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 That afternoon, Boss received a telegram from Maker stating, "All outstanding offers are withdrawn."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

1. Yes, Maker is obligated to sell the presses to News for $2.4 million. The transaction mentioned in the case pertains to printing presses and so the transaction will be governed by the UCC. All the elements of a valid contract are present here. The letter which was sent by Seller, Maker’s salesman, will be considered as a valid offer. Boss’s telephone message to Seller will be considered as a valid acceptance and the message was devoid of any ambiguity. The consideration was in the form of agreed upon amount of $2.4 million.

The letter which was telegraphed by Maker to Boss on 5th December was ineffective as the December 1st offer had been accepted after Boss made a call to Seller. Thus a valid contract was formed on 1st of December and Maker has a legal obligation to sell the press to News for $2.4 million.

2. As this contract is a UCC contract the usual ‘cover’ remedy will be available. The buyer can get goods at a higher price from another seller and the difference amount shall than be legally recovered. In this case damages are inadequate as News is not able to cover it and the Presidential Order has removed foreign manufacturers from the market.

The preferred remedy for News will be specific performance. The elements of feasibility and mutuality are present in the case. Lastly Maker has no valid defenses as it breached a valid contract just in order to pocket an extra half million as profit. Thus, as per specific performance, Maker will have to sell the press for the agreed upon amount of $2.4 million.

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