- 9209-06143 CA A81171
- Court of Appeals of Oregon
- GPL Treatment Ltd. v. Lousiana Pacific Corporation
STATUTE OF FRAUDS - REPLACED BY ART. 11 CISG
A Canadian seller of wood products sued a US buyer for breach of contract. The defendant contended that the alleged sales contract failed to comply with Uniform Commercial Code Statute of Frauds, since the printed confirmation of order that the plaintiff allegedly sent to the defendant was not sufficient to constitute written confirmation of the prior oral contract in accordance with UCC 2.201(2).
The trial Court dismissed this argument and entered judgment for the seller. The Court of Appeals affirmed with one judge dissenting. According to the dissenting opinion, however, while the seller's confirmation of order did not satisfy Statute of Frauds under the Uniform Commercial Code, if - as might have been the case - CISG were applicable to the sales contract at hand, buyer's statute of frauds defense would have been defeated since Art. 11 CISG does not require a contract to be 'evidenced in writing'.
De MUNIZ, Judge.
Plaintiffs are three separate wood products corporations owned and operated by members of the Clarke family, in British Columbia, Canada. Plaintiffs sued Louisiana-Pacific Corporation (L-P) to recover lost profits on alleged agreements by plaintiffs to sell 88 truckloads of cedar shakes to L-P. The jury returned a verdict for plaintiffs for the maximum amount of each plaintiff's prayer, and L-P appeals.
In its third assignment of error, L-P contends that the trial court erred in denying its motions in limine and for a directed verdict on the ground that the alleged contract for the sale of shakes fails for noncompliance with Oregon's Uniform Commercial Code Statute of Frauds. Specifically, the motions sought to exclude evidence of the written order confirmations that plaintiffs allegedly sent to L-P.
ORS 72.2010 provides, in relevant part:
'(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by the authorized agent or broker of the party. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subsection beyond the quantity of goods shown in such writing.
'(2) Between merchants, if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) of this section against such party unless written notice of objection to its contents is given within 10 days after it is received.' (Emphasis supplied.).
Under subsection (2), the 'merchant's exception' to the Uniform Commercial Code Statute of Frauds applies, when both parties to the transaction are merchants, if one merchant receives written confirmation of an oral contract from another merchant 'sufficient against the sender,' the contract becomes enforceable unless the recipient objects within 10 days. L-P argued to the trial court, and argues on appeal, that the order confirmations that plaintiffs allegedly sent to L-P are inadmissible as proof of the agreements and in satisfaction of the Statute of Frauds, because, as a matter of law, they are insufficient under ORS 72.2010 to constitute written confirmations of the contracts. The trial court held, as a matter of the law9 that the documents were confirmations. The court submitted to the jury the factual questions of whether the confirmations were received by L-P, whether L-P knew their contents and whether L-P sent written notice of objection to plaintiffs. The assignment of error relates only to the trial court's ruling concerning the legal effect of the documents, i.e., that they are, as a matter of law, sufficient to constitute 'confirmations under ORS 72.2010.
The printed order confirmation forms consist of four pages, one original page and three copies. The original and first copy are sent to the buyer. Those two pages are, for the most part, identical. At the top left of both, in large print, is the name and address of the selling company. At the top right are boxes for the date and the seller's order number. Directly underneath those boxes, in large bold print, are the words 'ORDER CONFIRMATION.' The form contains two address blocks of three single-spaced lines each, encaptioned 'SOLD TO' and 'SHIP TO.' Underneath those address blocks are three slim, long boxes of one line each for shipping instructions, terms of payment and the customer number. The largest part of the form, filling approximately one half the page, is for a description of the product, with a place to note FOB mill, freight and delivery price. At the bottom right of the form is the name of the selling company, and underneath it a signature line following the word 'BY.' Underneath that line are the words 'THANK YOU. '
The original and first copy differ in one respect. At the bottom left of the original, in small print, are the words:
CONDITIONS OF SALES;
All orders accepted subject to strikes, labor troubles, car shortages or other contingencies beyond our power to control. Any freight rate increases, sales or use taxes is for buyers account.
Then, beneath that block, in smaller print but highlighted, are the words: 'SIGN CONFIRMATION COPY AND RETURN.' At the bottom left of the first copy, the 'confirmation copy,' in small print, are the words: 'ORDER ACCEPTED BY:,' followed by a line for firm name. Below that is a line for a signature and the title of the person signing, and the date.
L-P concedes that the documents contain all the elements necessary to confirm an order. However, L-P contends that, by instructing the buyer to sign the confirmation copy on the 'order accepted by' line and return that copy to plaintiffs, plaintiffs have indicated an intention that the agreement is to become final only after L-P's approval of the quoted terms.
Considering the document in its entirety, we conclude that it cannot reasonably be read as L-P suggests. The form is captioned 'ORDER CONFIRMATION,' boldly and in large print. Unlike the forms involved in the cases relied on by the dissent, see, e.g., Great Western Sugar Co. v. Lone Star Donut Co., 567 F.Supp. 340 (N.D.Tex.), aff'd 721 F.2d 510 (5th Cir.1983); Kline Iron & Steel Co., Inc. v. Gray Com. Consultants, Inc., 715 F.Supp. 135 (D.S.C.1989), there is no language on this form, either on the original or the first copy, indicating that the parties are in the course of negotiations, that plaintiffs are merely proposing terms or that L-P must approve the terms. Every feature of the form suggests that it is what it is labeled, a confirmation and not a mere offer. We conclude that the sign and return instruction does not later the apparent purpose of the document, to confirm in writing a completed agreement for the sale of shakes. [FN4 omitted] The trial court did not err in denying L-P's motions in limine and for a directed verdict.
LEESON, Judge, dissenting.
I disagree with the majority's conclusion that the documents allegedly sent by plaintiffs to L-P were sufficient to satisfy the UCC Statute of Frauds. The majority's opinion is at odds with courts from other jurisdictions that have ruled on facts similar to those in this case. Regrettably, it creates an 'Oregon exception' to the uniformity that is one of the underlying purposes of the UCC. See ORS 71.1020(2)(c).
ORS 72.2010 is a verbatim enactment of the Statute of Frauds in Article 2 of the UCC. The official commentary to UCC 2-201 indicates that the writing need not be a complete memorial of the contract, as long as it affords a sufficient basis for believing that a contract has been made. Tripp v. Pay `N Pak Stores, Inc., 268 Or. 1, 5, 518 P.2d 1298 (1974). ORS 72.2010(2) eliminates the signature requirement when both parties are 'merchants.' [FN1 omitted] The official commentary explains that failure to answer a written confirmation within 10 days makes the writing sufficient against both parties under subsection (1). Under both subsections (1) and (2), the writing must evidence the existence of an agreement between the parties. Failure to respond to a merchant's confirming memorandum takes away from the nonresponding merchant the Statute of Frauds defense. To ultimately prevail, however, the sender still must show that an oral contract was in fact made prior to the confirming memorandum. Here, it is not necessary to reach the issue of whether an oral contract was formed between the parties, because that contract would be unenforceable absent satisfaction of the Statute of Frauds. UCC section 2-201, comment 3.
The question of whether a writing satisfies the Statute of Frauds is a matter of law, to be determined from an examination of the writing itself. [FN2 omitted] R.S. Bennett & Co. v. Economy Mech. Industries, 606 F.2d 182, 186 n. 4 (7th Cir.1979); Howard Const. Co. v. JeffCole Quarries, Inc., 669 S.W.2d 221, 230 (Mo.App.1983); Bazak Intl Corp v. Mast Indus, 73 N.Y.2d 113, 118, 538 N.Y.S.2d 503, 505, 535 N.E.2d 633, 635 (1989); Adams v. Petrade Intern., Inc., 754 S.W.2d 696, 705 (Tex.App.1988). That a writing labels itself a 'confirmation' is not determinative of whether it satisfies the merchants' exception. Adams, 754 S.W.2d at 706. Cases from other jurisdictions have directly addressed the use of a sign-and-return clause in a document that purports to be a 'confirmation' under UCC section 2-201(2).
Despite being labeled 'ORDER CONFIRMATION,' plaintiffs' forms unambiguously require L-P to sign and return a 'confirmation copy' on which it has signified its acceptance. That language indicates that plaintiffs were seeking agreement from L-P in order to form a contract, rather than merely providing confirmation to L-P of a previously concluded oral agreement. The forms require further action by L-P. Consistent with the rule in Great Western Sugar, I would hold that the writings offered by plaintiffs were merely offers to L-P to enter into a contract, and not a confirmation of a prior oral contract between them.
I would reverse the trial court's ruling that plaintiffs' forms constitute 'writings in confirmation of a contract' under ORS 72.2010(2). Therefore, I would not reach the issues of lost profits and waiver of attorney-client privilege. [FN4]
FN4. I would, however, address plaintiffs' cross-assignment that the trial court erred in refusing to apply the United Nations Convention on Contracts for the International Sale of Goods (CISG), 15 U.S.C.A.App. (Supp.1994), instead of the UCC. Article 11 of the CISG does not require a contract to be 'evidenced by writing' and, thus, would defeat L-P's statute of frauds defense if the trial court abused its discretion under ORCP 23 B in ruling that plaintiffs' attempt to raise the CISG was untimely and that they had waived reliance on that theory.
Published in English:
- 133 Or. App. 633
- 894 P.2d 470
Commented on by:
- H.M. Flechtner, Another CISG Case in the U.S. Courts: Pitfalls for the Practitioner and the Potential for Regionalized Interpretations, 15 Journal of Law and Commerce 127-138 (1995)
- Supreme Court of Oregon, 11-04-1996, GPL Treatment Ltd. v. Louisiana-Pacific Corp., 914 Pacific Reports (2d Series), 682
(no mention of CISG)}}