Bazak International Corp. v. Mast Industries, Inc.
73 N.Y.2d 113, 535 N.E.2d 633, 538 N.Y.S.2d 503 (1989)
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Rule of Law:
Under the Uniform Commercial Code's merchant's exception (UCC § 2-201(2)), a writing sent in confirmation of a prior oral contract does not require express words of confirmation. It is sufficient if it affords a basis for believing that the offered oral evidence rests on a real transaction between the parties.
Facts:
- On April 22, 1987, Karen Fedorko of Mast Industries met with Tuvia Feldman of Bazak International to negotiate the sale of textiles.
- The following day, April 23, 1987, Fedorko and Feldman reached an oral agreement on all terms, including a price of $103,330.
- Fedorko told Feldman that invoices for the goods would be sent and the textiles would be delivered shortly, but they were not.
- On April 30, 1987, from the offices of Mast's parent company, Feldman telecopied five of Bazak's purchase order forms to Mast.
- The purchase orders were dated April 23, contained highly specific terms (quantity, description, price), and included the handwritten notation 'As prisented [sic] by Karen Fedorko.'
- The forms, which were signed by Bazak, contained pre-printed language stating: 'This is only an offer and not a contract unless accepted in writing by the seller.'
- Mast received the purchase orders but never delivered the textiles and did not provide a written notice of objection within 10 days.
Procedural Posture:
- Bazak International Corp. (plaintiff) sued Mast Industries, Inc. (defendant) in New York Supreme Court (trial court) for breach of contract and fraud.
- Mast moved to dismiss the complaint, asserting a Statute of Frauds defense under UCC § 2-201.
- The Supreme Court denied Mast's motion to dismiss.
- Mast appealed to the Appellate Division of the Supreme Court (intermediate appellate court).
- The Appellate Division reversed the trial court's order and granted the motion to dismiss, holding the breach of contract claim was barred by the Statute of Frauds.
- Bazak (appellant) appealed the dismissal to the New York Court of Appeals (the state's highest court).
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Issue:
Do purchase orders sent by a buyer to a seller after an alleged oral agreement, which the seller receives and retains without objection, satisfy the 'merchant's exception' to the UCC Statute of Frauds (UCC § 2-201(2)) even if the forms contain boilerplate language stating they are 'only an offer'?
Opinions:
Majority - Kaye, J.
Yes. The purchase orders satisfy the merchant's exception to the Statute of Frauds. A writing need not contain explicit words of confirmation to fall within UCC § 2-201(2); rather, the standard is whether the writing affords a basis for believing that the oral evidence rests on a real transaction. Here, the purchase orders, taken as a whole, meet this standard. The handwritten notations referencing Mast's agent, the highly specific terms, and the fact that Mast's own parent company facilitated the transmission all indicate that the forms were sent to confirm a pre-existing agreement. The boilerplate 'offer' language was irrelevant to the dealings between these parties, as it was part of a form Bazak typically used as a seller, not a buyer. Mast's failure to object in writing within 10 days of receipt removes the Statute of Frauds as a defense, allowing Bazak the opportunity to prove the existence and terms of the oral contract at trial.
Dissenting - Alexander, J.
No. The purchase orders do not satisfy the merchant's exception because they are not 'sufficient against the sender' under UCC § 2-201(1) to indicate that a contract has been made. The writings expressly state, 'this is only an offer and not a contract,' which negates any inference that a binding agreement had been reached. Disregarding this plain language is improper. At best, the documents are ambiguous and do not make it more probable than not that a contract existed. Holding these ambiguous writings sufficient weakens the Statute of Frauds' protection against fraudulent claims and unfairly burdens receiving merchants by forcing them to object to documents that appear to be mere offers.
Analysis:
This decision adopts a liberal, commercially practical interpretation of the UCC's merchant's exception, rejecting a formalistic requirement for 'magic words' of confirmation. It establishes that courts should look at the totality of the writing and its context to determine if it indicates a 'real transaction,' even in the face of contradictory boilerplate language. The ruling lowers the threshold for a writing to satisfy the Statute of Frauds between merchants, thereby allowing more claims based on oral agreements to survive dismissal. Consequently, it places a greater burden on merchants to be vigilant and promptly object in writing to any document that could be construed as confirming a contract, lest they lose the Statute of Frauds defense.
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