St ansgar mills inc v streit

COMMERCIL LAW

1\Contract Formation

2\Warranties

Professor:

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Introduction

This paper is centered on contract formation and the sale of goods, describing the major principles of this topic. The description is made using cases covered in class as well as other problems, code and comments. The cases that will be used will are a description of the process of contract formation and the sale of goods.

1-Contract Formation

A- The Statute of Frauds:

A statute of frauds is a state law within the United States of America that generally applies for oral contracts. Under the UCC, the statute of frauds requires some contracts be in their written form. However, not all the contracts are required to be in written form, hence the need to have the statute of frauds to cover for all oral contracts. Under the UCC, there is a special provision of the statute of frauds that requires that for contracts between parties to be enforceable, they have to be in written form. However, there are limitations to the situations during which the contract must be in writing, such as when goods for sale are worth $500 or more, goods being leased are worth $1000 or more, or in the event that goods, whose security needs to be assured, are not in the hands of a creditor. (The Statute of Frauds pg53-54)

Case (1) Ellig v. Molina (2014):

In this case, the plaintiffs, Mr. And Mrs. Ellig had taken to court over a breach of contract on the side of the defendant. Mr. Molina, the defendant, had failed to meet his legal obligations as required by their oral agreement, promising to buy back goods that he had sold to the plaintiff. The defendant used the statute of frauds to deny claims of breaching the contract, claiming that the oral contract that was made between him and the plaintiff was not enforceable, based on the requirement by the statute of frauds that goods worth $500 and more should be sold after having signed a written contract. However, the court found the defendant’s claims to be utterly misleading based on the fact that he clearly proved that a contract existed between him and the plaintiffs (Ellig, pg 54). In the course of the case, the court identified the usage of the dear brother letter by Molina, and this was the basis of proving that indeed, a contract existed between them.

Case problems:

Case Problem 6 descries the scenario where James Ross and Robert Scott disagreed on the existence and details of a contract signed between them. The instruments of the contract included a memo by Scott, and a letter by Ross to Scott giving details of the order placed.

Based on section 2-201(1),[footnoteRef:1] the contract needed to be in writing, since the contract exceeded the $500 limit for goods that did not require a written contract under the statute of frauds. In this case, there was a legal contract between the defendant and the plaintiff. This is mainly because the case meets the requirements of section1 2-201(1),[footnoteRef:2] that requires that for the contract to be enforceable, the plaintiff or party to be enforced against must have signed the contract in written form. Clearly, Scott did sign by scribbling his initials on the pad. As appertaining to section 201(b) (37), the contract is enforceable since the initials scribbled on the pad were an intention to adopt of accept the contract on the side of Scott. [1: U.C.C. § 2-201 (Am. Law Inst.) available at https://www.law.cornell.edu/ucc/2/2-201.] [2: U.C.C. § 1-201 (Am. Law Inst.) available at https://www.law.cornell.edu/ucc/1/1-201.]

In my personal opinion, the ruling made by the court in both the case and the problem is sufficient evidence to show how oral and written contracts must be treated. Written contracts that are made enforceable by signing need to be honored and do must the contracts that are made orally. In both cases, justice was served as necessary.

Case (2) St. Ansgar Mills, Inc. v. Streit (2000):

In this court case, St. Ansgar Mills, Inc was suing Duane Streit as well as John Streit for allegedly breaching a contract established between the two entities. Usually, Duane Streit bought grain from the plaintiff by placing a phone call to initiate the process. However, in this case, the defendant failed to do so, since the prices of grain had fell far below the agreed price after the order was laced. As a result, the plaintiff moved to court seeking a summary judgment for the defendant’s action of breaching the contract. However, the defendant claimed that the charges were not enforceable since there was a long delay between the placing of the orders, and thus, signing of the oral contact, and the confirmation of the contact through signing of the written contract. In addition, John sought to clarify that the Statute of Frauds did not apply to this case, as he was not a merchant (St. Ansgar Mills, Inc, pg63). The farmer was a merchant, hence the jury had to determine whether the manner of acknowledgment was reasonable. If found to be reasonable the farmer had 10 days to appeal.

Case problems:

In this problem, a contract signed by the administration of the City of Thebes to the Tanks of America organization was nullified by a new administration, as the company was in its final stages of painting the finished tank. In this case the check was a confirmation of the existence of the oral contact, and it satisfies section 2-201(1)[footnoteRef:3] where goods worth more than $500 must be made in writing, as it was signed by the comptroller of the defendant. Since the quantity of goods is stated as one, the section 2-201 may not be applied to this case. However, the defendant has a right to claim for the contract to be enforced, since the goods were specifically made for the use of the city and could not be resold to other buyers. In addition, according to section 2-201(3)(c), payment had already been made by the city, and received by the manufacturer hence the contract was enforceable. The city, using 1-103(b)[footnoteRef:4] can easily circumvent this contract by using estoppel as an avenue as it is allowed in this section (Tanks of America, pg 68). [3: U.C.C. § 2-201 (Am. Law Inst.) available at https://www.law.cornell.edu/ucc/2/2-201] [4: U.C.C. § 1-103 (Am. Law Inst.) available at https://www.law.cornell.edu/ucc/1/1-103]

In my personal opinion, I think that the code is enforceable for the case problem, since the contract was made valid based on section 1-103 as payment had already been made. In a similar manner, in the St. Ansgar Mills, Inc. v. Streit case, the defendant was not liable for the contract since the time taken between the contracts was a factor of concern, and also, there was no proof that John was a merchant. He had not also signed any contract on behalf of Duane, and so, there did not exist any valid contact, oral or written.

B-Offer and Acceptance

General Rules:

Due to the complexity of the situations as well as language under which businesses create contracts, these contracts are only meant to be, ‘determined by the language used by them and by their action, read and interpreted in the light of commercial practices and other surrounding circumstances.’ In the Mastervoice case (Mastervoice v. General Electroc Company case pg87), the point at which the contract was formed was when the defendant shipped the fuses. In this case, the defendant showed an intention to comply with the contract details. General Electric has no excuse to claim there did not exist a contract, since section 2-204 states that any action towards the contract details signifies compliance to the contract. In addition, section 2-206(1)(b) states that the very act of shipping the goods shows existence of acceptance of the contract. (pg. 89)

The Battle of the Forms:

Case (1) Dependable Component Supply, Inc. v. Pace Electronics Inc (2000):

In this case, the seller seemed to have added some new terms to a contract signed between seller and buyer stating that, “both parties agree that any and all proceedings relating to the sale of the products to buyer or these terms and conditions shall be brought in the state courts of general jurisdiction in Orange County in the State of Florida, which ․ shall have exclusive jurisdiction for such purpose, and Buyer hereby irrevocably consents to such jurisdiction ’The court ruled that by failing to object to the changes, the buyer had seemingly accepted the changes, and this the choice of venue for the seller was enforceable (Dependable Component Supply, Inc. , p g 88).

Case problems:

This problem involved Alibaba, the seller, and Magic Carpet, the buyer. The buyer sued the seller for supplying nonconforming carpets. The seller had earlier on expressly notified the buyer, within reasonable time before supplying the carpets that there would be no warranties for the goods supplied. As a result, according to section 2-207(1),[footnoteRef:5] a contract in favor of Alibaba which had expressly notified the buyer in reasonable time of its terms existed. The disclaimer was also part of the contact as it was not a material alteration of the contract, did not expressly limit acceptance to the offer, neither did it give room for objection. [5: U.C.C. § 2-207 (Am. Law Inst.) available at https://www.law.cornell.edu/ucc/2/2-207 ]

In my personal opinion, the Dependable Component Supply, Inc. v. Pace Electronics Inc. case, the seller had every right to have the ruling in their favor, since subsection 2-207(1) affirms that the additional terms were legitimate. This is because the seller did not require the buyer to sign the acceptance of the additional changes. In addition, according to subsection 2-207(3), the buyer’s action of continuing to buy in spite of seeing the invoice can be counted as their acceptance of the additional changes. (pg88)