Clean Machines Company makes washing machines. Over the phone, Clean offers to sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150 per unit. Clean says that it will keep the offer open for ninety days. Dealers responds that within two or three weeks it will decide whether to accept. One week later, Clean faxes, and Dealer receives, notice that the offer is withdrawn. Dealer immediately phones Clean to accept the $150-per-unit offer. When Clean refuses to deliver at that price, Dealer files a suit. Clean asserts, first, that there is no contract and, second, that if there is a contract, it is unenforceable. Discuss Clean's assertions.

Question

What will be an ideal response?

Answer 1

Clean's contention that there is no contract between it and Dealers is correct. An offeror can revoke an offer at any time before acceptance without liability unless the offer is irrevocable. For this offer to be considered irrevocable, Dealers would have to prove that it had an option, which requires consideration, or that the offer was irrevocable under UCC 2-205. Neither of these applies. Dealers gave no consideration for the offer to be kept open, and thus no option was created. And, for the offer to be irrevocable under the UCC without consideration, Clean¾a merchant¾would have had to give assurance that the offer would remain open for ninety days in a signed writing. Because the assurance was made orally, the offer was revocable. Thus, Dealers's receipt of Clean's revocation (withdrawal) of the offer before Dealers's acceptance terminated the offer, and no contract was formed.

Clean's contention that even if a contract was created, the contract is unenforceable is also correct. Under UCC 2-201, any contract for the sale of goods priced at $500 or more must be in writing, be supported by written evidence such as a memorandum, or be the object of an applicable exception (such as written confirmation between merchants, specially ordered or manufactured goods, admission under oath, or partial performance completed) to be enforceable. The contract in the case presented here is for the sale of goods (washing machines) priced at $500 or more ($15,000). It was not in writing; nor is there a writing signed by Clean that an oral contract was formed. Also, none of the exceptions apply. Thus, even if Dealers could prove that an oral contract had been made, the contract could not be enforced against Clean's defense of the Statute of Frauds.