Diamond Electronics and Silver Wire Co. are engaged in a business transaction on a regular basis. Their transactions are routine to a point where they sometimes buy from each other couple times a week. Hence they have a good relationship. The first few years they would have a written, signed contract but both companies thought it was a hassle to sign it every other day. The parties agreed to let go of the written agreement and instead started dealing with each other with phone calls and emails.
Mark works for Diamond. He is the purchasing manager. His counterpart is Jane, who works as a Sales Representative for Silver Wire. Both are authorized to make buying and selling decisions in their respective capacities on behalf of their companies respectively.
On January 1, 2020, Mark called Jane and said “hey Jane we need a container of your Brand Z cable wires by Feb 15.” Jane said, “Not a problem Mark”. Jane hangs up and soon realizes they didn’t discuss the price, but she knows that Diamond always pays the asking price so she doesn’t bother to call again to ask. On Feb 15, Mark gets the goods and with it a bill of $50,000. He jumps out of his chair. He receives the goods and places them in Diamond’s warehouse, which is where they are generally stored for operations. On Feb 20, he called Jane and said the price is too high and that he never committed to the goods, and further he said “I wish to return them”.
Jane noted that they never discuss price on an deal, because it has never been an issue. Mark said, “Well its an issue now… unless you can send me more inventory worth $3,000”. Jane quickly dispatched more goods worth $3,000. Jane has ability to provide complimentary goods for up to $3,000 to their regular customers so Jane was not too worried about it. Her bigger concern was to make sure that Diamond paid $50,000.
On Feb 25, after Diamond received more goods, Jane called Mark again to demand $50K payment. He was agitated and said, “What makes you think I will pay $50,000? I need a 10% discount or I will call your bosses, and I am pretty sure I can get you fired very easily because you know you made a mistake.” Jane, out of fear of losing her job, said, “sure, sure no problem. I will give you a 10% discount.” Diamond quickly paid Silver Wire $45,000 with instant bank wire the same day.
Question: Was there an (1) Agreement and (2) Consideration between Diamond Electric and Silver Wire on the following dates?
- Jan 1? b. Feb 15 c. Feb 20? d. Feb 25?
For each part answer, please explain, if there was an agreement, what was the agreement for? Present your answers fully, give reasons for and against your position/conclusion for each part.
Fernando is a successful entrepreneur, he owns a chicken farm.
Pedro is a chef and owns his own restaurant in Korea Town. He specializes in brunches and his “Organic garden scramble” has been rated 5 stars by 100K reviewers.
Fernando and Pedro are also best friends from grade school. They grew up together and helped each other through various struggles in life, including helping each other in business. They havean amazing friendship and often do favors for each other on a regular basis. Sometimes Pedro goes over to Fernando’s farm and helps him with cleaning up.
Pedro buys eggs and chicken from various vendors, but he prefers to get them from Fernando, of course. He has a big event coming up. Shakira is coming into town and she is throwing a huge party of over 5000 people, at a private property overlooking the Pacific Ocean in Malibu. On January 1, 2018, she hired Pedro to be the special chef for the party to be held on April 15, 2018.
On March 15, 2018, Pedro texted Fernando, all excited, “Guess who is gonna eat your eggs bruh! Shakira!! So send me some, yeah!?” Fernando said, “U gotta be clowning dawg! How much, where, when, tell me more bro!” Pedro got busy with the day and never returned the text. Fernando said again, Anyway though, I got ur back always u fool. Cus u r the best care taker of my farm.”
On March 30, Fernando followed up, “Hey dude, wassup with ur event?” Pedro texted back, “I dunno the details yet I think I am gonna need a 100 dozen for my specialty scramble. Write up a proposal for me bro.”
Same day, March 30, after a busy day at work, Fernando wanted to relax. So he drank three beers and a few shots of Tequilla. He then wrote up a proposal agreement for Pedro, “1000 dozen eggs for $1000 to be delivered to Pedro on or about April 15, 2018.” Fernando thought “oh well this is gonna be a sweet deal if Pedro agrees.” He signed it, and then left it on his desk hoping to fax it to Pedro in a couple days.
The same night, March 30, Pedro stopped by Fernando’s farm to clean up a mess. Fernando hadalready left for home. Pedro walked in the site-office and read the proposal Fernando had written that was sitting on the desk. Pedro said to himself, “All these years later, he still sucks at math, still messes up his zeroes!” Pedro struck one zero each from the quantity and the price. The contract then read as following: “100
0 dozen eggs for $100 0 to be delivered to Pedro on or about April 15, 2018.” He then signed the agreement and left it on Fernando’s seat. Pedro made a copy using a photocopier in the office. Pedro then placed a sticky note on the original and stuck it on the signed copy sitting on Fernando’s seat. The note stated: “Consider your farm burned if you don’t come thru on this one!!!”
On his way out of the farm, Pedro saw Raul, Fernando’s son, who helps him occasionally with the farm paper work. Raul needed some extra cash for his eighteenth birthday coming up in a week, so his Dad allowed him to earn quick cash. Raul told Pedro: “Uncle Pedro, I can sign that agreement for you, I help Dad with most of that kinda work anyway.” On the copy he had, Pedro changed the party name to Raul’s, gave him the contract, and Raul signed it and handed it back.
Next day, March 31, Fernando returned to this office the next day, read the agreement on his desk, and noticed the changes and Pedro’s signature — and simply put it away. Raul did not tell Fernando anything about what he signed.
On the event date, Fernando and Raul both failed to provide a single egg to Pedro. Hence Pedro couldn’t make a single scramble for the party. Next day, the LA Times published an article “Shakira’s guest were fed oatmeal for brunch!” Pedro’s reputation got tarnished. His star ratings went down to 2 stars.
Pedro sued both Fernando and Raul in court.
1. Does Pedro have a viable claim against Fernando? How will Fernando counter the attack? Which of Fernando’s arguments are likely to prevail versus fail, and why?. What will Pedro’s counsel likely argue back? Which arguments are likely to be weak or/andstrong? Explain your reasoning and expound on your analysis in detail.
2. Does Pedro have a viable claim against Raul?
How will Raul counter the attack? Which of Raul’s arguments are likely to prevail versusfail, and why?. What will Raul’s counsel likely argue? Which arguments are likely to be weak or/and strong? Explain your reasoning and expound on your analysis in detail.
Pedro’s claim against Fernando:
Pedro will not likely prevail in his claim against Fernando because there was no legal agreement between Pedro and Fernando. To have an enforceable contract there must be an agreement between the parties. This requires an offer by the offeror and acceptance by the offeree. There also must be mutual assent by the parties. For the reasons to follow, there was no agreement.
1. Initial communication between Fernando and Pedro
While it is true that Pedro and Fernando communicated about the eggs purchase for the Shikara event, there was simply no agreement between the two. On the first communication, there was no offer when Pedro’s text stating ““Guess who is gonna eat your eggs bruh! Shakira!! So send me some, yeah!?” For an offer to be valid, it must pass three requirements: (1) The offeror must objectively intent to be bound by the offer, (2) the terms of the offer must be definite or reasonably certain, and (3) the offer must be communicated to the offeree.
Here, Pedro cannot successfully argue that the offer was definite or reasonably certain, because Fernando stated, “U gotta be clowning dawg! How much, where, when, tell me more bro!” It was unclear the material terms and what they would be, and neither were they “reasonably certain”. Pedro will argue that Fernando stated, “Anyway though, I got ur back always u fool” and by saying so there was an agreement. However, this argument will fail because a valid offer did not exist at this point of time and any statements by Fernando suggesting acceptance are irrelevant.
2. March 30th communication
Pedro cannot argue that by stating he needs 100 dozen eggs, that he somehow made a legal offer. Because again, for an offer there must be a definite or reasonably certain term, and here Pedro was stating “I dunno the details yet” and that “write up a proposal for me bro.” No reasonable person can conclude from this statement that Pedro had offered reasonably certain terms particularly because he was asking Fernando to write a proposed offer. Therefore this second communication was not an offer, and hence there was no agreement at this stage either.
3. Proposed agreement at Fernando’s Office.
Pedro also cannot legally argue that there was an agreement here for two reasons:
First, Fernando’s proposal was not an offer. While he did write a proposal, however, writing alone does not constitute an “offer”. To constitute an offer, the offer must be communicated to the offeree. Here, the offer was not communicated from Fernando to Pedro. In fact Pedro intended to fax it over but left it on his desk. The fact that Fernando intended to fax does not matter, all that is required is the act of communication – which had not been carried out. Hence there was no valid offer in effect.
Second, even if Fernando’s written proposal was an offer, it did not survive. Here, Pedro, on his own changed material terms of the offer by striking the zeroes. This was a counter-offer. An offer is terminated when the offeree makes a counteroffer. A counteroffer is defined as a response by an offee that contains terms and conditions different from or in addition to those of the offer. Here, Pedro’s changing of the agreement changes the material terms of the quantity which is vastly different from what Fernando has proposed, and hence it terminated Fernando’s offer – if there was one in place.
Next, Pedro cannot argue that Fernando accepted the counter offer. Because Fernando simply did not respond and placed it away, there was no acceptance. An acceptance is defined as a manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the objective theory of contracts. Here, the written proposal required the parties to sign it. Fernando never signed it and hence the “manner invited or required” was not followed or met. Therefore there was no acceptance of Pedro’s counter offer. Thus there was no agreement at this juncture either.
Even if the court finds there was an agreement, Fernando can argue two theories to defend himself. First he can state that Pedro left a sticky note, stating that “Consider your farm burned if you don’t come thru on this one!!!” He can argue that by making this threat Pedro unlawfully coerced him to form an agreement. This is a classic example of illegal consideration. An illegal consideration required that a contract cannot be supported by a promise to refrain from an illegal act. Here, Pedro threatened to burn down the farm, and willfully burning down anyone’s property is criminal act. Pedro’s sticky note contents therefore nullified any agreement, if there was one.
Second Fernando can argue that he was intoxicated when he wrote the proposed agreement. Generally, contracts entered by intoxicated parties are voidable when a person reaches a contractual incapacity because of ingested of alcohol or drug to a point of incompetence. While it is true here that Fernando did consume three beers, his intoxication argument will likely fail because no reasonable person can conclude that consumption of three beers alone will place a someone at a point of incompetence. Rather to the contrary, the facts exemplify Fernando knew what he was doing, when he said to himself, “oh well this is gonna be a sweet deal if Pedro agrees.” His own thoughts show a conscience that placing a higher quantity of the eggs will benefit him. This further proves his state of mind was not so intoxicated as to make him incompetent. Therefore Fernando’s intoxication defense will fail.
Fernando will likely prevail in this lawsuit because he can successfully argue that there was no agreement between him and Pedro for following reasons: First that Pedro’s two text message communications did not constitute an “offer” because they were not reasonably certain. Second that Fernando’s writing of a proposed agreement was not an “offer” because it was never communicated to Pedro. Third, that Pedro’s signature on the proposal with changes in terms served as a counter-offer, which he never agreed with his signatures. Hence there was no agreement and Pedro’s claim will likely fail.