Max calls Alex offering to sell him a guitar for $350 if he pays cash upon delivery within one month, and tells Alex to let him know by August 10. Alex responds by letter saying that he will pay that amount within one month if he can have delivery upon a first payment of $100 next week. Alex mails the letter on August 1. After the letter is mailed but before Max receives it, Max telephones Alex to say he revokes the offer. Is there a contract? How would the results differ in the following situation under common law principles and UCC? What if Max was the owner of “Max’s Guitar World”? What if the guitar was valued at $600?

Question

What will be an ideal response?

Answer 1

Several issues are presented in this fact pattern. Because this is a contract for the sale of goods, Article 2 of the UCC would apply. Examine the language of UCC 2-207 for guidance in answering this problem.

Was Max’s offer accepted by Alex? Under common law principles, because Alex’s attempted acceptance is not the mirror image of Max’s offer, there would be no agreement. Under the UCC, acceptance was made although the terms varied from the original offer. Whether or not the new terms would be included depends on other factors.

Assuming the acceptance was sufficient, was it made prior to revocation of the offer? Because there is a time lag between Alex sending the acceptance and Max receiving it, the “mailbox rule” would apply. Under common law rules, because the method of communicating acceptance was not impliedly authorized by the manner in which the offer was made, the acceptance would not be effective until actually received, which would allow Max to revoke the offer. Under the UCC, however, acceptance is by any reasonable method, and a letter may meet that standard. If so, the mailbox rule makes the acceptance is effective when it is deposited in the mail, and therefore Max did not revoke his offer in a timely manner.

If Max were a merchant, he may be held to different standards of conduct than a nonmerchant under the UCC. However, Alex is not a merchant. The UCC provides that if both parties are merchants, the new terms included in Alex’s acceptance would be part of the contract (if they do not materially alter it) unless Max objects to the new terms within a reasonable time. Max could have also stated that no new terms could be added when he made the offer.

The UCC provides that contracts for the sale of goods in excess of $500 must be in writing to be enforceable. This statute of frauds provision requires a writing by the party to be charged. Alex, not Max, is the party who has put this agreement in writing. Therefore, this contract would not be enforceable against Max.