Azevedo v. Minister
7 U.C.C. Rep. Serv. (West) 1281, 86 Nev. 576, 471 P.2d 661 (1970)
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Rule of Law:
Under the Uniform Commercial Code's merchant's exception to the Statute of Frauds, a written confirmation of a prior oral agreement is sufficient to create an enforceable contract if it is sent within a reasonable time and the recipient, who has reason to know its contents, does not object in writing within 10 days.
Facts:
- J. L. Azevedo, a licensed hay buyer, and Bolton F. Minister, a hay rancher, are both merchants in the hay business.
- In early November 1967, Azevedo and Minister reached an oral agreement by telephone for Azevedo to purchase hay.
- The parties agreed on a price of $26.50 per ton for the first and second cuttings and $28 per ton for the third cutting.
- Minister claims the agreement was for 1,500 tons of hay, while Azevedo contends no specific quantity was agreed upon.
- Shortly after the call, Azevedo deposited $20,000 into an escrow account and began hauling hay from Minister's ranch.
- Minister sent Azevedo periodic accountings, and on January 21, 1968, sent one that stated, "there remains approximately 16,600 bales of hay yet to be hauled on your purchase."
- Azevedo did not object to the January 21 accounting; instead, he deposited an additional $3,000 into the escrow account and continued hauling hay.
- In late March 1968, after the escrow funds were depleted, Azevedo refused to purchase any more hay.
Procedural Posture:
- Minister (Plaintiff) filed a lawsuit against Azevedo (Defendant) in Nevada district court to enforce the oral agreement.
- The district judge, as the trier of fact, found in favor of Minister, ruling that the requirements of NRS 104.2201(2) had been satisfied and the oral agreement was enforceable.
- A judgment was entered for Minister.
- Azevedo (Appellant) appealed the district court's judgment to the Supreme Court of Nevada.
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Issue:
Does a seller's periodic accounting document, sent ten weeks after an oral agreement, qualify as a written confirmation between merchants under UCC § 2-201(2), thereby satisfying the Statute of Frauds, if the buyer does not object?
Opinions:
Majority - Mowbray, J.
Yes, a seller's periodic accounting document can qualify as a written confirmation satisfying the Statute of Frauds under the UCC's merchant's exception. The UCC § 2-201(2) only requires that the writing provide a basis for believing that the oral evidence rests on a real transaction; it does not need to be a formal contract. Here, the accounting from January 21, which referenced the "balance of the hay" on Azevedo's "purchase," was sufficient to confirm the pre-existing oral agreement. Azevedo's failure to object within 10 days, coupled with his subsequent deposit of more funds, bound him to the agreement. Furthermore, the ten-week delay in sending the confirmation was reasonable given the nature, purpose, and circumstances of the transaction, which included the parties' ongoing performance since the agreement was made.
Analysis:
This case clarifies the application of the UCC's merchant's exception (UCC § 2-201(2)) to the Statute of Frauds. It establishes that informal business documents, like accountings, can serve as a 'writing in confirmation' so long as they indicate the existence of a prior contract. The decision emphasizes a flexible, context-dependent standard for determining what constitutes a 'reasonable time' for sending such a confirmation, looking to the parties' course of performance. This ruling reinforces the UCC's intent to align commercial law with modern business practices and prevent merchants from using the Statute of Frauds as a technicality to escape legitimate oral agreements, particularly when market prices change.
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