Fred is a computer retailer. He just made a bulk purchase of a new computer he has never sold before, the Does It All 800.
He sends out 100 advertisements which read as follows: "20 Does It All 800s at a price of $3000 each."
Is this an offer? No.
When Sam, who runs a consulting business which makes extensive use of computers, receives the ad, he calls Fred and says, "I will take all 20 at $2750 each."
Is this an offer? Yes.
Sam faxes the following memo during the conversation to confirm his order: "I'll buy all 20 Does It All 800s at $2750 each plus free setup and installation."
Offer? Yes.
Fred says, AI will think about it.@
Rejection? No.
After the phone conversation is over, Fred responds with this memo: "I offer to sell 20 800s at $2800, no free setup and installation. I will give you three months free service."
Acceptance? 2-207 applies as this is the sale of goods. Is this an expression of acceptance? No. So no acceptance under 2-207.
Sam calls when he receives Fred's memo and says, "Got your memo. The price may be OK. Assuming I buy them, what about four months free service?" Fred says "OK, I offer you that; I'll do it for free because I have the necessary diagnostic software already." Sam says, AI accept.@
Oral agreement formed. Potential parol evidence rule issue.
Fred then sends Sam a signed, pre-printed standard form contract that correctly states the price and quantity. The contract says nothing at all about servicing the computers.
Offer? Yes.
The written contact also contains an integration clause, which reads: "This contract represents the complete and exclusive agreement of the parties."
Sam signs the contract and sends it back. He adds an addendum to the contract to the effect that Fred will provide free setup and installation.
Acceptance under 2-207(1)? Yes.
When Fred shows up to service the computers, he discovers he does not have the right diagnostic software.
Possible excuse under mistake doctrine. Unlikely.
It will cost Fred $5000 to acquire the necessary software from the makers of the Does It All 800. Fred's total net profit on sale of the computers is $4000.
Possible excuse under impracticability or frustration. No.
Fred refuses to service the computers.
Breach? Depends on contractual terms.
What the terms of the purchase agreement contract?
2-207(2).
Both parties merchants? Yes. Then the terms of the acceptance are the terms of the contract unless one of three exceptions holds. The acceptance provides that Fred will provide free setup and installation. This becomes part of the contract unless (1) Fred explicitly limited the terms of the contract to the terms of his offer. Fred did not do so. (2) The provision materially alters the obligations of the parties, or (3) Fred objected to the provision in a timely fashion. Fred did not so object, so the only question is whether the provision materially alters the obligations of the parties.
Is the oral agreement that Fred will provide four months free service enforceable?
State parol evidence rule.
Does the oral agreement contradict the written agreement?
A contradiction is a contradiction that cannot be explained away.
There is not even an apparent contradiction between the contracts. One provides for service and the other is silent about it.
So the oral agreement is enforceable unless the written agreement is a complete integration and the side agreement falls in its scope.
Is the written agreement a complete integration?