Opinion ID: 3002874
Heading Depth: 2
Heading Rank: 2

Heading: Statute of Frauds Exceptions

Text: Defendant next argues that the magistrate judge erred in finding that the three oral contacts were enforceable because exceptions to the Statute of Frauds applied. Again, defendant does not separate its arguments regarding the boards and the microprocessors, but this court will address these components separately, as the magistrate judge applied a different Statute of Frauds exception to each. 4 The defendant cites this Court’s decision in Dresser Industries, Inc., Waukesha Engine Division v. Gradall Co., 965 F.2d 1442, 1449 (7th Cir. 1992), for the proposition that, where a party sends a written offer that makes acceptance of the agreement subject to its terms and those terms are not met or are rejected, no enforceable contract results. However, defendant leaves out the additional finding in Dresser which states that, “If, without the offeror’s acceptance of the offeree’s terms, the parties nevertheless act as if a contract has been formed, the terms of their agreement are determined by § 2-207(3) of the U.C.C., as set forth in Wisconsin Statute § 402.207(3).” Id. In this case, the parties acted as if a contract was formed, and defendant’s acceptance of the agreement was evidenced by its instructions to plaintiff regarding production of the parts, and its failure to object to plaintiff’s conduct and statements indicating that it was performing on the parties’ contract. No. 08-3282 13
The magistrate judge held that the parties’ oral contracts for the USB and HUB boards were not subject to the Statute of Frauds because the boards were specially manufactured goods. Wisconsin Statute § 402.201(3)(a) states, (3) A contract which does not satisfy the requirements of sub. (1) but which is valid in other respects is enforceable:
for the buyer and are not suitable for sale to others in the ordinary course of the seller’s business and the seller, before notice of repudiation is received and under circumstances which reason- ably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement . . . . Wis. Stat. § 402.201(3)(a). Defendant argues that the magistrate judge erred in applying § 402.201(3)(a) because the record does not show either that the goods were actually manufactured or that the boards were specially designed. Both of these arguments fail. As to defendant’s first argument, the record reflects that Edmonds testified multiple times that the goods were manufactured. For example, plaintiff’s counsel directly asked Edmonds, “And were the items manufactured?” to which Edmonds responded, “Yes.” Later, 14 No. 08-3282 Edmonds and his counsel had the following exchange regarding defendant’s order for 1,000 USB boards: Q. Did you complete the manufacturing process? A. We completed the manufacture of those boards. Q. And are those items in existence today? A. They are in existence. Q. And has ReMapp paid for the component parts? A. We have. Edmonds also testified that, in total, plaintiff had manufactured 2,000 USB boards and 2,000 HUB boards. Finally, the court asked Edmonds directly whether the manufacturing was completed on the goods, and Edmonds explained that “the boards are fabricated but the components aren’t on the boards.” As to whether the goods were specially made, Edmonds testified that the boards were manufactured to fit defendant’s specific design. He further testified that they could not have been used by any other company. Moreover, Edmonds testified that the boards had defendant’s proprietary design and plaintiff would have no reason to give them to anyone without permission. The evidence cited by defendant on appeal does not refute this evidence. Afifi testified that he had problems with some of the previous boards he received. As a result, he had to desolder a wire, clean the holes and solder a resistor onto the board. However, nothing about Afifi’s testimony identifies the wire as the uniquely manufactured part of the board, or that the replacement of the wire would No. 08-3282 15 change the nature of the board, such that it would not have been defendant’s specific design. Accordingly, this court rejects defendant’s argument that the district court erred in finding that the boards were specially manufactured goods.
The district court also held that the parties’ contract for microprocessors was enforceable despite the absence of a writing. Wisconsin Statute § 402.201(2) states: (2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of sub. (1) against such party unless written notice of objection to its contents is given within 10 days after it is received. Wis. Stat. § 402.201(2). Defendant argues that the district court erred in applying this section because the document at issue was not a confirmation of the order, but rather was an offer requiring a response. Initially, it is important to note that defendant’s argument is moot. The district court ultimately did not award plaintiff any relief for defendant’s breach of the microprocessor contract. Thus, even if this court were to reverse the district court on these grounds, there is no other relief defendant could obtain on this issue. See Grinnell Mut. Reinsurance Co. v. Reinke, 43 F.3d 1152, 1154 16 No. 08-3282 (7th Cir. 1995) (“Litigants who take offense at statements in an opinion, or who believe that the judge committed a legal error, but who cannot show how the judgment injured them in a way the court of appeals can correct, are not proper appellants.”). However, even if we assumed defendant’s argument is not moot, it would be rejected. Defendant cites Kline Iron and Steel Co. Inc. v. Gary Communications Consultants, Inc., 715 F. Supp. 135 (D.S.C. 1989), to support its argument that the invoice at issue is not a writing in confirmation of the contract. In that case, the plaintiff sent the defendant a document entitled “Proposal” which stated in part that “This proposal is for immediate acceptance and prior to such acceptance is subject to modification or withdrawal without notice,” and that, “Acceptance of this proposal will evidence Buyer’s intent that the sale be governed solely by the terms and conditions of this proposal.” Id. at 136-37. Six days after receiving the proposal, the defendant informed the plaintiff that the defendant had received a lower quote and indicated it wanted the plaintiff to justify its higher price. Id. at 137. The plaintiff sued the defendant for breach of an oral contract. Id. The plaintiff invoked a provision virtually identical to § 402.201(2) arguing that the contract was enforceable because the proposal constituted a confirmation of the oral contract. Id. at 141. The court found that the oral agreement did not come within this exception because the proposal expressly required further action by the defendant and was not binding on the plaintiff. Id. at 14142. The court remarked that “[i]n order to be a confirmaNo. 08-3282 17 tion . . . a writing must at least indicate that a binding or completed transaction has been made.” Id. at 142 (quotation marks omitted).5 This case differs significantly from Kline Iron. First, the invoice at issue makes no express requirement that plaintiff take further action for the agreement to be consummated. Rather, the invoice requires 100% payment “at time of purchase.” This does not necessarily mean 100% payment is the acceptance of the offer. Second, unlike the proposal in Kline Iron, the invoice does not indicate that plaintiff could modify or withdraw the offer prior to the acceptance. As a result, the language of the invoice is far less clear than that of the proposal in Kline Iron. Third, unlike the parties’ activities in Kline Iron, here both parties acted as if a contract had been formed despite the lack of initial payment, and Edmonds testified that after speaking to Afifi he “went out and put in an order and contracted for 4,100 parts”, thereby refuting the possibility that Edmonds intended the invoice as an offer he could modify. The evidence also supports the magistrate judge’s finding that defendant received written notice of the microprocessor order and made no objection within ten days. The record contains the invoice, dated July 19, 2006, 5 Defendant also cites First Bank (N.A.) v. H.K.A. Enterprises, Inc., 515 N.W.2d 343 (Wis. Ct. App. 1994) to support its argument. However, the court explicitly refused to rule on the § 402.201(2) issue because the issue was not raised before the trial court. Id. at 347 n.10. 18 No. 08-3282 issued to defendant for 4,100 “Cypress U4” at $5.85. In addition, Edmonds testified that Afifi never informed him that he did not want the microprocessors or that there was any indication that Afifi would not make pay- ment until he received an e-mail from Afifi in September 2006. As such, this court cannot find that the magistrate judge’s ruling that § 402.201(2) applied to the microprocessor contract was clearly erroneous.