business law analysis
On November 1, 2022, Kona’s Best Coffee, a wholesale coffee bean company, sent the following fax signed by Charles Morrison, the owner and president of Kona’s Best Coffee, to all their coffee shop and grocery store accounts, including Don’s Supermarkets, who sell Kona’s Best Coffee:
“Offer for Sale: Kona Deep Roast Blend, special price, $20.00/lb. Limit 200 lbs per customer. This offer will not be revoked or modified for 30 days.”
Between November 5 and November 10, 2022, the global market price for coffee skyrocketed due to a tsunami that hit Asia and destroyed much of the Indonesian coffee crops. On November 12, Charles sent the following fax to all their coffee shop and supermarket accounts, which was received by Don, the owner of Don’s Supermarkets on the same day:
“Due to the destruction of some of the world’s coffee bean crops, coffee manufacturers have increased prices on all coffee. As a result, the price of Kona Deep Roast Blend has increased $10.00/lb to $30.00/lb.”
On November 13, 2022, Don sent the following signed fax to Charles: “ I am accepting your offer of November 1, 2022, and agree to purchase 100 lbs of Kona Deep Roast Blend at $20.00/lb.”
Ted, the owner of Ted’s Java Hut, was not one of Charles’s accounts to whom Charles sent faxes, but Ted learned about both of Charles’s faxes from Don, and he sent the following fax to Charles on November 13, 2022:
“I am accepting your offer of November 12, 2022, and agree to purchase 50 lbs of Kona Deep Roast Blend for $30.00/lb.”
Charles refuses to satisfy either order.
(a) Don sues Charles for breach of contract. Judgment for whom? Explain fully.
(b) Ted sues Charles for breach of contract. Judgment for whom? Explain fully.
(A)
Issue: Does Don have a claim against Charles for damages when he fails to fulfill the coffee order?
Rules: Under the UCC, a merchant who provides a written, signed firm offer cannot revoke or modify that offer for the period offered. This is a different rule than the common law where an offer can be revoked at any time (unless an option contract has been formed).
Analysis: Here, Charles is a merchant and provides a written signed offer to his accounts including Charles. The offer says it will be open for one month so Don’s acceptance by fax (a reasonable method of acceptance) was made prior to the stated deadline and a contract was formed. Charles’ attempted revocation on November 12th is ineffective.
Conclusion: A valid contract was formed for $20/lb and Charles is liable for breaching the contract.
(B)
Issue : Does Ted have a claim against Charles for failing to deliver the coffee?
Rules: A valid contract is formed when there is mutual assent. Only a valid offeree may accept an offer to form a contract.
Analysis: Ted was not a valid offeree, so he has no right to accept the offer. It was not an offer communicated by Charles to Ted. Ted’s purported acceptance is really an offer, which Ted was free to accept, reject or ignore.
Conclusion: Charles in not liable.