On July 1, a farmer in the business of raising and selling tomatoes sent the following signed letter to a produce wholesaler, which was received July 2:”Have 2000 bushels of grade A tomatoes available for delivery on August 15 at $10 a bushel. This offer will remain open until July 15.”
On July 5, a severe thunderstorm destroyed the tomato crop in a neighboring county, causing the wholesale price of tomatoes to rise to $20 a bushel. On July 6, the farmer sent the following telegram to the produce wholesaler: “Cancel my offer of July 1.” It was received by the wholesaler on that date. On July 12,
The wholesaler wrote to the farmer:
“I accept your offer of July 1. However, I would appreciate your delivering one thousand bushels on August 15 and the remaining one thousand bushels on August 31.”
The farmer received the wholesaler’s letter on July 14. No further communications took place between the parties.
On August 1, what is the status of the contractual relationship between the parties?
A. There is no contract because the farmer’s offer was revoked prior to the time it was accepted.
B. There is no contract because the purported acceptance stated terms at variance with the offer.
C. There is a contract for delivery of 2,000 bushels of tomatoes on August 15.
D. There is a contract for delivery of 1,000 bushels of tomatoes on August 15 and 1,000 bushels of tomatoes on August 31.
{ 14 comments… read them below or add one }
Wrelyea, the section this question is UCC 2-207. It has to do with materially changing a K. Since the nature of this good is perishable, the question is whether the modification is material or not goes to the perishable nature of the good.
Can somone clarify where the requirement for perishable goods is discussed in the formation of a contract. I understand it to be referenced under UCC 2-603 Merchant Buyer’s Duties as to Rightfully Rejected Goods.
Answer C is correct. Since the wholesaler merely stated that he would appreciate delivery of half of the agreed amount on each of two different dates, this statement of preference does not become part of the contract and does not alter the fact of acceptance of the seller’s offer. Moreover, even if the wholesaler intended these new terms to become part of the contract, they would probably be considered to materially alter it because this contract involves perishable fruit. If that were the case, the new terms would again not become part of the contract.
Answer A is incorrect. The offer of the farmer is a firm offer from a merchant and is irrevocable under U.C.C. section 2-205. Section 2-205 provides that a written offer by a merchant (here, the farmer) containing an assurance that the offer will not be revoked is an irrevocable firm offer, and no consideration is required to support the promise that the offer will remain open, so long as the period of irrevocability does not exceed 90 days. The farmer’s written offer complies with all of these requirements, and thus cannot be revoked, notwithstanding the rise in prices or the farmer’s subsequent attempt to revoke his offer. In essence, having made the offer in a form that is irrevocable, the farmer bears the risk that prices may go up during the time that the offer is open. The wholesaler’s acceptance of the farmer’s offer is effective upon proper mailing, which was July 12 under the facts of this question, and a contract between the parties was formed as of that time.
Answer B is incorrect. The reply of the wholesaler operates as an acceptance under U.C.C. section 2-207. Since the buyer merely stated that he would appreciate delivery of half of the agreed amount on two different dates, this statement of preference does not become part of the contract, and clearly does not alter the fact of the wholesaler’s acceptance of the farmer’s offer. If the wholesaler intended the new terms to become part of the contract, they would probably be considered to materially alter it because this contract involves perishable goods. If this is the case, then the new terms would simply not become part of the contract.
Answer D is incorrect. Since the wholesaler merely stated that he would appreciate delivery of half the agreed amount on two different dates, this statement of preference does not become part of the contract. Anyway, if the wholesaler intended the new terms to become part of the contract, they would probably be considered to materially alter it because the contract involves perishable goods. If that were the case, the new terms would still not become part of the contract, and the farmer would only be obligated to deliver the entire order on August 15.
D. the offeror is the master of the contract. A contract is irrevocable if part performance (or detrimental reliance), merchants firm offer, or an option contract. The contract is a Merchant’s Firm Offer, which does not need consideration. However, the contract can be modified if done in Good Faith which is present here.
D, firm offer is valid for 90 days btwn merchants, ucc 2-205
D. On the principles of firm offer and UCC merchant additional offer rules
I think the answer is C.
The orignal contract was to be left open for 30 days because it was between merchants, firm offer. The farmer could not revoke until after 30 days. The wholesaler accepted the offer before the July 15 deadline.
My only angst with this question is that it uses the term farmer. There is a split in authority as to whether farmers are merchants. When both parties are not merchants any new or additional terms will be construed as proposals for addition, which unless the offeror assents to the new terms, will not become part of the contract.
So it is possible that C, could be the best answer…
A Merchants Firm offer is open for the stated time period, but in no case greater than three months. The merchant accepted the terms of the offer and only requested a minor change affecting the delivery date. Thus, a valid acceptance occurred for one thousand bushels on August 15 and the remaining 1000 bushels on August 31 for the following reasons:
The Merchants Firm Offer Rule: UCC 2-205 provides that where a promise not to revoke an offer for a stated period for the purchase or sale of goods is made, (A) by a merchant, (B) in a signed writing, the offer is irrevocable for the time period stated, or if not time is stated, for a reasonable time, but in no event will the period of irrevocability exceed three months. No consideration is required to keep the offer open.
Note: That when the period of irrevocability expires, the offer may still remain open until revoked or rejected according to the general rules regarding termination of an offer.
UCC Abandoned Mirror Image Rule: Under UCC 2-207 (1) a definite and seasonable expression of acceptance o a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from the terms of the offer, unless the acceptance is expressly made conditional on assent to the additional or new terms. Whether the additional or different terms in the acceptance or confirmation become part of the contract will depend upon whether the parties are both merchants.
When both parties are merchants the additional or new terms in the acceptance or confirmation will be part of the contract unless: (1) the offer expressly limits acceptance to the terms of the offer, or (2) the new additional terms materially alter the offer, or (3) within a reasonable time after learning of the new additional terms, the offeror notifies the offeree that she/he objects to them.
Here, the acceptance is still 2,000 bushels of tomatoes, but delivery is requested on different dates, this does not materially alter the contract, the farmer is still selling to the merchant 2,000 bushels of tomatoes.
Furthermore, the farmer did not object within a reasonable time period after learning of the new terms.
Therefore Answer (D). Provides the solution…
D because the acceptance does not materially alter the contract and therefore becomes part of the contract . I am still thinking about C especially after reading the “perishable goods” answer, but going with D because thats what I thought in 1.8 minutes.
C – again rolling with BV. We got beat up on the last one. Its MBE hocus pocus at its best!
UCC 2-207 – unless the contract is specific about limiting the terms in the acceptance of the offer, it can be altered. Reasonable notification of the modification will allow terms to be altered, here two weeks. Language such as, “I would appreciate if you…” is more like an inquiry. It did not mean to alter the contract, nor did it express acceptance on its terms.
I think C is the best answer here. Wholesaler gives a definite expression of acceptance to Farmer’s offer. However, the terms that follow are better viewed as “different” and not “additional”. Different terms have already been objected to and they materially alter the original bargain. As different terms (not additional), I do not believe that they will become part of the contract, unless Farmer expressly consents to them. Here, Farmer’s silence will not operate as an express consent. Thus, Farmer has not accepted the different terms. However, there is a contract on Farmer’s terms (“2000 bushels of grade A tomatoes available for delivery on August 15 at $10 a bushel”).
C is the best answer. This is an example of a merchant firm offer in article 2, therefore, it could not be canceled by the farmer. There is a contract, but because of the perishable nature of the product, the contract is for the delivery of 2,000 bushels of tomatoes on August 15.
I believe the best answer is D. This is an example of a merchants firm offer. There was a signed writing by the farmer that the offer would remain open until July 15. The wholesaler accepted the offer before the offer expired by it’s own terms. The change in delivery terms was not material and the farmer did not object to them within a reasonable time so they become a part of the contract.