharp's price quotation. Sec-
tion 2-201(2) only refers to a writing "in confirmation of the
contract." (Emphasis added). Accordingly, for this provision to
excuse compliance with the statute of frauds, Audio Visual would
have to allege that a contract existed and that it sent the purchase
order in confirmation of the contract within a reasonable time thereaf-
ter. See, e.g., R.S. Bennett & Co. v. Economy Mechanical Indus., Inc.,
606 F.2d 182, 185-86 (7th Cir. 1979). In sending its purchase order
in this case, however, Audio Visual sought to form a contract, rather
than confirm one.

In sum, the complaint alleges a price quotation by Sharp and Audio
Visual's responsive issuance of a purchase order for 1,400 units at the
quoted price, but it alleges no mutual assent to any commercial trans-
action and no writing signed by Sharp to satisfy the statute of frauds.
Therefore, Audio Visual's complaint fails to allege a contract on
which to base a breach-of-contract claim.

                    9
III

Audio Visual's tort allegations were also properly dismissed.
Audio Visual alleged in its complaint that Sharp interfered with its
contractual relationship and prospective economic advantage in
bypassing Audio Visual and CSR and contacting the Navy directly to
sell it the calculators. Audio Visual also alleged that Sharp fraudu-
lently and negligently misrepresented first that it had calculators to
sell at $31.00 and then that it was out of stock when in fact it had an
inventory of more than 30,000 calculators.

To support its claim of intentional interference with an existing
contract, Audio Visual must allege, inter alia , "[t]he existence of a
contract or a legally protected interest between the plaintiff and a
third party" and "the defendant's intentional inducement of the third
party to breach or otherwise render impossible the performance of the
contract." Bagwell v. Peninsula Regional Medical Ctr., 665 A.2d 297,
313 (Md. Ct. Spec. App. 1995). But Audio Visual does not allege that
Sharp induced CSR to breach its contract with Audio Visual. Rather,
it alleges that Sharp contacted the Navy directly, thereby allegedly
interfering with the contract between the Navy and CSR. Because
Audio Visual was not a party to this contract, Audio Visual fails to
allege that Sharp induced a party with which Audio Visual had a con-
tract to "breach or otherwise render impossible the performance of
the contract." Id. Moreover, Audio Visual also does not claim that the
Navy and CSR entered into a contract with the intent to benefit Audio
Visual, such that Audio Visual had a "legally protected interest" as a
third-party beneficiary. See Flaherty v. Weinberg, 492 A.2d 618, 622
(Md. 1985).

To state a claim of tortious interference with its prospective eco-
nomic advantage, Audio Visual must allege:

          (1) intentional and wilful acts; (2) calculated to cause dam-
          age to the plaintiffs in their lawful business; (3) done with
          the unlawful purpose to cause such damage and loss, with-
          out right or justifiable cause on the part of the defendants
          (which constitutes malice); and (4) actual damage and loss
          resulting.

                     10
Alexander & Alexander, Inc. v. B. Dixon Evander & Assocs., Inc.,
650 A.2d 260, 269 (Md. 1994) (citation omitted). Audio Visual,
though, never alleges the necessary "unlawful purpose" of Sharp. The
only allegations touching on this element are Sharp's knowledge of
CSR's contract with the Navy and Audio Visual's contract with CSR,
Sharp's statements that Audio Visual would not get the calculators "at
any price," Sharp's false claim that it had no calculators, and Sharp's
offer to provide the Navy with calculators and projectors. These alle-
gations, without more, do not support a necessary claim of "violence
or intimidation, defamation, injurious falsehood or other fraud, viola-
tion of the criminal law, and the institution or threat of groundless
civil suits or criminal prosecutions in bad faith." K & K Management,
Inc. v. Lee, 557 A.2d 965, 979 (Md. 1989) (citation omitted).

Finally, to support its claim of fraudulent misrepresentation based
on Sharp's false offer to sell the calculators for $31.00 each and its
later false statement that the calculators were sold out, Audio Visual
must allege that it justifiably relied on the misrepresentations and, as
a result, suffered compensable damages. See Alleco, Inc. v. Harry &
Jeanette Weinberg Found., Inc., 665 A.2d 1038, 1047 (Md. 1995).
Similarly, to support its negligent misrepresentation claim, Audio
Visual must allege that it had justifiably taken action in reliance on
the statements and suffered damages proximately caused by Sharp's
negligence. See Martens Chevrolet, Inc. v. Seney , 439 A.2d 534, 539
(Md. 1982). But Audio Visual has failed to allege its appropriate reli-
ance on the statements. Because Audio Visual was able to obtain the
calculators at a per-calculator price of $31.00 from DSC and thereby
to fill CSR's order, Sharp's refusal to sell the calculators also caused
no damage. Although Audio Visual states that it lost its business rela-
tionship with CSR, there is no indication that Audio Visual's loss of
that relationship is attributable to its reliance on Sharp's statements.

IV

Finally, Audio Visual alleges that it was damaged in its business
or property by Sharp's price fixing, in violation of§ 1 of the Sherman
Act, 15 U.S.C. § 1, and § 4 of the Clayton Act, 15 U.S.C. § 15. It
bases this claim on its allegations that, although DSC originally
quoted Audio Visual a price of $29.95 per calculator, an hour later,
DSC informed Audio Visual that the price per calculator was $31.00

                    11
because "Sharp says $31.00 is the fixed price." But, as the district
court observed, there is no allegation that the $31.00 price was the
product of an illegal contract, combination, or conspiracy. The com-
plaint only states, "based upon Sharp's intervention with the DSC the
price was changed to $31.00 per unit." These allegations are insuffi-
cient to allege an illegal price-fixing arrangement. See Monsanto Co.
v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 n.9 (1984) ("The concept
of `a meeting of the minds' or `a common scheme' in a distributor-
termination case includes more than a showing that the distributor
conformed to the suggested price. It means as well that evidence must
be presented both that the distributor communicated its acquiescence
or agreement, and that this was sought by the manufacturer"); United
States v. Colgate & Co., 250 U.S. 300, 307 (1919) (the Sherman Act
does not restrict a manufacturer's right to "announce in advance the
circumstances under which he will refuse to sell").

For the reasons given, we affirm the judgment of the district court
dismissing Audio Visual's amended complaint.

AFFIRMED

                    12
