Opinion ID: 805147
Heading Depth: 4
Heading Rank: 1

Heading: Credit as an essential element

Text: Appellants insist that credit was essential to UPC’s agreement with Westlake, so that the putative contract does not satisfy either the UCC or the Texas statutes of frauds. Under the UCC, the only essential term that must be contained in a written agreement for the sale of goods over $500 is the quantity. Specifically, the UCC statute of frauds’s writing requirement states: 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.16 In addition, a comment to this provision states: The required writing need not contain all the material terms of the contract and such material terms as are stated need not be precisely stated. All that is required is that the writing afford a basis for believing that the offered oral evidence rests on a real transaction. It may be written in lead pencil on a scratch pad. It need not indicate which party is the buyer and which the seller. The only term which must appear is the quantity term which need not be accurately stated 15 Westlake asserts that, to the extent that the Texas statute of frauds conflicts with the UCC, the UCC preempts the state statute. Because we find that the agreement meets the requirements of both provisions, we do not address this issue. 16 TEX. BUS. & COM. CODE ANN. § 2.201(a) (Vernon 2003). 10 Case: 10-20634 Document: 00511931930 Page: 11 Date Filed: 07/24/2012 No. 10-20634 but recovery is limited to the amount stated. The price, time and place of payment or delivery, the general quality of the goods, or any particular warranties may all be omitted.17 In this case, the written confirmations sent by Brice to both parties by instant message and email immediately after the deal was “done” meet the requirements of the UCC’s statute of frauds.18 These confirmations included the essential quantity provision (5 million pounds per month), as well as the price ($0.54 per pound), the product (ethylene), and the delivery terms (monthly during the 2009 calendar year, delivered via pipeline to Mont Belvieu-Williams). Regardless of the credit term, the UCC’s statute of frauds writing requirement was met in this case. The agreement between UPC and Westlake also satisfies the Texas statute of frauds. The Texas general statute of frauds requires “[a] promise or agreement... or memorandum...[to be] in writing; and signed by the person to be charged with the promise or...by someone lawfully authorized to sign for him.”19 The writing also must contain “all of the essential elements of the agreement so that the contract can be ascertained from the writing . . .”20 As previously discussed, we are satisfied that UPC did not present any evidence at trial (or pointed to any on appeal) which firmly establishes that credit terms were 17 TEX. BUS. & COM. CODE ANN. § 2.201(a) cmt.1 (Vernon 2003) (emphasis added); see also § 2.204(a) (“A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.”) 18 Den Norske Stats Oljeselskap, A.S, v. Hydrocarbon Processing Inc., 992 F. Supp. 913, 914-15 (S.D. Tex. 1998) (holding that the broker’s confirming memoranda “reliably evinces agreement.”), aff’d, 161 F.3d 8, No. 98-20190, 1998 WL 723858 (5th Cir. Oct. 6, 1998) (unpublished). 19 TEX. BUS. & COM. CODE ANN. § 26.01 (Vernon 2005). 20 Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978) (citation omitted). 11 Case: 10-20634 Document: 00511931930 Page: 12 Date Filed: 07/24/2012 No. 10-20634 “essential” to the contract. In fact, trial evidence indicates that the industry norm is to negotiate payment and credit terms after formation of the contract. Therefore, the writing requirement of the Texas statute of frauds was met in this case.