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Q: Business law case─counter offer ( No Answer,   2 Comments )
Question  
Subject: Business law case─counter offer
Category: Business and Money
Asked by: ttszying-ga
List Price: $3.00
Posted: 27 Oct 2006 09:34 PDT
Expires: 31 Oct 2006 06:44 PST
Question ID: 777477
Hi everyone,

This is a question about business law.

Sorry, this question is a bit long. I understand that the below case
is a counter offer in which no contract is existed. However, I am not
sure whose terms (EFI or MHG) should be followed when this case appear
in court. Thanks for your help!

Wong, the Managing Director of Exclusive Food Imports (EFI), a gourmet
food import company, wrote to Leung, the Regional Purchasing Manager
for the Majestic Hotel Group (MHG), on 1 June 2006:

?Dear Mr. Leung, 
Further to our phone discussion yesterday afternoon, I write to offer
to supply 2000 kg of Scottish smoked salmon to the MHG over the period
of the next 12 months.
?. 
Please complete the enclosed order form and post it back as soon as possible. ?.?

The order form that EFI sent to MHG contained terms and conditions
prescribed by EFI. Clause 3 stated that the price of the salmon was
HK$85.00 per kg. Clause 10 said that all orders were accepted only on
EFI?s  terms, which were to prevail over any terms and conditions in
the buyer?s order. Clause 15 stipulated that any increase in the cost
of the product including shipping during the year should be added to
the price (per kg).

On 15 June 2006 MHG sent a standard MHG purchase order to EFI. The
second sentence in page 1 said ?Please supply (Scottish smoked salmon)
on terms and conditions stated below?. Clause 5 of the standard
purchase form stipulated that 160kg of Scottish smoked salmon shall be
delivered to the MHG?s central warehouse on 2nd of every month (for
the next 12 months).  Clause 19 of the conditions stated that the
price of the salmon shall be HK$80.00 per kilogram. Clause 20 provided
that: ?The usual conditions governing the sale of food apply?. There
are, however, no such conditions. The order form was silent on the
effect of increase in the cost of smoked salmon over the contracted 12
month period. At the foot of the order form was a tear-off slip
stating: ?We accept your order on the Terms and Conditions stated
thereon?.

On 19 June 2006 EFI signed and returned the order form, writing ?Your
order is being entered in accordance with our quotation of 1 June
2006? at the head of page 1 of MHG?s order form.

At 9:00am 14 July 2006 EFI sent a fax to MHG, saying that due to the
increase of cost of supply and transport, the price of the Scottish
smoked salmon to be delivered over the next 12 months was now HK$89.00
per kilogram. EFI said in the fax that no delivery will commence until
EFI had confirmation on the increased price from MHG.

Advise MHG     

1.Analyse the case, explaining whose terms, EFI?s or MHG?s should be followed.
Answer  
There is no answer at this time.

Comments  
Subject: Re: Business law case─counter offer
From: ubiquity-ga on 27 Oct 2006 10:47 PDT
 
This is a sale of goods covered by UCC art. 2.

The June 1, 2006 can be seen as either an offer or a solicitation to
make an offer.  Due to the circumstances of this fact pattern, the
distinction is irrelevant.  I would probably call it an offer under
2-206.

The second correspodance (June15) can be seen as a counter offer or an
acceptance. 2-207.  I would go with an acceptance.  Generally, if the
parties are merchants (here they are), the new terms will survive.
2-207(2).  However, here the terms are materially altered.  There is
a different price and a very different quantity.  Further, the June 19
form is showing an objection to the price term. 2-207(2)(c).  Here,
we have an acceptance of the contract at the June 1 price and at the
June 15 quantity.

Unless the contract is revocable, these are the terms regardless of
that last pattern.

If this is for a law school assignment, I would include 3-305.

By the way, the statement about ?usual terms? is important because it
assures us that we can rely on UCC article 2.  Article 2 provides
default provisions to use then a contract is silent on such matters.


UCC Art 2 can be found at: http://www.law.cornell.edu/ucc/2/
Subject: Re: Business law case─counter offer
From: myoarin-ga on 27 Oct 2006 12:03 PDT
 
Isn't the UCC  - Uniform Commercial Code -  only applicable for
business with at least one US party?

Ttszying-ga, will the UCC apply to your case?  Or is EFI a UK entity
and MHG one in Hongkong?

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