Betsy contacted Sam, a salesman who works for Luxe, a company that sells luxury
ID: 448769 • Letter: B
Question
Betsy contacted Sam, a salesman who works for Luxe, a company that sells luxury boats, and told him that she was interested in purchasing a luxury boat. Luxe provided Betsy with free airfare and lodging at a hotel resort near the Luxe boat showroom. After shopping at the showroom, Betsy became interested in the Wind Catcher model priced at $200,000. Sam explained to Betsy the features of the Wind Catcher and told her that it was “state of the art.” Sam gave Betsy a one-page purchase order form on which the words “Wind Catcher” were written in the blank space marked “Boat Model,” and “$200,000” was written in the blank space marked “Price.” Just above the signature line in red italics were the words “This offer by Purchaser is irrevocable for thirty (30) days. All sales are final when approved by Luxe.” Before Betsy left the hotel the next day, Sam came by to tell her that he had just learned that Luxe was about to raise its prices, but that she could order the Wind Catcher at the current price if she quickly returned the purchase order form she had received the night before. When Betsy returned home, she checked prices on the Internet for comparable boats and decided the price quoted by Luxe for the Wind Catcher was a good deal. She signed and faxed the purchase order form to Luxe. After receiving the purchase order form from Betsy, Sam prepared the documents that Betsy would need to register the boat and went to the boat harbor where Betsy planned to keep the boat to make sure that the docking facilities were adequate for the Wind Catcher. A few days later, Betsy learned that, despite what Sam had said, Luxe had no plans to raise its prices and that the Wind Catcher was an older model without the navigation and safety features available on newer models. She immediately faxed a letter to Luxe stating that she did not want to make the purchase. That same afternoon Betsy received in the mail from Luxe a photocopy of the purchase order form that was stamped “Accepted” and signed by Luxe. Under what theory or theories may Luxe be successful in a breach of contract action against Betsy? Discuss. Do not discuss U.C.C.
Explanation / Answer
A contract involving a transaction in goods in form of Luxury boat by Luxe
From transaction parts involved during the sale of a Luxes boat, the transaction would completed as a transaction of Boat.
Merchants Deals
Here a merchant is a person who deals in the kind of goods like boat involved in the transaction for himself out as having knowledge and skill peculiar for the goods involved in here.
Luxe is a distributor of luxury boats. Thus, they deal in the kind of goods involved in the transaction. And Betsy is a customer looking for a luxury boat. So, she does not hold herself out as having special knowledge.
Offer for the Luxury Boat
Here an offer shows with present contractual intent, with definite and certain terms that is communicated.
Customer took the purchase order form and returned home. She checked out prices on the internet and found that the Wind Catcher with a quoted price of $200,000 was a good deal. And she signed the purchase order form and faxed it back to Luxe Company. Her act of signing the order form is a present contractual intent to be bound by contractual agreement.
Beginning Negotiations
There are communications between the parties that do not match to the necessary present contractual intent and are essentially an inquiry or an invitation to deal.
Betsy contacted Sam, a salesman who worked for Luxe in regard to purchasing a luxury boat. Sam showed Betsy some boats in the showroom and Betsy became interested. Sam gave Betsy a one-page purchase order form with the words “Wind Catcher” written in the blank space marked “Boat Model” and “$200,000” was written in the blank space marked “Price.” Sam’s conduct of filling in the model and price on the purchase order form and his actions of giving Betsy the purchase order form shows his intent to negotiate an invitation to deal with Betsy.
The main point is that after receiving the purchase order form Sam, the salesman for Luxe prepared the documents that Betsy would need to register the boat. Hence, the facts evidence a communication to the offeree, Luxe.
Acceptance Purchase form
An acceptance of purchase form is an unequivocal assent to the terms of the offer.
Once Betsy signed and sent over the purchase order form, she received a photocopy of the order form with the words “Accepted" stamped on it. Therefore, a valid acceptance occurred here in form of signed purchase paper.
Revocation
Betsy made on offer to Luxe to purchase the Wind Catcher for $200,000. Later Betsy learned that the model was older and did not have the navigation and safety features that were available on the newer model. A few days after sending in the offer Betsy immediately faxed a letter to Luxe stating that she did not want to make the purchase.
Further, Luxe will argue that Betsy signed the purchase order form. On the form signed by Betsy it stated “This offer by Purchaser, i.e. Betsy, is irrevocable for thirty (30) days, the offer cannot be revoked for 30 days. Betsy may contend that the purchase order form had the terms already embodied within the papers that was provided by Luxe to Betsy.
Luxe will rebut based on the fact that the express language was in red italics above the purchaser signature line Betsy would have seen the language “offer irrevocable for thirty days.” Based on her
Mailing Policy and Conditions
Luxe will argue that when they deposited the letter of acceptance in the mail, the acceptance became effective. Luxe’s letter of acceptance was valid when Luxe deposited the acceptance letter in the mail.
So here, Luxe’s mailed “acceptance” was a valid acceptance
Finally, the offer by Betsy expressly stated that “All sales are final when approved by Luxe.” So, Betsy signed the offer stating once the offer is accepted by Luxe, the sale became final and can’t be recalled or cancelled.
Statute of Frauds – Contact for the Sale of Goods for $500 or More
The deal involved the sale of a boat for $200,000. Since the agreement was made with partial writings, i.e., made on Luxe’s purchase order form and with Luxe’s photocopy of the purchase order form, and deals with the sale of goods means boat.
Luxe’s purchase order form contained the description of the quantity, identity of the parties, price and subject matter. As stated supra, time will be a reasonable time. Thus, it contained the essential terms.
Misrepresentation of Detail or Documents
Betsy will argue that Sam, the salesman for Luxe represented to her that the Wind Catcher was “state of the art” when, in fact, the Wind Catcher did not have the navigation and safety features that were available on the newer models. Thus, a misrepresentation of a material or documents.
Sam will contend that he explained the features of the Wind Catcher that Betsy was looking at in the showroom. He further told her that it was state of the art. The words “state of the art” is merely an expression and not a representation of a material fact.
Betsy later learned that despite what Sam said Luxe had no plans to raise its prices. However, the fact that the price may or may not go up is not a material fact in regard to the product.
There are no facts to show that Sam knew when he made the representation to Betsy of the newer models with the navigational system and safety features. Thus, the misrepresentation was made without knowledge.
Betsy will further argue that Sam represented to her that the Wind Catcher was state of the art when he was negotiating with Betsy. This representation induced Betsy to justifiably rely on Sam’s statement and caused her to enter into the contract.
Breach of case
A breach is an unjustified failure to perform which goes to the essence of the bargain.
When Betsy faxed a letter to Luxe that stated that she did not want to make the purchase, this establishes an unjustified failure to perform going to the essence of the contract.
Losses
The breach of contract entitles the non-breaching party to the expectancy under the terms of the contract
Luxe can be sued for the deal price if $200,000 less offsets for the cost they inquire to purchase the boat goods
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