On May 2, Handy Hardware sent Ram Industries a signed purchase order that stated, in part, as follows:
“Ship for May 8 delivery 300 Model A-X socket sets at current dealer price. Terms 2/10/net 30.”
Ram received Handy's purchase order on May 4. On May 5, Ram discovered that it had only 200 Model A-X socket sets and 100 Model W-Z socket sets in stock. Ram shipped the Model A-X and Model W-Z sets to Handy without any explanation concerning the shipment. The socket sets were received by Handy on May 8.
Which of the following statements concerning the shipment is correct?
a.
Ram's shipment is a counteroffer.
b.
Handy's order must be accepted by Ram in writing before Ram ships the socket sets.
c.
Handy's order can only be accepted by Ram shipping conforming goods.
d.
Ram's shipment is an acceptance of Handy's offer.
Explanation
Choice “d” is correct. Under Article 2 an offer can be accepted by a promise to ship or by prompt shipment. Shipment of nonconforming goods constitutes both an acceptance and a breach unless a notice is sent prior to shipping that the goods are only an accommodation.
Choice “a” is incorrect. Shipment of nonconforming goods is not a counteroffer unless accompanied by a notice of accommodation. Here, Handy shipped the socket sets without any explanation concerning the shipment.
Choice “b” is incorrect. In a goods contract, acceptance of an offer can be made merely by shipping goods.
Choice “c” is incorrect. Shipment of goods is an acceptance, whether or not the goods conform. If they do not conform, the shipment is also a breach.
BEC: 81
FAR: 75
AUD: 81
REG: 85
PA license Pending..
.