Maker manufactures printing presses. News, a publisher of a local newspaper, had

Question

Maker manufactures printing presses. News, a publisher of a local newspaper, had decided to purchase new presses. Rep, a representative of Maker, met with Boss, the president of News, to describe the advantages of Maker's new press. Rep also drew rough plans of the alterations that would be required in the News pressroom to accommodate the new presses, including additional floor space and new electrical installations, and left the plans with Boss. On December 1, Boss received a letter signed by Seller, a member of Maker's sales staff, offering to sell the required number of presses at a cost of $2.4 million. The offer contained provisions relating to the delivery schedule, warranties, and payment terms, but did not specify a particular mode of acceptance of the offer. Boss immediately decided to accept the offer, and telephoned Seller's office. Seller was out of town, and Boss left the following message: "Looks good. I'm sold. Call me when you get back so we can discuss details." Boss next telephoned Pressco and rejected an outstanding offer by Pressco to sell presses to News similar to those offered by Maker. Using the rough plans drawn by Rep, Boss also directed that work begin on the necessary pressroom renovations. By December 4, a wall had been demolished in the pressroom and a contract had been signed for the new electrical installations. On December 5, the President of the United States announced a ban on imports of foreign computerized heavy equipment. This removed from the American market a foreign manufacturer that had been the only competitor of Maker and Pressco. That afternoon, Boss received a telegram from Maker stating, "All outstanding offers are withdrawn." In a subsequent telephone conversation, Seller told Boss that Maker would not deliver the presses for less than $2.9 million. A telephone call by Boss to Pressco revealed that Pressco's entire output had been sold to another buyer. ASSIGNMENT: Fully and legally discuss the following:

1. Was Maker obligated to sell the presses to News for $2.4 million? Why/why not? and

2. Assume Maker was so obligated. What are News' rights and remedies against Maker? Why/why not?

Explanation / Answer

Answer to question 1:

The UCC has rules applicable for merchants. In this case both the buyer and the seller of the presses are merchants. Hence merchant rule is applicable. And also considering other view points, there is no where stated that either maker or his boss made an offer to other party in their conversation. The conversation between them is only mere sharing of information.

The letter received on December 1 was an offer stating the goods and also its price ($2.4 million) and also other payment terms. Boss’s telephone call to the seller can be considered as an acceptance. The confusion here is whether boss’s looks good message is not enough. But “ i am sold” indicates acceptance. However under ICC nothing is inconsistent about an unequivocal offer coupled with discussion of missing terms. Maker can argue that there was no condition for agreement to pay $2.4 million and the promise to pay maker was a condition. Considering the statute of frauds, maker made a written offer signed by the seller. The written signed offer will satisfy the statute of frauds.

News rejected press co’s offer to sell the press. It began to work on its renovation including demolition and signing the contract. This renovation work was based on plans that maker had given to the news. Maker’s attempt to revoke the offer came only on December 5 after news had begun the renovation work. Hence offer once accepted can’t be revoked or offeree takes action based on acceptance. Hence the contract between maker and news for the sale of press for $2.4 million and based on terms of December 1 offer, maker is obliged to sell them for $2.4 million.

Answer to question 2:

After the telegram, maker told news that he would not deliver the press for less than $2.9 million. But maker’s obligation to sell for $2.4 million was repudiated and therefore an anticipatory repudiation. Hence news can declare it a breach and sue because of the long time for installing the presses.

When the seller breaches a contract and buyer doesn’t have the money, then buyer can recover the damages amount by calculating difference between cost of replacement and contract price or difference between market price of funds at the time and place of delivery and contract price.

Here news can also recover his incidental damages like cost of finding cover funds.

In this case news can’t find another source because pressco is the only competitor for maker had sold the entire output. In that case if the damage news wants to recover is not adequate, where news’ existing press needs to be replaced, then news can satisfy the requirement.

Breached contracts that are definite for legal remedies does not satisfy the equitable standard. In this case however the contract specifies about price, warranties and payment terms. Assuming that the specifications contained in the contract will be definite.

Courts can grant specific performance only when both the parties are available at the time of contract.

As a solution, specific performances are subject to equitable defenses

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