Extreme Machine manufactures machines and parts for various industries; they have an office in Youngstown, Ohio. Avery


Extreme Machine manufactures machines and parts for various industries; they have an office in Youngstown, Ohio. Avery Dennison manufactures and sells labels from a plant in Mentor, Ohio. They use roll racks to hold large rolls of paper on which the labels are printed. As they were interested in new racks that could be fitted with two sizes of cores, Avery Dennison’s engineering manager spoke to Extreme Machine’s general manager about manufacturing the new racks.
After some emails and a meeting, Extreme Machine’s general manager sent Avery Dennison’s engineering manager a document on November 6, 2009, which was called “Quotation 110109-01.” This quotation was for supplying material and labor to fabricate and paint “[m]ultiple core paper roll racks,” including safety locks and core hold-downs. The quantity was listed as 2,302 at a rate of \($669\) per rack for a total price of \($1,540,038.\) Delivery was to occur in three weeks for the first two sample racks. After approval of the racks, the first shipment of 200 racks would occur in six weeks; the delivery rate for the remainder of the order would be 200 racks per week. The quotation stated:
Please note that pricing is based upon an order of the total number of racks.
The price for sample racks is \($1,320.00.\) This price is only good if an order is received for 2,300 racks within 6 weeks after receiving an order for the two sample racks.
The quotation provided that transfer of ownership would occur “FOB” upon leaving Extreme Machine’s plant in Hermitage, Pennsylvania. The terms of payment were to be discussed at the time of an order. The quotation said it was subject to review at order placement based upon current material prices. Further, if Avery Dennison did not order any additional racks other than the two sample ones, a \($30,000\) “engineering fee” would apply.1 Avery Dennison sends Extreme Machines a purchase order for the two sample racks. After receipt of the two sample racks, Avery Dennison decides to cancel the contract and order no more racks. The issues presented are 

1. The contract only identifies the cost of the two sample racks if more are ordered; it is silent if no more racks are ordered.
2. Is the \($30,000\) fee enforceable as a UCC provision or a separate contract under common law for services?
3. Is the contract void under the UCC due to lack of specific pricing until the time of the order placement?

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Dynamic Business Law

ISBN: 9781260733976

6th Edition

Authors: Nancy Kubasek, M. Neil Browne, Daniel Herron, Lucien Dhooge, Linda Barkacs

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