Normally under the UCC the statute of frauds dictates that if a contract is over 500
dollars, it must be in writing and signed by the party against whom one is seeking
enforcement. Here, the agreement on January 9th was oral and not signed.
Additionally, it was for a price of 10,000 dollars. Thus, it would not satisfy the statute
of frauds.
However, the UCC contains an important exception to the statute of frauds that
applies here. If a contract is between merchants, and the one merchant sends a signed
memo or letter reaffirming an oral contract, and the memo or letter is not responded
to with a rejection within a reasonable amount of time usually 10 days, the contract
will be considered enforceable despite it being oral. However, it will only be
enforceable up to the amount of goods specified by the writing.
Here, both parties are merchants of silk. Merchants are someone that regularly deals
in a kind of good, by virtue of their profession, hold themselves out as having special
knowledge of the good.
The Seller here sells silk in bulk regularly. This is enough for him to be a merchant.
The buyer here is also a merchant, because he mass manufactures scarves including
those made out of silk.
Here, while there was no formal written contract, the buyer did send a signed note
reaffirming the contract stating that he was "glad that we were able to reach an
agreement on the deal for the 10,000 yards of silk im buying from you." This note was
signed and also specified the amount of goods int he contract, 10,000 yards of silk.
Thus, if Seller failed to respond to this note rejecting that a contract had been formed
within 10 days, the contract will have been enforceable against him. Here, the Seller
read the letter and simply never responded. Over 20 days passed from the day the
letter was sent on January 11th to the time of performance on February 4th. Due to
the Sellers lack of response, the note will make the contract enforceable up to 10,000
yards of silk. Thus, an enforceable contract was formed arising from the January 9th
conversation.
Note that it does not matter that the note leaves out important things like the price or
the date of performance. Under the UCC, a court has wide powers to fill in terms of a
contract left out if they find that an enforceable contract was created.
2. The Seller most likely does have to deliver to the Buyer's place of business. The
issue is whether a history of prior performances will allow the court to infer a term.
In this case, the contract was oral and the note making it enforceable did not specify
where the silk was to be delivered. This means that the contract is silent on where the
goods should be delivered. When a contract is silent, the UCC allows a court to fill in
reasonable terms. When doing so, the court will consider a few factors. One factor