Lodge & Associates (“Lodge”), was planning to building a new hotel in Milpitas, California. Freeze, Inc. is a supplier of commercial refrigeration units, located in Gilroy, California. On May 1, 2020, Lodge sent an email to Freeze, requesting Freeze to deliver and install 20 of Freeze’s “CoolMax50” ice machines at the hotel. The email contained an attached drawing showing where in the hotel the machines were to be installed, asked that the machines be custom built with the hotel’s name on the front of the machine, and stated that the ice machines “must be delivered and installed on or before August 31, 2020.” There was nothing in the email regarding price or payment terms.
On May 15, 2021, Freeze sent a return email to Lodge stating that Freeze could customize, deliver and install the ice machines under the terms set forth in Lodge’s May 1st email for $1,000 per unit for a total price of $20,000, with payment terms of $10,000 paid by July 15, 2020, and the remaining $10,000 payable upon completion of the job. This email also stated that, in order to have the customized ice machines installed on or before August 31st, it would be necessary for Lodge to have the identified installation locations “ready for installation of the ice machines” and make these locations “available to Freeze on or before August 15, 2020.”
On July 15th, Freeze received a $10,000 payment from Lodge but heard nothing else from Lodge until August 5th, when Lodge sent an email to Freeze stating that due to construction delays, the hotel would not be ready for the ice machines to be installed until November 30th. By August 15th, Freeze had already constructed 20 of the customized ice machines.
Freeze decided that it was not economically feasible for it to have that much inventory sitting around for more than 3 months and on August 15th found another buyer for the ice machines it had made for Lodge, for only $750 per unit. It informed Lodge on that date that it would no longer deliver and install these units for Lodge’s hotel and returned Lodge’s $10,000 payment.
Initial Discussion Post
Answer the following questions:
On August 15th, Lodge complained that Freeze was breaching their contract, Freeze responded that “We didn’t even really have a contract, because your May 1st email did not contain all of the necessary terms for an offer required under California common law.” Lodge countered, “We have a contract under the U.C.C.!” Who is correct? Explain your answer. (In other words, analyze whether Article 2 of the UCC applies to these facts and why?)
Freeze then replied to Lodge on August 16th, “Even if we had a contract under the U.C.C., you breached the contract on August 5th, when you told us you could not accept delivery of the ice machines until the end of November – 3 months late! Based upon your breach we are cancelling the contract.” To which Lodge immediately responded, “We have not breached the contract yet, we had until August 31st to pay you the rest of the money and accept delivery. We just panicked.” Who is correct? Explain your answer.
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