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Chapter 18
Formation of Sales and Lease Contracts
VI. Answers to Critical Legal Thinking Cases
18.1 Good or Service
No, Article 2 does not apply to this transaction. Article 2 applies solely to transactions in goods.
Sometimes a sale involves the provision of service and a good. This is called a mixed sale. Article 2 only
applies if the provision of the good is the predominant part of the transaction. Courts decide whether a
given transaction is primarily for goods or services based upon the facts of the case. In this situation, the
18.2 Statute of Frauds
Yes, a valid sales contract existed between St. Charles and Eagle. The formation of a sales contract
requires both an offer and an acceptance. The UCC holds that an offer may be accepted by the shipping of
conforming or nonconforming goods. However, the UCC also holds that conduct by both parties that
recognizes the existence of a contract is sufficient to form a contract. The court held that the telephone
conversations between St. Charles and Eagle were sufficient to constitute an offer. When Eagle shipped
18.3 Battle of the Forms
No, the clauses in the delivery memo were not part of the contract. Because the court found Miller and
Newsweek to be merchants in regards to photographs, UCC Section 2-207 applies. If two merchants
negotiate a sales contract and then exchange preprinted forms, the additional terms materially alter the
agree to pay over $100,000 if it accidentally lost the photos. Because the inclusion of this term was a
unilateral action by Miller, the court held that it materially altered the original contract. Applying UCC
2-207, additional terms do not become part of contracts between merchants if they materially alter the
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18.4 Open Terms
terms of acreage, and the approximate delivery date. Market prices for commodities like potatoes are
readily available from government agencies. The court determined that the parties had intended to form a
18.5 Statute of Frauds
No, the court will not enforce the agreement between Donzi and Wallach. The UCC includes a Statute of
Frauds provision that applies to sales contracts. Generally, the UCC requires that a contract for the sale of
court would not enforce it. Wallach Marine Corp. v. Donzi Marine Corp., 675 F.Supp. 838, 1987 U.S.
Dist. Lexis 11762 (United States District Court for the Southern District of New York)
18.6 Good or Service
uses in providing its medical services. The essence of the relationship between a hospital and its patients
does not relate essentially to any product or piece of equipment it uses but to the professional services it
provides. The treatment provided by Cedars-Sinai in relation to implantation of pacemakers includes pre-
and post-operative care, nursing care, a surgical operating room, and technicians. As a provider of
of Appeal of California)
VII. Answers to Ethics Cases
18.7 Ethics Case
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not give written notice of an objection to the contract within 10 days of receiving the confirmation. In this
case, the court held that the memorandum sent by Perschke’s office manager was a written confirmation.
reasonable objection to Perschke’s written confirmation of the oral agreement between the parties.
Sebasty v. Perschke, 404 N.E.2d 1200, 1980 Ind. App. Lexis 1489 (Court of Appeals of Indiana)
18.8 Ethics Case
between merchants, it only quoted a price. The letter gave no assurance that the bid would be held open.
In order for the firm offer rule to apply, the offeror must explicitly state that the offer will be held open.
Because they had made no such statements, Coronis had properly revoked its offer on June 1. The
question of whether Coronis act unethically in withdrawing its offer is questionable. However, since both