SUMMARY

2 Snowmobiles: Advertised & DisplayedOne was raced & hard used

displayed on a raised platform with the numerous trophies it won.

The other was relatively new & only used as a demonstationdisplayed along with other models and equipment.

In response to the newspaper advertisement, the purchaser called the company. “Advertised machines were still for sale?” => “Yes” & “Had some hard use”, said the Salesman“The machine was the one that the company had in its display?” => “Yes”The purchaser offered to buy the machine for $8,000 => Salesman: Accepted Provided his credit card number The company prepared the raced snowmobile: “Sold” Label Sold the demonstator then

ISSUE(S)

1. Refund: Yes/No?

2. Liable for Fraud?

RULE(S)

2006 New York Code - Agreements Required To Be In Writing

UCC - Article 2: Sales§ 2-201. Formal Requirements; Statute of Frauds§ 2-204. Formation in General§ 2-206. Offer and Acceptance in Formation of Contract§ 2-208. Course of Performance or Practical Construction§ 2-401. Passing of Title; Reservation for Security; Limited Application of This Section§ 2-602. Manner and Effect of Rightful Rejection§ 2-607. Effect of Acceptance; Notice of Breach; Burden of Establishing Breach After Acceptance; Notice of Claim or Litigation to Person Answerable Ove§ 2-703. Seller's Remedies in General

Restatement (Second) of Contract§ 161: When Non-disclosure is Equivalent to an Assertion (Silence)

APPLICATION

1. Could it be considered as a valid contract; and which elements make the contract enforceable?

2. Did the defendant, Snowmobiles Inc., commit fraud, or should it be considered as an unilateral mistake?

APPLICATION

1. Could it be considered as a valid contract; and

Which elements make the contract enforceable?

APPLICATION

Article 2 of the UCC, “the agreement of the parties, which exists when one party makes an offer and the other party accepts the offer, creates a valid contract.”

A contract has two essential elements, which are: (1) an offer, and (2) an acceptance. The agreement can be expressed orally or in writing.

APPLICATION

2006 New York Code - Agreements Required To Be In Writing:

(3a) There is sufficient evidence that a contract has been made if:There is evidence of electronic communication (including, without limitation, the recording of a telephone call or the tangible written text produced by computer retrieval), admissible in evidence under the laws of this state, sufficient to indicate that in such communication a contract was made between the parties

(4) For purposes of this subdivision, the tangible written text produced by telex, tele facsimile, computer retrieval or other process by which electronic signals are transmitted by telephone or otherwise shall constitute a writing and any symbol executed or adopted by a party with the present intention to authenticate a writing shall constitute a signing. The confirmation and notice of objection referred to in subparagraph (b) of paragraph three of this subdivision may be communicated by means of telex, tele facsimile, computer or other similar process by which electronic signals are transmitted by telephone or otherwise, provided that a party claiming to have communicated in such a manner shall, unless the parties have otherwise agreed in writing, have the burden of establishing actual or constructive receipt by the other party as set forth in subparagraph (b) of paragraph three of subdivision.

APPLICATION

§ 2-201. Formal Requirements; Statute of Frauds:

(3c) A contract which is more than $500 is valid without being written is enforceable if in other respects to goods for which payment has been made and accepted or which have been received and accepted.

APPLICATION

§ 2-204. Formation in General:

(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.

(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

APPLICATION

§ 2-206. Offer and Acceptance in Formation of Contract:

(1) Unless otherwise unambiguously indicated by the language or circumstances:

(a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;

(2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

APPLICATION

§ 2-401. Passing of Title; Reservation for Security; Limited Application of This Section:

(3) Unless otherwise explicitly agreed where delivery is to be made without moving the goods,

(a) if the seller is to deliver a document of title, title passes at the time when and the place where he delivers such documents; or

(b) if the goods are at the time of contracting already identified and no documents are to be delivered, title passes at the time and place of contracting.

APPLICATION

§ 2-607. Effect of Acceptance; Notice of Breach; Burden of Establishing Breach After Acceptance; Notice of Claim or Litigation to Person Answerable Over:

(1) The buyer must pay at the contract rate for any goods accepted.

(2) Acceptance of goods by the buyer precludes rejection of the goods accepted and if made with knowledge of a non-conformity cannot be revoked because of it unless the acceptance was on the reasonable assumption that the non-conformity would be seasonably cured but acceptance does not of itself impair any other remedy provided by this Article for non-conformity.

(4) The burden is on the buyer to establish any breach with respect to the goods accepted.

APPLICATION

N.Y., Inc. v. Williams, 69 N.Y.2d 987 (1987)

In that case, a group of homeowners on Fire Island was ordered to pay dues to a homeowners' association even though there was no written contract between them. Instead, there was an implied in fact contract: The homeowners purchased the homes knowing the homeowners' association existed, provided services to the area, and charged everyone in the area their share of the associations' expenses. Knowing this, they went ahead and purchased the homes anyway. According to the court, that was enough to create an enforceable contract to pay dues to the association. No one can walk away from such an agreement simply because it is not in a formal written contract.

APPLICATION

2. Did the defendant, Snowmobiles Inc., commit fraud, or

Should it be considered as an unilateral mistake?

APPLICATION

§ 2-208. Course of Performance or Practical Construction:

"Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement."

APPLICATION

Frigaliment Importing Co. v. B.N.S. International Sales Corp

A Swiss company, has ordered frozen eviscerated chickens from a New York wholesaler of poultry. The order called for chickens of two sizes: 1 ½ - 2 pounds, and 2 ½ - 3 pounds. When the shipment arrives in Europe, Buyer discovers that the larger birds are all stewing chickens. Expecting broilers and fryers, Buyer cries "foul" and brings suit against Seller for breach of contract.

The plaintiff buyer contends that "'chicken" means a young chicken, suitable for broiling and frying." The defendant insists that a chicken is "any bird of the genus that meets contract specifications on weight and quality, including what it calls 'stewing chicken'

APPLICATION

APPLICATION

§ 161 – Restatement Law of Contract: When Non-disclosure is Equivalent to an Assertion (Silence): A person's non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only:

(1) Where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material.(2) Where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which the party is making the contract and if non-disclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.(3) Where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effects of a writing, evidencing or embodying an agreement in whole or in part.(4) Where the other person is entitled to know the fact because of a relation of trust and confidence between them.

APPLICATION

§ 2-703. Seller's Remedies in General:

"Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract, then also with respect to the whole undelivered balance, the aggrieved seller may:

(a) withhold delivery of such goods;(b) stop delivery by any bailee as hereafter provided;(c) proceed under the next section respecting goods still unidentified to the contract;(d) resell and recover damages as hereafter provided;(e) recover damages for non-acceptance or in a proper case the price."

APPLICATION

Merrimack Mut. Fire Ins. Co. v. Dufault, 958 A. 2d 620

Merrimack Mutual Fire Insurance Co. issued a homeowner’s policy including a personal umbrella liability policy to Mr. and Mrs. Ronal Deufault. The policy covered relatives of the insured who lived in the same household and owned a motor vehicle. Frank Beauparlant was involved in an automobile accident with the Dufaults’ son who lived with his parents and owned a pickup truck. Merrimack asked the court the rule that it was not liable for the son’s accident. It alleged that the Dufaults did not intend the umbrella policy to cover him. Therefore, Merrimack said there was a mutual mistake about the policy covering the son.

The Court pointed out that any mistake in understanding the terms of the contract was a unilateral one on the part of the Dufaults and a unilateral mistake would not avoid the contract.

CONCLUSION

- The contract: Enforceable -> Buyer cannot revoke

- No Liable for Fraud

- § 2-208. Course of Performance or Practical Construction: "Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement." - Frigaliment Importing Co. v. B.N.S. International Sales Corp case.