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Trilco Terminal v. Prebilt Corp.

Decided: March 23, 1979.


Haines, J.s.c.


This is a breach of contract action between merchants. See N.J.S.A. 12A:2-104(1). Plaintiff claims that it entered into four oral agreements with defendant, each for the purchase and sale of goods at a price exceeding $500. Since it is alleged that not all the ordered merchandise was delivered pursuant to any one of these contracts, plaintiff seeks to recover damages for loss of business, loss of good will and injury to reputation.

The oral agreements were followed by written purchase orders. The orders are not identical. In addition to listing

different kinds and quantities of goods, the first three orders contain the same printed and typewritten terms while the fourth omits the typewritten terms. On the face of all four orders appears the typewritten word "CONFIRMATION" as well as the printed language "THIS ORDER NOT VALID WITHOUT RETURN ACKNOWLEDGEMENT." The only signature appearing on the orders is that of plaintiff.

Defendant has moved for summary judgment on the ground that the oral agreements are not enforceable because no writing satisfies the requirements of N.J.S.A. 12A:2-201 (1). Plaintiff does not controvert this contention, but claims that its purchase orders constituted written confirmations of the oral agreements which, under subsection 21 serve to satisfy the statute of frauds. The cause is ripe for summary judgment, for the facts with respect to this issue are not in dispute. Judson v. Peoples Bank & Trust Company of Westfield , 17 N.J. 67 (1954).

Unless appeased, the statute of frauds precludes judicial enforcement of a contract. In general, only the existence of a writing signed by the party to be obligated, which specifies a quantity and indicates "that a contract of sale has been made between the parties," surmounts the barrier to enforceability erected by the statute. See N.J.S.A. 12A:2-201(1). When the transaction is one between merchants, however, a limited exception from this general rule is carved out by N.J.S.A. 12A:2-201(2). The significance of this exception lies in the fact that it allows a writing not signed by the party against whom enforcement is sought to satisfy the statute. For this result to obtain "a writing in confirmation of the contract" and "sufficient against the sender" must have been sent within a reasonable time, and the recipient having reason to know of its contents must nevertheless not have sent written notice of objection to its contents within 10 days after receipt.

This exception is the drafters' response to problems arising under the analogous provision of the Uniform Sales Act N.J.S.A. 46:30-10(1) (repealed), which could only

be satisfied by "[a] note or memorandum in writing of the contract or sale * * * signed by the party to be charged or his agent in that behalf." Under the Sales Act an unscrupulous merchant could take advantage of the common mercantile practice of sending a written memorandum confirming the terms of an agreement. The receiver of such a memorandum could enforce the contract against the sender who signed it, while the latter had no recourse against him. Consequently, the receiver could play the market, honoring the contract or not, as it suited his economic advantage. See N.J. Study Comment para. 5, N.J.S.A. 12A:2-201; White and Summers, Uniform Commercial Code , c. 2 at 47-48 (1972).

The parties do not dispute that defendant received the purported confirmations within a reasonable time, had reason to know of their contents and lodged no objections to them. They do differ over whether the purchase orders are written confirmations of the contract, sufficient against the sender.

A writing is sufficient against the sender when it fulfills the requirements laid down in N.J.S.A. 12A:2-201(1). See White and Summers , op. cit. at 48. These are: a writing signed by the dispatching merchant, which states a quantity and is "sufficient to indicate that a contract for sale has been made between the parties". The New Jersey Study Comment views the latter requirement as satisfied when a writing "reasonably proves the existence of a contract obliging the defendant to buy or sell goods." N.J. Study Comment para. 3, N.J.S.A. 12A:2-201. The only case in this jurisdiction discussing the point, Cohn v. Fisher , 118 N.J. Super. 286, 292-295 (Law Div. 1972), involved an endorsement on a check which clearly met the above stated test. It relied, however, on the more ambiguous and possibly more relaxed language of the Uniform Commercial Code Comment to N.J.S.A. 12A:2-201(1): "All that is required is that the writing afford a basis for believing that the offered oral evidence rest on a real transaction."

To date what little case law there is has not ascribed independent significance to the "in ...

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