Cloud Corp. v. Hasbro, Inc.

314 F.3d 289 (7th Cir. 2002)

 

RULE:

The sender's name on an e-mail satisfies the signature requirement of the statute of frauds.

FACTS:

The purchaser acquired a powder made by the seller for use in a toy sold by the purchaser. Mistakenly believing that the purchaser's market was expanding, the seller manufactured a great many packets of powder in advance of receiving formal purchase orders from the purchaser. The seller sent an order acknowledgment to the purchaser for the original order, including additional packages. The purchaser received the acknowledgment orders but did not respond to it explicitly. However, it appears that an employee of the buyer had email exchanges and even spoke on the phone with the purchaser regarding delivery dates, quantities to be delivered on those dates. The emails also contained numbers that correspond with the seller’s order numbers along with a memorandum written and signed by seller’s employee. The purchaser refused to accept delivery of these excess packets or to pay for them. Contending that this refusal was a breach of contract, the seller sued the purchaser.

ISSUE:

Can emails modify the quantity specifications of the purchase orders even if they contained no signature as required under the statute of frauds?

ANSWER:

Yes.

CONCLUSION:

The court held that there was a valid modification of the quantity specifications in purchase orders submitted by the purchaser. Although purchase orders could not be modified without the purchaser's written consent, emails and other correspondence between the seller and the purchaser indicated that the purchaser wanted an increased quantity. The purchaser did not object within 10 days after the seller sent an acknowledgement of the oral modification. The purchaser's statute of frauds defense failed, and in any event, the seller was reasonable in believing that if the purchaser did not want to be committed to buying the additional quantity, it would so advise the seller, thereby waiving the requirement that modifications be in writing.

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