Mega Manufacturing has agreed over the phone to manufacture 10,000 highly specialized routers and couplers to the exact specifications required by…

Mega Manufacturing has agreed over the phone to manufacture 10,000 highly specialized routers and couplers to the exact specifications required by Circuits Systems, Inc. for use in one of its proprietary designs.  These are highly specialized goods for which there is no ready market.  Mega sends a signed confirming memorandum “This is to confirm our understanding of the purchase of routers and couplers to be delivered to your Dayton, Ohio facility by Dec. 1, for a total contract price of $37,000.” Mega waits 10 days, then begins the manufacturing of the items and is nearly complete when Circuit Systems attempts to breach the contract. Under these facts and under the UCC:

options:

1)   Mega’s memorandum to Circuit is sufficient to satisfy the requirements of the statute of frauds.

2)   Unfortunately this oral contract is not enforceable.

3)   Mega’s verbal contract with Circuit is enforceable as a specialized goods exception to the Statute of Frauds rule.

4)   Circuit is not bound to pay Mega for any of the goods because the confirming memo did not specify the quantity of goods.

Leave a Reply