Assume both parties are merchants and all letters are signed by the sender.
Letter One: P sends to D a promise to buy 35 carloads of widgets. She wants a discount from the usual price of $2.00/widget to $1.50/widget. She also wants to know if she can have 10 extra carloads if she needs it. Assume the letter also clearly manifests intent to enter into a bargain.
Letter Two: D replies to P. He says "we cannot cut our price that much." He offers 35 carloads of widgets at $1.80/widget. Also states that he cannot send more than 35 carloads.
Letter Three: P relies to D. She says, "If $1.80 is the best you can do, we are inclined to take it." Also accepts the fact that she will not be able to get the 10 extra carloads. She does, however, request that all the widgets be blue.
Letter Four: D replies to P. Says blue widgets are more expensive to make and that price would be $1.85/widget.
Letter Five: P replies to D. Says she can't afford $1.85/widget, so send any colors. Also states, "Enclosed is my check for $5,000 as a down payment in token of my good faith." Facts do not state whether D signed or deposited check.
Later, P telephoned D to request her first shipment. D tells her to "go to hell" and does not send any widgets.
What are the rights and duties of each parties?
1) This is a transaction in goods, UCC applies.
2) P's first letter is the offer.
3) D's reply is a counter-offer. It is not simply "different or additional terms" prescribed by §2-207(1). The changes are material.
4) P's reply to D's counter-offer qualifies as an acceptance. She assented to price and quantity. The request for blue widgets only is allowed under §2-207(1).
5) D objected to P's request, so it does not enter contract pursuant to §2-207(2)(c).
6) P's reply is merely a confirmation of the shipment not being blue all widgets. The $5,000 payment potentially raises a part performance issue under §2-201(c). Facts are unclear, however, whether D accepted payment.
7) Conclusion: contract was entered into when P accepted D's counter-offer. Mutual assent and consideration were present, thus a contract is enforceable. Other letters were simply further negotiations between the merchants that §2-207 is designed to deal with.