C12 - Business LawCase Analysis 1

1 C12 - Business LawCase Analysis 1 Summarize the facts of the case OpenPeak, Inc. were in the process of producing a computer tablet product for a client and during the production, placed a purchase order for embedded wireless data from Option Wireless, Ltd. The purchase order was to include details for the 12,300 units to be purchased at the price of USD $848,700. Both the Buyer and Seller settled on the how many shipments the order would arrive in initially and concluded the exact number of units and price that would be included in the final shipment, dependent on a deposit which would be paid in full for the remaining balance. The buyer’s invoice contained terms on this arrangement and, in addition, also contained a clause stating the buyer had a maximum of fourteen days to contest any area of the invoice as they see fit. The contract also stated that if this term was not complied with, the seller would not carry any responsibility for any damages incurred. Once the remaining balance was paid, the final shipment was sent however upon inspection of the units, the buyer concluded that the shipment contained multiple defects as they did not meet the specifications previously agreed upon. In light of this, the Buyer formally rejected the shipment and returned the defective modules approximately three months later. The seller requested that data be provided from the buyer to prove there was no such deficiency. Even though the buyer complied, the seller has not provided proof that there were no defects. The Buyer would like the seller to be charged a total of four criminal counts, three of which including counts as contractual breach and the fourth count to include unjust enrichment. The Seller moved to dismiss all contractual breach charges however motion to dismiss was denied in favor of the buyer. 2 Identify the parties and explain each party’s position OpenPeak, Inc. is identified as the Defendant, Counter-Plaintiff and Buyer whereas Option Wireless, Ltd is identified as the Plaintiff, Counter-Defendant and Seller. The Defendant’s position in the case is to receive compensation for direct as well as consequential damages regarding the order that was placed and delivered with defective units. The defendant claims there was a breach of contract. The Plaintiff’s position is that the buyer did not comply with the terms listed on the purchase order which gives a time restraint on the return of units that were unsatisfactory. Outline the case’s procedural history including any appeals The case was brought to the United States District Court for the Southern District of Florida. Option Wireless, Ltd filed a motion to dismiss the counterclaim of OpenPeak, Inc. A decision by the court was made to deny this request. There are no appeals on records regarding this decision. What is the legal issue in question in this case? The legal issue in question in this case is if an invoice produced by the seller is considered as a proper means of accepting the offer set out by the buyer, by way of a purchase order, in the event that the invoice specifically discloses a restriction on how significantly damaged goods are recovered but the purchase order did not. If there is in fact a contract that has been executed, where is the location of the terms placed within the contract. 3 How did the court rule on the legal issue of this case? The court ruled in favor of the buyer and denied the seller’s motion to dismiss. This decision was made due to the review of the contract and the determination of what a breach is with regards to this case. The buyer pleaded that a purchase order cannot be used in place of a proper controlling contract and stated that there was not a valid contract provided between the buyer and seller that consisted of terms regarding consequential damages received on the units. The court had to engage in a battle of the forms which referred to three different sections pertaining to UCC Section 2-207 in relation to additional or different terms. The court stated that the formation of a contract can only transpire under 1 section rather than multiple. The court ruled that a proper contract has been created however the terms section regarding consequential damages which should have been included had in fact, been removed. What facts did the court find to be most important in making its decision? The court found that the lack of an official and formal invoice was one of the most important facts in the case. Because both parties consisted in a basic and normal process, it constituted that the buyer, of his own will, created an order for purchasing to the seller who also of his will, filled the order. Though there were terms and conditions stated on the purchase order, there were no additional checks completed by either party to ensure compliance of liability in the event of a problem. Another important fact was the omission of additional terms within the purchase order in regards to consequential damages allowed for the UCC’s “gap filler” to be added which allows recovery of damages in the event that there has been damage. 4 Are there any situations in which it might be a good idea to include additional or different termsin the “acceptance” without making the acceptance expressly conditional on assent to the additional or different terms? The UCC states that in the event that there is indeed any additional or different terms which are contained within the acceptance of contract which is between non-merchants then the terms can be regarded as a proposal. This applies in most cases except when the acceptance is expressly conditional on assent to the additional or different terms. There are times where an additional document is shared between parties which contains standard terms which are not found on the initial contract. This changes if both parties are merchants as the terms are normally included initially. Common Law stipulates that any acceptance made must reflect the offer in all aspects. This acceptance is a binding agreement of the contract and in the case where a party involved in the contract alters the acceptance, the contract becomes invalid as it would no longer math the initial offer. Under what conditions can a contract be formed by the parties’ conduct? Under Section 2-207(3), if both parties acknowledge that a contract exists then a sales contract can be created even though no previous literature was stated which established a contract. Why wasn’t the conduct of the parties here used as the basis for a contract? The conduct of the parties here wasn’t used as the basis for a contract because the writings of the parties does actually constitute that a contract wasformed according to Section 2-207(1) due to the 5 fact that the invoice created by the seller did not expressingly condition acceptance on the asset of the buyer in regards to the conflicting terms. Do you agree or disagree with the court’s decision? Provide an explanation for your reasoning either agree or disagree. I agree with the court’s decision in favor of the buyer. For an order of such great value and importance, furtherstepsshould have been taken to ensure that all aspects of the terms and conditions covered both parties’ liability in the event of problem. I believe that for order of this type, a formal contract should be created and agreed upon by both parties before any transactions occur. This would take the risk out of the order and provide an ease when placing this and all future orders that may come about.