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Fields & Co. v. United States Steel Int'l, Inc. - 426 F. App'x 271 (5th Cir. 2011)

Rule:

A contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. Tex. Bus. & Com. Code Ann. §§ 2.201-2.210. Generally, a price quotation, such as one appearing in a brochure or on a flyer, is not considered an offer; rather, it is typically viewed as an invitation to offer. Despite this general rule, a price quotation, if detailed enough, can constitute an offer capable of acceptance. However, to do so, it must reasonably appear from the price quote that assent to the quote is all that is needed to ripen the offer into a contract.

Facts:

United States Steel International ("USSI") was selling and marketing steel products manufactured at domestic steel mills for international sale. J.D. Fields was a steel-product distributor, serving as a conduit between manufacturers and end-users. On at least 30 occasions from 2003 through 2008, J.D. Fields entered into contracts with USSI to purchase steel products. USSI produced copied documents pertaining to its prior transactions with J.D. Fields. These documents appeared to show that, on most occasions, USSI and J.D. Fields followed a general course of dealing. This course of dealing appeared to be as follows: (i) J.D. Fields requested a price quotation from USSI, either orally or via email; (ii) USSI sent J.D. Fields a price quotation; (iii) J.D. Fields sent USSI a purchase order; (iv) USSI sent J.D. Fields an order acknowledgment; and (v) USSI shipped the product and sent J.D. Fields an invoice. J.D. Fields contested the general course of dealing, stating that USSI had an inconsistent pattern of delivering its acknowledgments. The current dispute arose out of two specific transactions stemming from a series of emails. In both transactions, it was undisputed that while USSI sent J.D. Fields a price quotation and J.D. Fields responded with a purchase order, USSI never transmitted an order acknowledgment. USSI did, however, correspond with J.D. Fields several times regarding the orders. J.D. Fields contended that the series of emails created two separate binding contracts. Specifically, J.D. Fields asserted that USSI's price quotations constituted "offers," which J.D. Fields accepted by submitting purchase orders.

Issue:

Did the price quotations constitute “offers” that would bind the seller once the other party accepts?

Answer:

No.

Conclusion:

The appellate court affirmed in part, reversed in part, and remanded the case for further proceedings. The district court held that two price quotations sent from the seller could not be construed as offers as a matter of law and, sua sponte, held that the buyer could not prove a claim of fraudulent inducement. Concerning the first of those quotations, the appellate court held that an exchange between the parties’ representatives at most showed that the buyer was considering increasing its order. There was no evidence that the buyer did so or that the parties ever agreed as to quantity. Further, by the time of the exchange, the 14-day validity period for the quote had lapsed and the seller’s representative had repeatedly told the buyer’s representative that it would need a revised purchase order, which the buyer never submitted. So the district court did not err in finding that it was unreasonable as a matter of law for the buyer to believe that the price quotation was an offer. As to the second price quotation, there were questions of material fact concerning whether the buyer could reasonably construe the price quote as an offer, so summary judgment was not appropriate, and the appellate court reversed. However, any error in the sua sponte grant of summary judgment as to the buyer’s claims of fraudulent inducement was harmless.

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