Procedural Posture

Plaintiff, a manufacturer, appealed a judgment for defendant, a buyer, from the Superior Court of El Dorado County (California) in plaintiff’s action seeking damages for the breach of an unwritten sales contract pursuant to Cal. Com. Code § 2201.

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Overview

Plaintiff and defendant entered negotiations for a prospective contract that would provide for the sale of merchandise. The merchandise was to be constructed according to defendant’s specifications. The parties also discussed proposed sales prices at length, and in the meantime, plaintiff began ordering the merchandise. Defendant later withdrew from the negotiations, declining to sign any contractual agreement. Plaintiff thereafter brought an action for damages. Although the lower court recognized the existence of a definite agreement, it rejected enforcement and instead ruled in defendant’s favor because of the parties’ failure to sign a written contract. The appeals court reversed the judgment and remanded for a determination of damages. Although Cal. Com. Code § 2201 required a written contract for sales of goods exceeding $ 500, an exception applied to circumstances such as in the instant case where goods were manufactured specifically for the buyer. The merchandise to be supplied by plaintiff was of unusual size and could not be re-sold in the ordinary course of plaintiff’s business.

Outcome

The court reversed the judgment and remanded the case for a determination of damages and plaintiff’s loss resulting from defendant’s breach of an oral sales contract. Although generally a written contract was required for sales of goods exceeding $ 500, an exception applied to circumstances where goods were manufactured specifically for the buyer.