Deck 17: Formalities of a Sale

Question 1

May Trucking Co. (May) negotiated orally and by e-mail with Volvo Trucks North America Inc. (VTNA), and its dealer, TEC Equipment Inc. (TEC), for the purchase of 499 tractor trucks for $89,000 each. TEC and VTNA exchanged e-mails in which VTNA instructed TEC that "VTNA's support for this transaction is to TEC Equipment not the customer. You will have to prepare your agreement with May Trucking based upon the support we are providing you." TEC and May exchanged drafts of a proposed contract. TEC prepared a final draft that listed three parties; TEC, May, and VTNA, with signature lines for each. This draft was e-mailed to various persons at VTNA. VTNA decided not to sign the agreement and May sued alleging breach of contract. May alleged the e-mails between VTNA and TEC with "To" and "From" heading and initials of the persons at the end and which summarized the points to which they agreed satisfied the writing requirement of the Statute of Frauds. Did they?

Answer 1

Statute of Frauds  is a law enacted by English Parliament in 1677 and it is applicable to executor contracts only. This law provides list of certain classes of contracts which cannot be enforced if their terms are not given in a written form.
As per Statue of frauds, signature may be stamped, should contain initials of individual signing, can be electronic in case contract takes place by exchanging emails.
Facts :
M negotiated with V and its dealer orally and through email, for purchasing 499 tractors at $89,000 each. T and V exchanged emails in which V instructed T "V is supporting transactions to T not to customer". T and M agreed and exchange the drafts containing terms of proposed contract. T in prepared final draft, to be signed by each party. V decided not to sign the and M sued him for breach of contract. M claimed that emails exchanged between V and T had initials of persons and summarized points to satisfy the requirements of Statue of frauds.
Outcome :
As per Statue of frauds, signature may be stamped, should contain initials of individual signing, can be electronic in case contract takes place by exchanging emails. Thus, contract is binding on V and M as the emails exchanged between V and T had initials of persons and summarized points that satisfy the requirements of Statue of frauds.

Question 2

If a sale of goods is for less than $500, in what form may the contract be?

Answer 2

Sales of goods contract: when seller transfers goods and ownership of goods to buyer at a price, then sale takes place.Ownership is transferred to buyer, regardless of the fact which party has possession of goods. If goods are damaged or lost, then buyer is responsible for losses and damages.
Contract may be in oral, written or implied form.
When the price of goods is $500 or more, then the contract for sale of goods must be in writing, this is included Uniform Commercial code, for the Statue of Fraud requirement.In case, the sales price is less than $500, then it is not mandatory for the contract to be in written form, it may be written, implied by conduct, oral or combination of these.

Question 3

After the Deepwater Horizon explosion and oil spill, BP Exploration, Inc. (BP), found itself in immediate need of oil containment boom. Packgen manufactured packaging products, and began constructing boom manufacturing equipment within days of the spill. Within a month, representatives of Packgen and BP had had several conversations, including an oral commitment from BP to purchase all of Packgen's present and future production of boom, subject to certain quality standards and testing. BP and Packgen went through several rounds of testing, field testing, and reengineering. By the time Packgen's final boom product was successfully field tested, the Deepwater Horizon well had been capped and BP began winding down its boom purchases. Ultimately, BP never paid Packgen for any boom, and Packgen was left with 60,000 feet of completed boom in its warehouse, which it could sell for only 10 percent of the price it had agreed to with BP. Packgen argued it was entitled to the specially manufactured goods exception to the Statute of Frauds and payment from BP for the boom. Was it?

Answer 3

Statute of Frauds  is a law enacted by English Parliament in 1677 and it is applicable to executor contracts only. This law provides list of certain classes of contracts which cannot be enforced if their terms are not given in a written form.
Signature in writing contract : in case a suit filed against any individual for any transaction, terms of contract in writing and signed by the individual or his authorized agent, to sue that individual.
Nonresellable Goods : are those goods which can't be resold easily because they are manufactured for a particular buyer and as per modifications in goods demanded by buyer. These goods are not in usual nature and are considered unsuitable to be sold in normal course of seller's business.
Nonresellable contracts are enforceable, even in case they are entered orally. But, there is exception to this rule , if manufacturing of these has substantially began, or in case any intermediary party is ready for procuring goods from seller before the buyer sends the notice of rejecting goods.
In the given case, BP Inc and P manufacturer entered into an oral agreement which includes BP will purchase present and future production from P.P manufactured the products as per certain testing and quality standards for BP. These goods have become nonresellable on part of P. Nonresellable contracts are enforceable, even in case they are entered orally. But, there is exception to this rule , if manufacturing of these has substantially began, or in case any intermediary party is ready for procuring goods from seller before the buyer sends the notice of rejecting goods.
Thus, this case will be covered in the exceptions of statue of frauds and BP Inc would have to pay P. for boom.

Question 4

What facts would be relevant to determining whether the purchase of a number of items is one sale or many sales?

Question 5

Brenda Darlene, Inc. (Brenda), operated a shrimp boat offthe coast of Texas. Brenda entered into an agreement with Bon Secour Fisheries, Inc. (BSF), whereby BSF would purchase all of Brenda's shrimp. The price was determined by the market at the time of delivery to BSF. At the time the shrimp were delivered to BSF, Brenda's employee asked BSF's dock representative if he thought the previous week's market price for shrimp would hold, and BSF's representative responded that he "thought it would." BSF in fact paid a lower price than it had paid the previous week. Under either calculation, the value of shrimp was far in excess of $500. Brenda raised a judicial admission exception to the Statute of Frauds. How should the court rule?

Question 6

What is receipt ?
b. What is acceptance ?

Question 7

Under an oral contract, Scapa Northamerica Inc. agreed to supply Eastern Adhesives Inc. with its requirements of a tape product for resale to a third party. Scapa also agreed not to supply the third party with that tape or a similar product directly. The contract was for more than $500. Scapa later began selling directly to the third party. Eastern sued for breach of contract and alleged that letters it had exchanged with Scapa satisfied the Statute of Frauds. Eastern argued that a letter it had sent Scapa that referred to an "account protection agreement" established the context for Scapa's signed, written responses. Scapa's letters did not refer to an account protection agreement. Because the letters failed to object to such an agreement, Eastern alleged that Scapa's letters admitted the agreement. Was there an enforceable contract?

Question 8

Is the delivery of a check of note as payment sufficient to make an oral contract enforceable? Why or why not?

Question 9

For years, under an oral agreement, Barbara Kalas printed and delivered written materials to Adelma Simmons. Simmons had designed the materials to sell at her herb farm, Caprilands, so they included that name. As Simmons had limited space, Kalas stored them until Simmons requested some. The town of Tolland, Connecticut, acquired the farm, and Simmons had to vacate by the end of the year. In December, Simmons died. Kalas made a $24,000 claim against Simmons's estate for unpaid deliveries of materials including two made after Simmons's death. The estate claimed the materials were goods printed under an oral contract in violation of the Statute of Frauds. Was the oral contract enforceable?

Question 10

What must have been done in order for the exception to the statute of frauds based on nonresellable goods to apply?

Question 11

Craig Robins collected paintings by Marlene Dumas. Dumas circulated to art galleries a list of people who were not allowed to buy her paintings. Because Robins had sold one of her paintings, his name was on the list. David Zwirner had told Dumas of the sale. Robins wanted to sue Zwirner, but the two orally agreed that instead Zwirner would give Robins "first choice, after museums, to purchase" Dumas's works whenever Dumas had an exhibition at his gallery and to remove Robins's name from Dumas's blacklist. Five years later, Zwirner had a Dumas exhibition but refused to sell to Robins three paintings he wanted to buy, each priced at more than $1 million. Robins sued for breach of contract. Can he recover?

Question 12

When is a contract of sale in an auction made?

Question 13

Charles Lohman wanted to convert his pig operation (raising them to fifty pounds) to a weaner pig facility (raising pigs only to seven to fourteen pounds). John Wagner was putting together a network of pork producers and buyers. Lohman began selling weaner pigs to Wagner although Lohman still needed a loan to remodel his building. Lohman asked Wagner for a sample of a weaner pig purchase agreement the pork network might use to show his banker. Wagner made one up and even signed it, although there were blanks including the quantity of pigs. He faxed it to Lohman, saying he hoped it would help Lohman get a loan. Lohman put in 300 per week for the quantity; he signed it but never sent it to Wagner. He supplied weaner pigs to Wagner at $28 per pig, consistent with the price in the sample agreement, until Wagner paid only $18 because the price of pork had dropped. Months later, Lohman sued Wagner for breach of contract. Was there an enforceable contract?

Question 14

What form of signature is acceptable to satisfy the Statute of Frauds?

Question 15

What types of writings commonly satisfy the writing requirement of the statute of frauds?