BEST Essay Q #1 Yelena Lyutin 1) Is there an enforceable contract between Bob Corp.(B) and Sell Corp(S)?

Since this contract is for the sale of goods the UCC is the applicable law. In order to have a valid contract you need to have an offer, acceptance and consideration. A valid offer must manifest an intention to be bound. The terms of the offer must not be too indefinite to be enforced. In this case on October 3rd B made an offer to S to buy 10,000 widgets at $1 per widget to be delivered on October 31, 2005 with payment due at delivery. The parties have specified the quantity, the price and the delivery date as well as the payment due date. This is sufficiently definite and will be considered a valid offer. Under the UCC acceptance does not need to be the mirror image. However, offeerees terms are included only if : 1) both parties are merchants, 2) there was no material change & 3) no objection to the new terms is made within a reasonable time. Ss confirmation memo sent on October 4th will be considered a valid acceptance. (See bellow for a discussion on what terms are part of the contract). Consideration is bargained for legal detriment or benefit. A person can bargain for a promise, performance or even forebearance. In this case B made a promise to pay S for the widgets and S made a promise to B to deliver the widgets at the agreed upon price and time. These promises are sufficient consideration and this will satisfy the requirements of a valid contract. Further, when you have a contract for the sale of goods that is $500 or more the statute of frauds requires the contract to be in writing. In order to satisfy the writing requirement the writing must include the quantity term and must be signed by the party to be charged with breach. However, when both parties are merchants and one merchant sends the other a confirmation memo and there is no written objection within 10 days this will satisfy the statute of frauds. In this case both parties are merchants under the broad definition of merchants under the UCC. The memo was sent by S and signed by the president of S with the terms of the agreement and B did not object within 10 days. Thus this writing will satisfy the statute of frauds requirement and will be able to be used against B. 2) Is S permitted to recover interest on the late payment from B? As mentioned above in a contract between merchants additional terms can become part of the contract if there is no material change and no objection is made to the new terms. The 1.5% interest charge on late payments seems like a penalty included in order to induce B to pay on time. This term does not materially alter the contract and does not create additional risk for B. Thus, it will most likely be included in the contract terms and B will be liable for paying it to S. 3) Has B waived its right to enforce the warranty of merchantability? A disclaimer of warranties is a material change in the contract because the buyer would be shocked by a change like this because it changes the risk allocation that was originally bargained for. In general a merchant who deals in goods of the

kind generally gives a warranty of merchantability that the goods are fit for their ordinary purpose. And generally a merchant has the right to disclaim an implied warranty. However, this disclaimer should be agreed upon by both parties in order to become part of the contract. In this case the fact that the merchant is disclaiming this warranty would be a material change and under UCC 2-207 would not be included in the contract terms.