Buckeye Lake Lodge was interested in acquiring an assortment of items to sell in its gift shop as souvenirs. It's owners hoped that through such sales it would be able to make a small profit, but more importantly, that it would be able to publicize the Buckeye Lake Lodge through distribution of T-Shirts, coffee cups, ashtrays, and posters, containing pictures of the Lodge and bearing its logo, a large buckeye floating on the lake.
On February 1, 1987, and in pursuit of this goal Buckeye sent a letter to a half-dozen firms that Lotta Kitsch owner of the Lodge, thought might be interested in manufacturing these items. The letter was as follows:
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Buckeye Lake Lodge Buckeye Lake, OH Dear Sirs:
The owners of Buckeye Lake Lodge are
interested in acquiring an assortment of T-shirts, coffee
cups, ashtrays, and posters, containing pictures of the
Lodge or bearing our logo, both of which are attached
hereto. Please send us a quote your prices for these items
and an indication of how much time it would take for you to
deliver them to us after receipt of any order we might
make. Thank you very much for your help! /s/ Lotta Kitsch |
Upon receipt of this letter, on February 4, 1987 Harry Stone, president and manager of the Central State Novelty Company, sent the following to Lotta at Buckeye Lake Lodge, in the form of a personal letter:
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Central State Novelty Co.
111 Downtown Street
Center City, OH
February 4, 1987 Dear Ms. Kitsch, Thank you for your inquiry. I am able to make available to you, through Central State Novelty Co. items of the type you are interested in at the following prices:
These items will be made available to you within 3 weeks of receipt of your order, upon approval by me, according to the additional terms contained on the attached information sheet. Thank you again for your inquiry, and I look forward to the opportunity to fill your order for any of the above items. Very truly yours, /s/Harry Stone President, Central State Novelty Co. |
The form attached to the letter contained the following:
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1. All goods sold are expressly warranted
to be free from defect. Seller disclaims all implied
warranties of MERCHANTABILITY and fitness for particular
purpose. Seller agrees to repair or replace goods found to
be defective, provided seller is notified of such defect
within 10 days of buyer's receipt of goods sold to buyer.
Seller shall not be liable for any incidental or
consequential damages resulting from any defect in goods
delivered under this contract. The remedy of repair or
replacement in this contract is the exclusive remedy for any
defect discovered and reported to seller in a timely
fashion. 2. Buyer must pay for all goods upon
receipt. 3. Buyer is responsible for insuring
goods during transit between Seller's warehouse and Buyer's
place of business. Buyer shall pay for any goods lost or
destroyed while in shipment to Buyer. |
The letter and accompanying form were mailed on February 4, 1987 and received, by Buckeye Lake Lodge on February 8, 1987. On that date Lotta, read the letter from Central State, and decided to place an order for T-Shirts, Coffee Cups, Ash Trays, and Posters. Lotta therefore sent the following letter to Central State:
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Buckeye Lake Lodge Buckeye Lake, OH Thank you for your letter of February 4.
We are pleased to accept your offer to manufacture and sell
us the following:
This will make the total price $11,150 as indicated below:
Total: = $11,150 We will be glad to pay this amount upon receipt of these items from you. I am not sure what you mean by incidental
and consequential damages, but we will, of course, expect to
hold your firm responsible for any losses we might incur
because of defects in your products. I can't, however,
imagine how a defective T-Shirt or Coffee Cup could cause
any harm to anyone. Thank you again for helping us promote
Buckeye Lake Lodge. We would be pleased to have you stay
with us, sometime, as our guests, if you want a nice weekend
on beautiful Buckeye Lake. Very truly yours, /s/ Lotta Kitsch Buckeye Lake Lodge |
This letter was received by Central State on
February 10. The next day, February 11, Central ordered the necessary
blank T-Shirts, Coffee Cups, Ash Trays, and Poster Blanks for use in
filling Buckeye Lodge's order. These materials were obtained, from a
local supplier at the following cost:
When the materials arrived a few days later,
Central State began work immediately. A week later, on February 20,
Central was a little over 1/2 done with the job, having finished the
300 T-Shirts containing the picture of the Lodge; 500 of the coffee
cups; 250 of the ash trays; and the 500 posters which were to contain
the Lodge Logo.
That day, February 20, Central State received the following letter from Buckeye Lake Lodge:
Dear Harry, I am very sorry, but we have decided not
to go ahead, at this time, with our plans to sell the
Buckeye Lake Lodge souvenirs that we ordered from you a few
weeks ago. I was beginning to get worried when I hadn't
heard back from you about whether you had approved our
order, and then, after thinking about it some more, decided
that we had best wait until next year or so before making
such a big financial commitment. I hope this has not inconvenienced you in
any way, but since I had not received anything back from you
I am confident that there will be no problem. I will be in touch with your firm in the future if we decide to go through with this at some other time.
Very truly yours, s/ Lotta Kitsch Buckeye Lake Lodge |
Upon reading this letter, Harry became most upset!
He immediately called Lotta, and without letting her get a word in
edgewise, told her that they had already begun working on the
T-Shirts, Coffee Cups, Ash Trays, and Posters, and that Central State
would expect Buckeye to pay for everything when it was
done.
When he cooled down, however, Harry realized that it made more sense to divert the remaining blank T-Shirts, Coffee Cups, Ashtrays, and Poster materials to other jobs for different customers. In addition, he found someone willing to buy the already completed T-Shirts for use as rags. The 300 T-Shirts were thus sold for a total of $75 or 25 cents each. Unfortunately, he was unable to find anyone willing to buy the already completed coffee cups, ash trays, or Posters.
ASSUME THAT YOU ARE THE LAW CLERK FOR THE TRIAL
JUDGE THAT HAS JUST HEARD THIS CASE ON THESE STIPULATED FACTS.
PREPARE AN OPINION FOR HER TO ISSUE, CONTAINING A FULL EXPLANATION OF
THE RELEVANT LEGAL ISSUES. THIS OPINION SHOULD INCLUDE ANY ARGUMENTS
THAT MIGHT REASONABLY BE MADE ON BEHALF OF BOTH PARTIES, A CLEAR
INDICATION OF HOW EACH SUCH ISSUE SHOULD BE RESOLVED, AND
WHY.