Business Law: Risk of Loss All America Export-Import Corp

18.5 Firm Offer Gordon Construction Company (Gordon) was a general contractor in the New York City area. Gordon planned on bidding for the job of constructing two buildings for the Port Authority of New York. In anticipation of its own bid, Gordon sought bids from subcontractors. E. A. Coronis Associates (Coronis), a fabricator of struc- tured steel, sent a signed letter to Gordon. The letter quoted a price for work on the Port Authority project and stated that the price could change, based upon the amount of steel used. The letter contained no information other than the price Coronis would charge for the job. One month later, Gordon was awarded the Port Authority project. Four days later, Coronis sent Gordon a telegram, withdrawing its offer. Gordon replied that it expected Coronis to honor the price that it had previously quoted to Gordon. When Coronis refused, Gordon sued. Gordon claimed that Coronis was attempting to withdraw a firm offer. Who wins? 18.7 Open Terms Alvin Cagle was a potato farmer in Alabama who had had several business dealings with the H. C. Schmieding Produce Co. (Schmieding). Several months before harvest, Cagle entered into an oral sales con- tract with Schmieding. The contract called for Schmieding to pay the market price at harvest time for all the red pota- toes that Cagle grew on his 30-acre farm. Schmieding asked that the potatoes be delivered during the normal harvest months. As Cagle began harvesting his red potatoes, he contacted Schmieding to arrange delivery. Schmieding told the farmer that no contract had been formed because the terms of the agreement were too indefinite. Cagle demanded that Schmieding buy his crop. When Schmieding refused, Cagle sued to have the contract enforced. Has a valid sales contract been formed? 19.4 Passage of Title J.A. Coghill owned a Rolls Royce Corniche automobile, which he sold to a man claiming to be Daniel Bellman. Bellman gave Coghill a cashier's check for $94,500. When Coghill tried to cash the check, his bank informed him that the check had been forged. Coghill reported the vehicle as stolen. Subsequently, Barry Hyken responded to a newspaper ad listing a Rolls Royce Corniche for sale. Hyken went to meet the seller of the car, the man who claimed to be Bellman, in a parking lot. When Hyken asked why the car was advertised as a 1980 model when it was in fact a 1979, Bellman replied that it was a newspaper mis- take. Hyken agreed to pay $62,000 for the car. When Hyken asked to see Bellman's identification, Bellman provided docu- ments with two different addresses. Bellman explained that he was in the process of moving. Although there seemed to be some irregularities in the title documents to the car, Hyken took possession anyway. Three weeks later, the Rolls Royce Corniche was seized by the police. Hyken sued to get it back. Who wins? 19.7 Risk of Loss All America Export-Import Corp. (All America) placed an order for several thousand pounds of yarn with A. M. Knitwear (Knitwear). On June 4, All America sent Knitwear a purchase order. The purchase order stated the terms of the sale, including language that stated that the price was F.O.B. the seller's plant. A truck hired by All America arrived at Knitwear's plant. Knitwear turned the yarn over to the carrier and notified All America that the goods were now on the truck. The truck left Knitwear's plant and proceeded to a local warehouse. Sometime during the night, the truck was hijacked, and all the yarn was stolen. All America had paid for the yarn by check but stopped payment on it when it learned that the goods had been stolen. Knitwear sued All America, claiming that it must pay for the stolen goods because it bore the risk of loss. Who wins? 21.8 Disclaimer of Warranty Edward Cate owned and operated an automotive repair shop. Cate wanted to purchase a set of automotive lifts (i.e., the devices used to elevate vehicles for repair work). Cate purchased a set of Rotary Brand lifts, manufactured by Dover Corporation (Dover). The contract for the lifts contained a five-year written warranty covering the repair of all defective parts returned to the factory. The warranty section of the contract, printed in black ink, also contained a separate paragraph stating: This warranty is exclusive and in lieu of all other warranties express or implied including any implied warranty of merchantability or implied warranty of fitness for a particular purpose.