Chapter 8 Self Check
Chapter 8-Self Check Questions
Existence of a Sales Contract
Does a sales contract exist? If so, what are the terms of the contract?
1. Boston Hardware Co. agrees to buy all the snow shovels it needs from New England Shovel
Co. In past years this has been around 5,000 shovels per year. The mild winter in 2009 caused
Boston Hardware to need only 250 shovels, leaving New England Shovel Co. with over 4,000 unpurchased shovels.
Yes, a contract exists. This is a requirements contract since Boston Hardware Co. is obligated to purchase the 250 shovels which are what they required.
2. New York High School agrees to purchase 200 desks for $100 each from Big Apple School
Supply Inc. The desks are to be ready for September 1, 2008, but there are no delivery terms in the contract.
Yes, a contract exists in this example. The delivery terms are supplied by the UCC since they are a missing element in the contract. As a result, New York High will have to pick up the desk at Big Apple School Supply, Inc.; Big Apple’s only responsibility in this case is to have the required amount of desks available to New York High by September 01.
3. L.A. Outfitters offers to sell West Coast Burrito Co. 1,100 uniforms by sending them a letter with price, quantity, and delivery terms and an offer to keep the offer open for seven months. Six months later, West Coast Burrito responds with a standard acknowledgment and acceptance form. The standard form includes an agreement to arbitrate.
No contract exists for the reason the UCC has a three month restriction. Consequently, L.A. Outfitter’s offer is not a valid proposal.
4. Chicago Toy Depot Inc. sends a purchase order to Midwest Dolls Inc. for 10,000 “Fancy Nancy” dolls by November 1, 2010, in time for the holiday season. Midwest Dolls returns an acknowledgment letter guaranteeing the dolls for January 1, 2011.
No contract exists for this example. Midwest Dolls accepted the contract agreement, however, changed the delivery date (Material change)
Existence of a Sales Contract
Does a sales contract exist? If so, what are the terms of the contract?
1. Boston Hardware Co. agrees to buy all the snow shovels it needs from New England Shovel
Co. In past years this has been around 5,000 shovels per year. The mild winter in 2009 caused
Boston Hardware to need only 250 shovels, leaving New England Shovel Co. with over 4,000 unpurchased shovels.
Yes, a contract exists. This is a requirements contract since Boston Hardware Co. is obligated to purchase the 250 shovels which are what they required.
2. New York High School agrees to purchase 200 desks for $100 each from Big Apple School
Supply Inc. The desks are to be ready for September 1, 2008, but there are no delivery terms in the contract.
Yes, a contract exists in this example. The delivery terms are supplied by the UCC since they are a missing element in the contract. As a result, New York High will have to pick up the desk at Big Apple School Supply, Inc.; Big Apple’s only responsibility in this case is to have the required amount of desks available to New York High by September 01.
3. L.A. Outfitters offers to sell West Coast Burrito Co. 1,100 uniforms by sending them a letter with price, quantity, and delivery terms and an offer to keep the offer open for seven months. Six months later, West Coast Burrito responds with a standard acknowledgment and acceptance form. The standard form includes an agreement to arbitrate.
No contract exists for the reason the UCC has a three month restriction. Consequently, L.A. Outfitter’s offer is not a valid proposal.
4. Chicago Toy Depot Inc. sends a purchase order to Midwest Dolls Inc. for 10,000 “Fancy Nancy” dolls by November 1, 2010, in time for the holiday season. Midwest Dolls returns an acknowledgment letter guaranteeing the dolls for January 1, 2011.
No contract exists for this example. Midwest Dolls accepted the contract agreement, however, changed the delivery date (Material change)