The Custom Bottle Run

Model answer

**1. UCC ARTICLE 2 APPLIES** The transaction is a sale of movable goods (custom amber bottles) identified to the contract. UCC Article 2 governs, not common law. The UCC's more forgiving formation rules and gap-fillers are therefore in play.

**2. CONTRACT FORMED UNDER §2-207** Riverbend's September 6 acknowledgment is a "definite and seasonable expression of acceptance" under §2-207(1), even though it contains additional terms. Northgate's PO tried to limit acceptance to its own terms, but Riverbend did not make its acceptance "expressly conditional on assent" to its new terms — it simply accepted and listed extras. A contract formed on September 6. Alternatively, performance by both sides (Riverbend starting production; Northgate wiring the deposit) confirms a contract under §2-207(3).

**3. ADDITIONAL TERMS DROP OUT** Both parties are merchants, so §2-207(2) controls. Northgate's PO "expressly limited acceptance" to its own terms, so Riverbend's additions do NOT enter the contract. Independently, the arbitration clause and the restocking fee LIKELY materially alter the bargain - surprise or hardship, judged against course of dealing and trade practice - and so would be excluded on these facts under §2-207(2)(b). The FOB term is fact-sensitive: FOB seller plant can shift shipment obligations and risk of loss away from the UCC defaults, which may itself be a material alteration depending on the commercial context. The express limitation makes the point immaterial here. The contract is the PO terms of Northgate plus UCC gap-fillers. Under the ALTERNATIVE §2-207(3) route, the additions of Riverbend likewise disappear, but for a different reason worth stating: the terms are those on which the writings AGREE plus UCC supplementary terms, not terms excluded through §2-207(2)(a).

**4. STATUTE OF FRAUDS - THE ORIGINAL CONTRACT IS ENFORCEABLE** Northgate argues the contract was unenforceable for lack of a writing. Answer it squarely - and note the relationship to section 5 precisely: the MODIFICATION adds a §2-209 requirement of its own, but the SAME records can satisfy §2-201 for both, because a later record may memorialise an earlier contract. At $32,000 the original contract is well within §2-201(1), so a sufficient writing is required unless an exception applies. TWO routes get there, and one is often missed. FIRST, a sufficient RECORD: the October 1 email THREAD identifies the purchase order by number (in the message from Riverbend), while the reply of Northgate supplies the SIGNATURE of the party against whom enforcement is sought - so the thread and the order read together, and the order supplies the 10,000-unit quantity. A later record may memorialise an earlier contract, so this composite record supports the ORIGINAL agreement, not merely the modification. SECOND, and independently, the statutory exceptions - where the specially manufactured-goods exception enforces the FULL order while part payment adds only limited enforcement for any quantity properly attributable to the deposit: - SPECIALLY MANUFACTURED GOODS, §2-201(3)(a). Give all FOUR elements. (i) The goods are specially manufactured FOR THIS BUYER - etched with the proprietary logo of Northgate. (ii) They are NOT SUITABLE for sale to others in the ordinary course of the business of Riverbend, which the facts state. (iii) The circumstances reasonably indicate they are for this buyer - the logo again. (iv) Before repudiation the seller made either a SUBSTANTIAL BEGINNING of their manufacture or commitments for their procurement: about 7,000 of 10,000 bottles were etched and finished BEFORE Riverbend received the December 3 repudiation, which is substantial by any measure and satisfies the statutory timing. All four are met. - PART PERFORMANCE, §2-201(3)(c), and be careful how you state its reach. The section enforces the contract "with respect to GOODS for which payment has been made and accepted" - it is measured in GOODS, not in a dollar slice of the price. The deposit was not allocated to any stated quantity, so it does not clearly establish WHICH goods, if any, fall within the exception (dividing $5,000 by $3.20 does not decide that allocation - it only confirms the ambiguity). So this is NOT an independent route to enforcing the full 10,000-bottle order - it reaches at most whatever quantity is properly attributable to the accepted payment, which these facts leave uncertain. Rely on §2-201(3)(a) for full enforcement. One trap to avoid: do NOT say the September 6 acknowledgment of Riverbend is itself a sufficient record. §2-201(1) requires a record signed by the party AGAINST WHOM enforcement is sought - here Northgate - and Riverbend signed that one. It could still reach Northgate through the merchant-confirmation rule of §2-201(2) - it was "sent back" to a merchant, Northgate then wired a deposit, and no written objection appears - so treat that as a SECONDARY alternative if receipt and the absence of timely objection are inferred. Two weaknesses, not one: those facts rest on inference, AND the acknowledgment is itself the formation-stage ACCEPTANCE, so whether it also counts as a "confirmation of the contract" is itself disputable. Keep it expressly behind §2-201(3)(a). Rest on §2-201(3)(a). The lack-of-writing argument fails.

**5. MODIFICATION OF DELIVERY DATE IS BINDING** When Riverbend's furnace cracked, the parties modified the delivery date to January 20 via their October 1 emails. Under §2-209(1), no new consideration is required. Under §2-209(3), §2-201 must be satisfied if the contract AS MODIFIED is within its provisions; at $32,000 it is. Northgate - the party against whom the modified date is enforced - itself wrote the October 1 reply "OK, agree to January 20." Say WHY that is signed rather than assuming email suffices: §1-201(b)(37) requires a symbol or process ADOPTED WITH PRESENT INTENT TO AUTHENTICATE, and the reply came from the company account of the purchasing lead over her typed name and title, on the thread in which the purchase-order number was quoted. (UETA and E-SIGN prevent discrimination against electronic form; they do not supply intent or missing content.) On QUANTITY, give the composite-record step rather than skipping it: the reply and the purchase order may be read TOGETHER because the email THREAD identifies the purchase order by number, and the purchase order supplies the 10,000-unit quantity. One more link worth a sentence - authentication shows she signed, not that she could bind: her company title, her company email account, and her handling of the modification and the attempted cancellation strongly support IMPLIED ACTUAL authority or, alternatively, APPARENT authority - though authority would ultimately be fact-dependent, since apparent authority turns on manifestations attributable to Northgate rather than on her own assertion of title. §2-201(1) is satisfied. Accordingly, the conforming January 20 tender of Riverbend was TIMELY, which answers argument (iii). §1-304's good-faith requirement is satisfied: the furnace failure was a legitimate commercial reason, not a pretext for squeezing the other side.

**6. NORTHGATE'S DECEMBER 3 EMAIL IS ANTICIPATORY REPUDIATION** "We don't need the bottles. Please return our $5,000" is a clear, unequivocal statement that Northgate will not perform. That is anticipatory repudiation under §2-610, which applies where the repudiated performance is NOT YET DUE and its loss will SUBSTANTIALLY IMPAIR the value of the contract to the other party - plainly met here, since Northgate repudiated its entire remaining take-and-pay obligation - the $27,000 balance after the $5,000 deposit - before the January 20 delivery date. Riverbend had TWO principal choices: await performance for a commercially reasonable time, or resort to breach remedies. In either event it could suspend its own performance and proceed under §2-704. The bottles were still UNFINISHED on December 3, so §2-704(2) is the operative provision: an aggrieved seller may, in the exercise of reasonable commercial judgment for the purposes of avoiding loss and of effective realization, either COMPLETE the manufacture and wholly identify the goods to the contract, or CEASE manufacture and resell for scrap or salvage value. Do the COMPARISON the section calls for, but state it honestly - do not claim the numbers PROVE superior realisation, because completion yields custom goods whose value depends on the price remedy, and stopping still leaves Riverbend its breach remedies rather than only $800. What the facts support is this: roughly 70% of the run was already complete, only about $1,900 remained to spend, nearly all of that existing work would otherwise drop to about $800 in scrap, and completion opened a plausible §2-709 price remedy. On those facts Riverbend could REASONABLY exercise the commercial judgment §2-704(2) commits to it in favour of completion.

**7. RIVERBEND RECOVERS THE FULL PRICE UNDER §2-709** Match the prong to the facts. §2-709(1)(b) allows the price where the seller is unable after REASONABLE EFFORT to resell at a reasonable price, OR the circumstances reasonably indicate that such effort would be UNAVAILING. Riverbend made no resale effort at all, so it must rely on the second prong - and it can: the bottles carry the proprietary logo of Northgate and cannot be sold to another buyer in the ORDINARY COURSE of the business of Riverbend. Keep that precise: a nominal scrap market exists, but salvage value does not show the finished goods can be resold at a REASONABLE PRICE, and any proceeds actually realised must be credited to Northgate. Riverbend must hold the conforming goods for Northgate as a condition of the price remedy - though §2-709(2) also permits resale at any time before collection of the judgment, with the net proceeds credited to Northgate. The contract price is $32,000 (10,000 × $3.20).

**8. IMPRACTICABILITY IS NOT A DEFENSE FOR NORTHGATE** Northgate cannot invoke §2-615 based on its chef's change of direction. §2-615 by its terms addresses SELLER nondelivery, so it does not give Northgate this defense - and any analogous supplemental impracticability or frustration argument a buyer might raise under other law would fail here too, because an internal change of preference is not a qualifying event. State the test the right way round: § 2-615(a) asks whether a contingency has OCCURRED the NON-OCCURRENCE of which was a basic assumption on which the contract was made. The change of direction by the chef is not such a contingency - the risk of shifting internal demand is allocated to the buyer. Riverbend's earlier furnace issue was addressed by modification, not by excuse. As for the earlier furnace failure, do not analyse it as an excuse at all: Riverbend never invoked §2-615, and any possible excuse became unnecessary because the parties AGREED TO MODIFY the delivery date.

**9. THE $5,000 DEPOSIT IS OFFSET, NOT REFUNDED** LEAD WITH THE CLEAN ACCOUNTING, because it is the actual route here: Riverbend is AFFIRMING the contract and recovering the $32,000 PRICE under §2-709, of which $5,000 has already been paid - leaving $27,000. The deposit is simply credited against the price; no restitution question arises, and that is what prevents double recovery. If you discuss §2-718 in the alternative, get two things right. FIRST, §2-718(2) is framed for a seller who WITHHOLDS DELIVERY because of the buyer breach - here Riverbend tendered and Northgate refused, so it is not an obvious fit. SECOND, if it did apply, retention absent an enforceable liquidated-damages term is capped at the smaller of $500 or 20% of the value of the total performance (here $500), leaving a provisional $4,500 - which would then have to be offset by DAMAGES independently established under §2-708 and §2-710. Do NOT simply relabel the §2-709 price claim as damages to do that work; the answer itself insists an action for the price is not ordinary damages. Riverbend has a $32,000 PRICE claim under §2-709 - not ordinary damages that happen to equal the price - against which the $5,000 payment is credited, leaving $27,000, plus any incidental damages it proves under §2-710.

**KEY POINT:** The call of the question centers on whether the contract exists at all and whether Riverbend may recover the price for custom goods. Students should answer the lack-of-writing argument under §2-201(3)(a), identify §2-207 formation, handle the exclusion of the arbitration clause cleanly under §2-207(2)(a) (and independently (2)(b) material alteration), recognize §2-209 modification without new consideration, and distinguish §2-709's price remedy from ordinary damages.