Contracts Hypo 2 - Deck Building Hypo

[colforbin]

Reggie and Matt had been negotiating for days for Reggie to build a shed for Matt. Pete was a good friend of both and sat in during their negotiations, and volunteered to type up their contract when they had reached an agreement.

Reggie met with Pete and had him type up the terms of the K, which he thought they agreed upon. Reggie signed this agreement. The next day Pete met with Matt and showed him the terms. Matt pretty much agreed with them all except the price, whereupon he crossed out the price of $4000, and made it $3000. Then he too signed the agreement.

Reggie purchased all of the shed building materials without any further conversations with Matt. Reggie calls Matt to say his ready and Matt tells him that he has changed his mind and doesn't want a shed anymore.   What are Reggie's rights against Matt?

Any input is welcome.

[celarkobri]

The first question is this a sale of goods? I think it is because the K is for a shed, not for the services. So the UCC would govern. 2-207 says that acceptance that varies terms is acceptance as long as its not expressly conditional. Cts tend to interpret that very narrowly and Matt did not EXPRESSLY say that he wouldn't agree to the K unless it was for $3k, so I think the $3k isn't a term of the K.

Next question is if Reggie began performance. Buying materials could be seen as either performance or preparation of performance. If it's performance, the he's partially performed.

I'm gonna post what i have so far and then look at my notes on damages

[colforbin]

Well I guess my major sticking point was on whether or not this was a contract for the sale of goods. I guess if were talking the building materials, then we would have "things movable at the time of the contract". If that's the case, then we could employ either the Predominant Purpose Test or the Gravaman Test to determine whether the UCC would be utilized for everything or not. Because Reggie has not yet performed, I guess the amount of the service portion of the K would not yet be calculated in; therefore, it would be UCC.

Thanks for helping me get that out.

Next.

[colforbin]

Now that you got me on the UCC track, I see that under UCC 2-207(1) if the writing had quantity on it and there was no conditional upon acceptance of the new price term, then we would have an acceptance. I don't believe these parties are merchants, so the price term would be a proposal for adddition to the K.

I think we also could find a K here under 2-207(3), if it's found that the writings aren't sufficient. Reggie went out and bought the materials and wanted to begin building.

I believe the Statute of Frauds would be met to, if not in the writings then under subsection 3(c).

Let me know if I'm off.

[celarkobri]

Yeah, I think that's what i was trying to get at earlier, re: additional/change in terms. Since they're not merchants and they both didn't agree to it, then the price difference drops out and remains at $4k. Right?

[dft]

Yea but the price change was a material alteration, so I think there's no contract.

[dft]

I guess you guys are trying to say that Article 2 is going to try to find a K anyway.

2-207(3) conduct forming the K I guess.

But Reggie didn't even get any notification of Matt's acceptance.

[celarkobri]

Does Reggie need to be notified of the acceptance? If he knew his friend was drafting the K and that he signed and expected Matt to sign it, if he didn't hear anything, wouldn't he think that Matt signed in no problem? Would it make a difference if after it was signed, he received a copy and put it in a drawer?

[celarkobri]

Also, does it matter if it was material? If Matt changed the K it was a proposal to change the terms. Reggie didn't agree therefore the K stands as it was. He didn't explicitly say "if you don't do it for $3k, then I'm not agreeing to this." So the assumption is that he meant "$4k is okay, but could you do it for $3?"

[dft]

I just read a little bit more on 2-207 and I think you're right. There was a K by conduct under 2-207(3). I need to do some more reading, but...

What if Matt had crossed the price out and changed it from $4000 to $200? Would they still have a K?

Also, does it matter if it was material? If Matt changed the K it was a proposal to change the terms. Reggie didn't agree therefore the K stands as it was. He didn't explicitly say "if you don't do it for $3k, then I'm not agreeing to this." So the assumption is that he meant "$4k is okay, but could you do it for $3?"