Worried about the wildly fluctuating price of oil, Airline wrote to Oil Company requesting a firm price on jet fuel for one year. On December 15, 2006, Oil Company wrote to Airline, stating: “I offer to supply you with any jet fuel ordered by you during the upcoming year beginning January 1, 2007. Price: $1.50 per gallon, to be ordered by you in minimum quantities of 50,000 barrels. Because of your past business, this offer will not be withdrawn during the year.” Airline received the letter on December 20, 2006.
On December 24, 2006, Airline replied in writing: “I accept your offer.” Mail was delayed during the holidays and Oil Company did not receive this communication until December 31, 2006. Because the price of oil was rising so rapidly, Airline called Oil Company on December 26, 2006, and orally stated to Oil Company’s agent: “I accept your offer of December 15th.” In the same telephone conversation, Airline requested the immediate shipment of 100,000 barrels. Oil Company’s agent orally agreed to ship 100,000 barrels that day, but informed Airline that the price for the rush order would be $1.70 per gallon. Oil Company delivered the fuel that day. Based on the $1.50 price for 2007 from Oil Company, Airline canceled all other negotiations with suppliers.
During January and February 2007, Airline ordered 200,000 barrels of fuel, the fuel was delivered, and Airline paid for it at the rate of $1.50 per gallon. Airline also paid for the 100,000 barrels shipped in December 2006 at $1.50 per gallon. During the first week of March 2007, severe weather destroyed a key pipeline, the oil that was lost in the pipeline, belonged to the Airline , by which the oil company had paid for Airline in a major oil producing region resulting in the disruption of the world supply of oil and causing the market price of jet fuel to rise to $2.00 per gallon. On March 7, 2007, Oil Company mailed a letter to Airline reading: “The offer dated December 15, 2006, is revoked.” The letter did not arrive until March 16, 2007. Airline placed the following orders, all by mail: 50,000 barrels on March 10, 2007; 50,000 barrels on March 17, 2007; and 100,000 barrels on March 30, 2007. Oil Company received all orders 2 days after mailing, but refused to fill any of the March 2007 orders.
In April 2007, Senior Partner requests that you prepare a memorandum of law regarding this matter.
Discuss all legal concepts and support your answer from your readings.
Learning Activity #2
Mary runs a clothing store near a college campus. In the winter, Mary was preparing to order some T-shirts and shorts for the upcoming summer. She prepared an order on her stationery for “1,000 T-shirts of assorted sizes; S, M, L, and XL; 800 in royal blue, the other 200 in assorted colors.” For the shorts her order read, “1,000 pairs of shorts, assorted sizes; approximately equal quantities of white, black, khaki, and olive.” She sent the order to the clothing maker and about a week later received an order confirmation on their sales order form. She glanced at it and the wording for her order was the exact same as she had sent in. When she received the merchandise a month later, there were only 150 royal blue shirts, and the others were various assorted colors. There were only 50 pairs of white shorts, with the other 950 approximately equal quantities of the other three colors. Mary looked back at the sales order and noticed a provision in the fine print that the clothing maker could substitute different colors for what was ordered. Mary claims that the clothing maker has breached the agreement. The different colors shouldn’t affect the sales of the shorts, but she ordered the royal blue shirts because that is the local university’s predominant school color. 10% of the T-shirts are defective, with sleeves that are different lengths. 20% of the T-shirts were made with defective ink which causes liver failure. 5% of these have been sold. On the sellers contract it has a clause that states that all sales are final and any items are sold as is with all faults either expressed or implied. The last clause states that seller is exempt from any liability, by any and all defects in any and all mechanize. Discuss Mary’s situation.
