Custom Dessert Boxes: Statute of Frauds and Repudiation
Marisol owns a small bakery. By telephone she agrees with Harborview Bistro to supply 300 custom dessert boxes per month for 12 months at $18 each, with the bistro's logo pressed into the chocolate. The total is $64,800. Two days later the bistro's manager texts: 'Confirming - 300 logo boxes/month, 12 months, $18, delivery on the first.' Marisol replies 'Confirmed.' She buys a $9,000 custom logo press and begins production. After four months the bistro's new owner emails: 'We're terminating. The pastry chef is going in a different direction. Stop all deliveries.' Marisol has already produced 250 boxes for month five and ordered $6,000 of packaging. She sells 100 finished boxes to a farmers' market for $12 each, below her normal price but above her cost. She does not make further boxes and does not buy more packaging. Marisol sues for breach of contract, seeking lost profits on the remaining eight months plus her out-of-pocket costs.
1. Does the statute of frauds bar Marisol's claim? Consider the merchant-confirmation exception and the specially-manufactured-goods exception.
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Article 2 applies and the price exceeds $500. Section 2-201(1) requires a writing sufficient to indicate a contract for sale, signed by the party against whom enforcement is sought or by that party's authorized agent.
Merchant confirmation, § 2-201(2). The bistro is the party against whom enforcement is sought, and it did not sign a writing in the conventional sense. But the exception supplies the writing: (a) a transaction between merchants, (b) a writing in confirmation, (c) sufficient against the sender, (d) sent within a reasonable time, (e) the recipient has reason to know its contents, and (f) no written objection within 10 days. Marisol is a merchant as to bakery goods. The bistro's text identifies quantity, price, term, and delivery, so it is sufficient against the sender. It satisfies the signature requirement because the sender adopted it with present intent to authenticate, which is what 'signed' requires under § 1-201(b)(37). Two days is reasonable, and Marisol replied 'Confirmed' rather than objecting. The exception thus satisfies the statute against Marisol.
Specially manufactured goods, § 2-201(3)(a). This is an alternative ground. It requires goods specially manufactured for the buyer and not suitable for sale to others in the ordinary course of the seller's business, plus a substantial beginning of manufacture or commitments for procurement. The logo press is a qualifying commitment. But Marisol sold 100 boxes at a farmers' market, which gives the bistro an argument that the goods were suitable for resale. Her response is that they were suitable only as distressed inventory, not in the ordinary course of her custom-logo business. That is the closest judgment call in the case.
2. What is the legal effect of the new owner's email, and what remedies are available to Marisol?
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The email is an anticipatory repudiation under § 2-610. It is positive, definite, and made before the time for performance, and it indicates the bistro will not perform. Marisol may await performance for a commercially reasonable time, resort to any remedy for breach, or suspend her own performance. She chose to suspend and stop.
Remedies. The default measure for a seller is § 2-708(1), the contract price minus market price at the time and place of tender, plus incidental damages, minus expenses saved. Alternatively, § 2-706 resale damages apply if the resale was commercially reasonable. If Marisol is a lost-volume seller, § 2-708(2) permits lost profits because she could have made and sold other boxes in the bistro's place; her capacity constraints and custom press may support that characterization.
Incidental and reliance costs. The packaging is an incidental damage under § 2-710. The $9,000 press is a capital asset, not automatically recoverable; it is recoverable only to the extent it was incurred in reliance and cannot be redeployed for other business.
Mitigation. Section 2-704(2) permits a seller to complete goods in process when reasonable to avoid loss. The 250 boxes were already in production, so finishing them was reasonable if it reduced loss. The $12 resale reduces the deficiency, but Marisol need not credit the bistro beyond the actual proceeds.
No impracticability. The new owner's 'different direction' is a business decision, not an unforeseeable event under § 2-615.
3. Could the bistro argue that no contract was ever formed, either because the agreement was oral or because the terms were too indefinite?
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No on both counts.
Oral formation. Section 2-204 provides that a contract for sale may be made in any manner sufficient to show agreement, including conduct by both parties that recognizes the existence of a contract. The telephone call plus the confirming text and Marisol's purchase of the press establish agreement.
Indefiniteness. Under the UCC, the only essential term is quantity. Here quantity is certain: 300 boxes per month for 12 months. Price is fixed at $18, delivery is on the first of each month, and the goods are identified. Even if a term were missing, § 2-305 supplies a reasonable price and § 2-309 supplies a reasonable time. The common-law 'mirror image' rule does not apply, and the UCC tolerates open terms so long as the parties intended to contract and there is a reasonably certain basis for a remedy.
Practical point. The bistro's own manager sent the confirmation, and the bistro accepted four months of deliveries and paid for them. That course of dealing and course of performance would independently support formation and would also inform the meaning of any ambiguous term.