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SIMMONS OIL CORP. v. BULK SALES CORP.

September 3, 1980

SIMMONS OIL CORPORATION, Plaintiffs,
v.
BULK SALES CORPORATION, Defendant



The opinion of the court was delivered by: LACEY

This is a breach-of-contract action brought by Simmons Oil Corporation (Simmons), an Arizona corporation, against Bulk Sales Corporation (Bulk Sales), a New Jersey corporation. Jurisdiction is based on diversity. 28 U.S.C. § 1332(a) and (c) (1976). Defendant moves to dismiss the complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6), because of plaintiff's alleged failure to comply with the New Jersey statute of frauds. 12A N.J.Stat.Ann. § 2-201 (West 1962).

The complaint charges that on May 25, 1979, Simmons and Bulk Sales concluded an oral sales contract under which Simmons agreed to sell and Bulk Sales agreed to buy 25,000 barrels of leaded, regular-grade gasoline at a price of $ 1.22 per gallon. Complaint P 8. In addition, at the time of contracting the parties agreed to memorialize the contract by exchanging telex messages the next working day, May 29, 1979. In accordance with this agreement, on May 29 Simmons sent a confirming telex to Bulk Sales setting forth the terms of the contract. Complaint P 9; see Exhibit A, attached to Complaint. The following day, May 30, Bulk Sales sent Simmons a telex message that referred to Simmons' confirmation and proposed revision of the payment terms, describing those terms as "not acceptable." Complaint P 11; see Exhibit B, attached to Complaint. Following Simmons' receipt of the Bulk Sales telex, representatives of both parties discussed the payment terms and attempted to resolve them. Complaint P 12. On June 1, 1979, Simmons sent a second telex to Bulk Sales, agreeing to the barge-delivery payment term proposed in the Bulk Sales telex of May 30, but again requesting, in the event of a book transfer, Bulk Sales' agreement to the terms of the Simmons telex of May 29. Id.; see Exhibit C, attached to Complaint. At this point, apparently, Bulk Sales remained silent. On June 22, 1979, when Simmons contacted Bulk Sales to determine when Bulk Sales intended to nominate barges to accept delivery of the purchased gasoline, Bulk Sales told Simmons that it did not recognize any binding contract. Complaint P 13.

 Simmons continued sending telexes. In a June 22, 1979, telex from Simmons to Bulk Sales, Simmons recounted the history of the sales transaction, offered to assist Bulk Sales in arranging a barge nomination or book transfer, and requested timely notification of Bulk Sales' barge nomination. Complaint P 14. Then on June 25, 1979, Simmons sent a telex message to Bulk Sales advising it that given the approaching "lift gate" deadline of June 28, 1979, and Bulk Sales' continued refusal to nominate barges to accept delivery, Simmons would be forced to protect itself by offering the gasoline for sale at its current market value unless promptly notified by Bulk Sales of its intention to honor its alleged purchase agreement. See Complaint P 15.

 On July 3, 1979, Simmons sold the gasoline that it alleges Bulk Sales had agreed to buy at $ 1.22 per gallon to Amerada Hess Corporation at the "then prevailing market price" of $ 0.90 per gallon.

 Plaintiff seeks damages for breach of the alleged contract of May 29, these damages to include the difference between the contract price and cover price, together with interest, "various incidental expenses as allowed by law," "such equitable relief as necessary to prevent injustice," and costs and attorneys' fees.

 As indicated, defendant argues in support of its motion to dismiss that even if there were an oral contract formed on May 29, 1979, that contract is not enforceable under the New Jersey statute of frauds, 12A N.J. Stat.Ann. § 2-201 (West 1962). For the reasons set forth below, however, defendant's motion will be denied.

 DISCUSSION

 The New Jersey statute of frauds provides:

 
12A:2-201. Formal Requirements; Statute of Frauds.
 
(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $ 500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.
 
(2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within ten days after it is received.
 
(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable
 
(a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a ...

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