Case: Corinthian Pharmaceutical Systems, Inc v Lederle Laboratories (1989)

pp291-295

Facts: Defendant Lederle Laboratories makes DTP vaccine and Plaintiff regularly
buys and distributes this vaccine. Lederle decided to self insure in 1986, and
increased the price of the vaccine to cover those costs. Lederle was going to
notify its customers of the price increase on May 20, but the Plaintiff heard of
this increase on May 19 and placed an order for 1,000 vials. After placing the
order, on the same day the Plaintiff sent two written confirmations (sent
automatically by computerized system), with each stating order is to receive
$64.32 per vial price. Lederle later sent invoice to Corinthian for 50 vials at
the lower price as an accomodation, and stated that the balance would be priced at
$171 because the price is set at the date of shipment, but as a courtesy Lederle
is offering the first 50 at the lower priced, and Corinthian can cancel the order
if they so desire. Lederle's price sheet stated that prices shown were not offers,
but merely the current prices, which may change at any time, and also says that
Lederle has the power to accept any offers buyers may request.

Issue: Whether Lederle agreed to sell Corinthian 1,000 vials at $64.32 each.
No.

Reasoning:
· UCC§2-206(b)—a seller accepts the offer by shipping goods, whether they are
conforming or not, but if the seller ships non-conforming goods and seasonably
notifies the buyer that the shipment is a mere accommodation, the seller has not
accepted the buyer’s offer
· Whereas the notification is properly made, the shipment of nonconforming goods
is treated as a counteroffer just as in the common law and the buyer may accept of
reject the counteroffer under normal contract rules. § 2-206(b)(1) is satisfied

· When Corinthian placed the order, Corinthian received a tracking number. The
Court basically said that just because a computer said it was accepted does not
mean it was accepted. This is no longer true today, and electronic agents today
can give acceptance. But during the time of this case, electronic agent acceptance
was not valid.
· The UCC throws around the term “nonconforming goods.” The shipment of non-
conforming goods is not acceptance if the seller seasonably notifies the buyer
that the shipment is only an accommodation, and it is not intended to be
acceptance.
· Further clarification of §2-206(b): When someone fills out an order form or
makes an order—and you can think of orders as offers for buyers—and that order
calls for prompt shipment, one way to accept that type of order/offer is to say “I
promise to ship it.” The other way to accept the order/offer is to ship the
goods/perform. If you fully perform, exactly to the specification of the order,
the UCC calls that the delivery of conforming goods. But if you begin performing
through nonconforming goods, it does not count as acceptance if the deliverer of
the goods notifies the buyer that the delivery of these nonconforming goods is an
accommodation, it is not intended to be acceptance. That is how Corinthian and
Lederle fit under the rule.
· UCC § 2-206 are the rules that talk about how acceptances operate under the UCC.
It states that an offer should be construed to confer acceptance in any medium
that is reasonable under the circumstances
Emmanuel
· Accommodation shipment: If the seller is "accommodating" the buyer by
shipping what the seller knows and says are non-conforming goods, this does not
act as an acceptance. In this "accommodation shipment" situation, the seller is
making a counter-offer, which the buyer can then either accept or reject. If the
buyer accepts, there is a contract for the quantity and type of goods actually
sent by the seller, not for those originally ordered by the buyer. If the buyer
rejects, he can send back the goods. In any event, seller will not be found to be
in breach.

RULE: The shipment of non-conforming goods is not acceptance if the seller

seasonably notifies the buyer that the shipment is only an accommodation, and it
is not intended to be acceptance.

Notes

Self-insurance - you will set aside an amount of money, that if you are sued,
lawsuits will be paid from these funds, up to a certain amount.

Under UCC 2-206, this is a shipment of non-conforming goods because price and
quantity doesn’t match the original offer. Court believes this is an accommodation
because Lederle says they decided to make an exception for customer relations
reasons, this was made as a favor, it was not the usual way they do business. An
exception to their general policy. If buyer didn’t want the additional vials at
the increased price, they could cancel the order.

§ 2-206. Offer and Acceptance in Formation of Contract.

(1) Unless otherwise unambiguously indicated by the language or circumstances
(a) an offer to make a contract shall be construed as inviting acceptance in any
manner and by any medium reasonable in the circumstances:
(b) an order or other offer to buy goods for prompt or current shipment shall be
construed as inviting acceptance either by a prompt promise to ship or by the
prompt or current shipment of conforming or nonconforming goods, but the shipment
of nonconforming goods is not an acceptance if the seller seasonably notifies the
buyer that the shipment is offered only as an accommodation to the buyer.
(2) If the beginning of a requested performance is a reasonable mode of
acceptance, an offeror that is not notified of acceptance within a reasonable time
may treat the offer as having lapsed before acceptance.
(3) A definite and seasonable expression of acceptance in a record operates as an
acceptance even if it contains terms additional to or different from the offer.

§ 2-207. Terms of Contract; Effect of Confirmation.

Subject to Section 2-202, if (i) conduct by both parties recognizes the existence
of a contract although their records do not otherwise establish a contract, (ii) a
contract is formed by an offer and acceptance, or (iii) a contract formed in any
manner is confirmed by a record that contains terms additional to or different
from those in the contract being confirmed, the terms of the contract are:
(a) terms that appear in the records of both parties;
(b) terms, whether in a record or not, to which both parties agree; and
(c) terms supplied or incorporated under any provision of this Act.

If some form is different still ok (doesn’t have to be "mirror-image"). But if

major deviation from what agreed to, then its a counteroffer.