Did Seton’s memorandum create a contract under the merchant exception?

General Motors hired Lear Corporation to supply all of the leather seats for its trucks and SUVs. In October 1998, Lear reached an agreement with Seton Company to provide Lear with the actual cut-to-pattern leather, which Lear would then assemble. Seton agreed to give Lear certain rebates based on the size of the orders. Despite the great value of this contract, the parties initially put nothing in writing. (Later in life, if you negotiate a multimillion dollar deal and fail to put it in writing, your grade in this course will be retroactively lowered!)
Both parties performed the contract satisfactorily for about a year. Then they agreed to a slight modification in the rebates. All was still well. In the fall of 1999, Lear asked Seton to send a written summary of the agreement, including the modified rebates. In November 1999, Seton sent a one-page memorandum to Lear, summarizing the agreement. It stated: “Lear is to award Seton the entire [truck and SUV program] cut-to-pattern business for the life of the program.” The letter ended with a request that Lear “kindly return with acknowledgment signature,” but Lear did not do so.
For two more years, the parties worked together amicably. Then Seton became anxious that Lear was planning to take its business elsewhere. In January 2002, Seton sent a letter requesting that Lear affirm its commitment to deal exclusively with Seton for the life of the GMC program. Lear responded that there had never been any such agreement. Seton filed suit.
At trial, Lear claimed that no contract had ever been signed. Seton replied that its memo summarizing the agreement created a valid contract under the “merchant exception” rule. The jury agreed with Seton and awarded the company $34 million. Lear appealed.