Video 26: Sales and Lease Contracts: Price as a Term
1. Is there a contract in this situation?
It depends. First, is it a UCC or common law contract? Since it is a sale of goods
from a commercial seller it would be a UCC contract. It appears that the primary
value of the contract is for the goods, not computer service. If it was a common
law contract then the major terms, including price, would have to be clear from
the writings (the emails), but there would not have to be a written signature on
paper for their to be a contract. It could all be done by email so long as all
necessary conditions have been satisfied. Forming contracts by email has been
allowed by the courts and specifically by federal statute. This appears to be a
contract matter under the UCC. As such, the price need not specifically have
been agreed to by both parties so long as there were enough other terms certain
enough for the judge to say that the parties knew they were agreeing to a specific
sale and the price could be referenced by some specific way, such as reference
to posted prices on the day of the alleged agreement. However, if the price of the
good in question fluctuates, as tends to be the case with computer equipment,
then if there was no clear agreement as to how price would be determined, then
there may be no contract. And, of course, the specifics of statements made in the
emails will play a large role in determining whether or not it appears the parties
intended to enter into a contract for specific goods.
2. If the price was never fixed in writing but the equipment was delivered and a
dispute arose about the price, how would the price be determined?
Since the goods were delivered, then the seller clearly believed a contract had
been formed, as did the buyers who accepted the goods. However, since the
price is not clear the court will look to the emails and any other written
communication for the best evidence of how the parties intended to establish
price. If there is no evidence from that, then the market price of the product could
probably be ascertained by looking at prices for similar equipment at that time—
the fair market price.
3. If the parties only communicated by email, could there be a contract if the value
of it was for over $500? How would they handle the signatures for the contract?
Contracts formed by email are formed by writing, since such electronic
communication is considered to be a writing. So yes, over $500 is fine in case of
such a contract, so long as the emails evidence an intent to form a contract that
an objective observer viewing the evidence could discern. The courts allow
electronic writings or signatures, and Congress expressly approved such writings
as valid so long as the form of communication is reasonably secure from fraud
and tampering. In general, electronic fraud is more difficult to pull off in a case
such as this one than would be old-fashion fraud such as copying a signature to
an alleged written contract.