REASONING: As the title of § 2-201 alludes to, it is a statute to limit the effects of fraud and perjury. Under §
2-201, all that is required is (1) evidence of a contract for the sale of goods; (2) it is signed; and (3)
it specifies a quantity. The Rosenfeld court cites, the contract need only have the quantity term –
terms of price, time and place of delivery or payment, quality and warranties may all be omitted. In
fact, under the UCC even the quantity term does not need to be accurately stated. See UCC §
2-201 Comment 1.
Comment 1 to § 2-201 makes both covert and obvious appearances in the Rosenfeld opinion.
While comment 1 of § 2-201 is not law, since states enact only the actual UCC text and not its
official ALI comments, the courts still look to these comments for guidance when confronted with a
unique problem. The comments are sometimes more helpful than the actual code text – providing
examples, a less legalistic explanation of the Code, and the underlying policies behind a particular
section.
DISCUSSION POINTS: Have the students discuss the requirements for a written contract under the UCC using
Rosenfeld v. Basquiat case.
CASE BRIEF: Brooks Peanut Co., Inc. v. Great Southern Peanut, LLC
746 S.E. 2d 272 (Ga. App. 2013)
FACTS: Brooks Peanut is a peanut shelling company operating in Samson, Alabama. Great Southern
Peanut, LLC (GSP) is a competing peanut sheller. Because there is no established peanut
commodities market, peanut shellers and other businesses handling peanut products often use
brokers to buy and sell peanuts. Typically, the broker’s fee is paid by the seller. Mazur & Hockman,
Inc. (M & H) is a broker used by both Brooks Peanut and GSP.
In mid-September 2010, Barrett Brooks, president of Brooks Peanut, called Richard Barnhill and
Jay Strother, peanut brokers with M & H, and asked them to find peanuts for his company to buy
and to have delivered to his shelling facility. Brooks requested that Brooks Peanut not be identified
as the buyer when M & H contacted potential sellers. M & H solicited offers from several peanut
shellers, including GSP, and conveyed them to Brooks. After reviewing the offers, on September
20th, Brooks asked Strother to communicate a counteroffer to GSP’s manager, Doug Wingate.
Specifically, the counteroffer was an offer to buy 3,168,000 pounds of the 2010 crop, medium
runner shelled peanuts, for $.4675 per pound, to be delivered monthly throughout 2011.
According to Strother, Wingate accepted the counteroffer that same day, September 20th. After
Wingate accepted these terms, Strother revealed that Brooks Peanut was the buyer. According to
Strother, Wingate “sighed” upon learning that a competitor was involved in the transaction;
however, he did not reject the deal. Wingate testified that, although he initially accepted the deal,
he declined to consummate it when he learned that Brooks Peanut was the buyer.
On the same day, M & H prepared and then faxed to GSP and Brooks Peanut a written
confirmation of the sale of peanuts. The confirmation stated: “We confirm a Sale and Purchase
Transaction as described below[.]” The confirmation was printed on M & H letterhead and listed the
names and addresses of the seller and the buyer, as well as terms covering price, quantity, quality,
crop year, delivery schedule, and payment method. Spaces for the seller’s contract number and the
buyer’s purchase order number were left blank. The confirmation stated that “[t]his confirmation is
subject to the following condition[ ]: Seller’s contract and Buyer’s purchase order to follow [.]” Next
to the term “Quality,” the confirmation noted that the “American Peanut Shellers Association Trading
Rules” applied to the transaction. The confirmation was signed by M & H’s Strother.
GSP and Brooks Peanut each received the faxed confirmation from M & H. GSP did not issue a
contract and Brooks Peanut did not issue a purchase order. After Strother sent the confirmation to
GSP and Brooks Peanut, he continued communicating with the parties to finalize the logistics of the
deliveries. For example, on September 21st, he told Brooks that GSP had offered to haul the
peanut loads. They also discussed increasing the monthly shipments, but Wingate stated that he
wanted “to stay at 6 loads a month on the [B]rooks [Peanut] contract for right now[.]”
GSP did not raise any objection to the fax confirmation until late January 2011, almost four months
after M & H sent it. Wingate testified that he “did not see the need” to object to the confirmation.
Beginning in January 2011, GSP took the position that, despite the confirmation, GSP and Brooks
Peanut had not entered into that particular transaction because Wingate had rejected the sale
when he learned that it involved his company’s competitor, that M & H was not authorized to
confirm the sale or to send the confirmation, and that a condition precedent had not occurred
because GSP had not issued a written contract.
M & H had routinely brokered thousands of peanut sales between other peanut companies,
shellers, and manufacturers using the same form of trade confirmation. GSP had sold peanuts to
Brooks Peanut in June 2009 and April 2010 and their agreements were memorialized solely by M &
H sending the parties confirmations substantially similar to the one issued this time.
The trial court concluded that GSP had a defense of the statute of frauds as a matter of law.
Brooks Peanut appealed.
ISSUE: Is there a valid contract under the merchant’s confirmation memo provision or does the statute of
frauds bar the contract from being enforced?
REASONING: The confirmation memo contained the information needed for the contract to go forward. Also, the
parties continued to behave as if there was a contract and they were ironing out details and no one
indicated any objection to the contract.
4. Purpose of execution – can write after sale; for example, a letter written after goods are shipped is still
valid writing
5. Particular writings – contract formed by grouping together papers
D. Exceptions to requirement of a writing/record
1. Nonresellable goods or specially manufactured goods: the chair lift example – substantial beginning of
performance
2. Receipt and acceptance: partial performance – enforceable contract to the extent of payment or
acceptance
3. Payment (Wayne and Pamela example)
a. Full payment: contract enforced
4. Admission
a. By party against whom enforcement is sought
CASE BRIEF: Grandoe Corporation v. Gander Mountain Company
761 F. 3d 876 (8th Cir. 2014)
FACTS: Grandoe is a family-owned manufacturer of gloves located in Gloversville, New York. In the early
2000s, Grandoe began selling winter gloves to Gander Mountain, a national retailer of outdoor
sporting goods. At that time, it was customary in the glove-making industry for the manufacturer to
rely on a retailer’s oral commitment for the purchase of gloves. For the first few years of their
relationship, Gander Mountain and Grandoe abided by this custom; Gander Mountain would orally
agree to purchase a quantity of gloves, Grandoe would manufacture the gloves, and Gander
Mountain would periodically issue written purchase orders for smaller shipments of gloves as the
need for them arose, the sum of which was consistent with Gander Mountain’s oral commitment.
In 2007, Gander Mountain attempted to change this practice by posting a document called the
Vendor Buying Agreement (VBA) on its website. The VBA stated:
Any communications from Gander Mountain in the form of forecasts, commitments,
projections or other estimates provided to Vendor are for planning purposes only, do not
constitute an Order and shall not be binding upon Gander Mountain unless, until and only
to the extent that Gander Mountain expressly agrees in writing.
The VBA also stated that it “represent[ed] the entire and integrated Agreement between Gander
Mountain and Vendor, superseding all prior negotiations, representations or agreements, written or
oral” and that “by accepting [a purchase order], Vendor acknowledges and agrees to be bound by
the Vendor Buying Agreement.”
After posting the VBA on its website, Gander Mountain e-mailed Grandoe’s vice president, asking
him to “[p]lease read the attached document that explains our [purchase order] policy changes that
will be effective in June.” The attached memorandum explained that Gander Mountain was
“updating terms and conditions” and that any manufacturer that did business with Gander Mountain
would henceforth be bound by the VBA. Grandoe’s vice president did not respond to the e-mail or
acknowledge in any way that he had read the memorandum or the VBA.
Subsequently, over a series of meetings in 2008, representatives from the two companies
negotiated a deal whereby Grandoe would manufacture $3.05 million worth of gloves for Gander
Mountain. At one of these meetings, Grandoe’s president and vice president presented Gander
Mountain’s representative with spreadsheets detailing the quantities of gloves Grandoe would
produce in each style. Gander Mountain’s representative orally approved these spreadsheets. At
another meeting, the parties signed a Resource Allowance Contract (RAC), which set forth certain
percentage discounts and other ancillary terms that would apply to Gander Mountain’s purchase of
gloves from Grandoe. The parties also agreed that, consistent with their past practice, some of the
logistical aspects of the deal − such as when the gloves would be shipped and how many gloves
would be shipped at a time − would be specified in purchase orders that Gander Mountain would
send to Grandoe.
On April 16, 2009, after Grandoe had manufactured most of the gloves, Gander Mountain informed
Grandoe that it would not purchase all of the gloves that it had orally committed to purchase.
Gander Mountain sent Grandoe purchase orders for approximately $940,000 worth of gloves,
which Grandoe filled. Gander Mountain then ceased ordering gloves from Grandoe. Grandoe was
able to resell some of the gloves it had manufactured for Gander Mountain, but a large number of
the gloves − some $1.5 million worth − had been embroidered with Gander Mountain’s logo and
were largely worthless to anyone else.
Grandoe sued Gander Mountain for breaching its oral commitment. Gander Mountain asserted that
the VBA and RAC voided any oral agreement the parties had allegedly reached. It asked the court
to exclude evidence of the oral agreement and grant summary judgment to Gander Mountain. The
court denied Gander Mountain’s requests and submitted evidence of the oral agreement to the jury
along with the VBA and RAC, instructing the jury to consider the evidence of all three putative
agreements in determining whether Gander Mountain had agreed to purchase $3.05 million in
gloves from Grandoe. The jury found that the parties had entered into a valid oral contract and
awarded Grandoe $1,557,284.40 in damages.
Gander Mountain moved for judgment as a matter of law or for a new trial, asserting that two
written documents rendered the oral agreement void. Grandoe moved to recover $572,389.20 in
prejudgment interest because Gander Mountain reneged on its oral commitment to purchase $3.05
million worth of winter gloves.
The district court denied Gander Mountain’s motion and granted Grandoe’s motion. Gander
Mountain appealed both rulings.
ISSUE: Was there a contract? Was it an oral contract? Did the parol evidence rule prohibit introduction of
evidence about the oral agreement?
REASONING: The parties did not have a single written document that dealt with all of the issues. They had relied
on oral agreements in the past and that past practice was what controlled their relationship. Their
other documents did not indicate agreement and they had no purchase orders in evidence. The
case was one where all the paperwork found the parties tripping over what the terms were, and the
court had to go back to their past practices.
E. Noncode requirements – consumer protection statutes
DISCUSSION POINTS: E-Commerce & Cyberlaw
“I have read and understand these terms.”
We give our word when we click the box, and yet many of us have not even glanced at the terms. So far, no
regulation has been proposed with sellers still simply needing to establish that the box was clicked.
F. Bill of sale – a receipt
III. What is the Uniform Law for International Sales or the CISG?
A. Scope of the CISG
1. United Nations Convention on Contracts for the International Sale of Goods
B. Irrevocable offers
1. States it is irrevocable
C. Statute of frauds – the writing requirement is abolished unless countries require it
IV. How are Leases of Goods Different From Sales?
A. Types of leases
1. UCC Article 2A regulates
3. Consumer lease
4. Commercial lease – a nonconsumer lease
B. Form of lease contract
1. Must be a signed writing if total payments are $1,000 or more
C. Warranties
1. The usual warranties are made, except the finance lessor makes only express warranties
DISCUSSION POINTS: E-Commerce & Cyberlaw
The Deal with Dell
Go through the list of suggestions for getting contract terms into your agreement over the Internet, including requiring
a clock and doing more than just posting the terms. Indicate when the parties are about to contract – such as with
airlines, “Your card is about to be charged – are you sure you want to proceed?”
D. Default
1. Judgment
ANSWERS TO QUESTIONS AND CASE PROBLEMS
1. Application of UCC. The court held that the UCC does not apply and there was no warranty protection. The
2. Nonresellable goods. If goods are custom-manufactured for the buyer, not suitable for sale to others in the
course of the seller’s business, and the seller has made substantial progress in manufacturing them, then oral
3. Formation; offer and acceptance. The students should discuss the issue of intent – does the clarifying language
that the proposal is for budget purposes only affect intent to contract? There are missing price terms, but the
4. Sale of goods vs. service. The court held that Dr. Cook is not a merchant and is not in the business of selling
dentures. Rather, Dr. Cook is a professional who renders medical services that are governed by common law
Silicone would, likewise, not be a sale by a merchant. For the most part, this court and others have ruled that the
implantation of the devices is not the sale of goods and that any defects in the implants provide remedies in
malpractice against the physician or product liability against the manufacturers, but such is not the sale of goods
Our conclusion above – that health care providers offer services, not products – determines our holding as to the
issues of warranty under Article II of the UCC. Cases from other jurisdictions have similarly disallowed such
5. Sales of goods vs. service. The subject matter at the time of the contracting was goods. The contract is one for
6. Acceptance; change and additional terms. No. The late charge became part of the contract because it did not
constitute a material alteration, and no objection was made to it, as provided in UCC § 2 -207. Both parties were
7. The nonresellable goods exception to the statute of frauds. No. The packing cases could not be resold by
Bateman in the ordinary course of business. The contract therefore came within the exception made by UCC § 2
8. Nature of the writing required regarding quantity. Judgment for Syrovy. The terms of the agreement stated “all of
9. Sales of goods v. service. The court held that the contract was a service contract not governed by the UCC.
10. Firm offer. No. The offer was a firm offer, as it (1) expressed the intention that it not be revoked, (2) was in
11. Statute of frauds, merchant’s confirmation memo. Craft has executed a merchant’s confirmation memorandum
12. Contract for sale of goods or sale of services. The court held that this transaction was a sale of goods. Helvey
tried to extend or delay the time period within which he could have brought a cause of action when he should
13. Additional terms in acceptance. The sale of medical instruments is governed by Article 2 of the UCC. Even if the
product label is considered a written confirmation of the order under UCC § 2-207, the “single use only” term is
not binding on the customer if the additional term materially alters the agreement and the customer does not
14. Sales vs. leases; UCC applicability. In the case, the court held the agreement was not a lease, but a consumer
credit sale. Because it was an extension of credit and a sale, the Rent-A-Center was subject to Article 2’s
15. Goods vs. services; UCC application. The court held that a contract for subscriber names generated from
pop-up ads was the result of a service provided by C2B. The bulk of C2B’s work was in providing the service of
LAWFLIX
Beethoven (1992) (G)
Charles Grodin plays a fussy father who has founded and runs an air freshener company. Part of the plot centers on
management system for classroom use.