The Uniform Commercial Code (UCC) governs contracts that are made for the sale or the lease of goods. Goods, as we have seen, are movable tangible objects such as vehicles, electronic devices, and clothing. Many of the rules that are found in the UCC are straightforward, unambiguous expressions of legal principles that have been imbedded in the law for centuries. This simple fact makes the case of XCEL v. DeVault relatively easy for the court to solve.
The facts in the case play out like this. DeVault Industries manufactures custom built shotguns. XCEL has perfected a wire-cutting process that is ideally suited for the trigger assemblies in the DeVault shotguns. After an initial trial run, during which XCEL successfully produced six trigger assemblies, DeVault sent a purchase order (No. 27) to XCEL for 20 additional units (although there was enough material to produce 60 units), at a total cost of $1,080. XCEL received and accepted purchase order No. 27.
Within a few days, however, Mr. Cain, the president of XCEL, phoned Mr. DeVault, the president of DeVault, and told him that XCEL could not manufacture the parts at that price. DeVault remembers the phone call differently, arguing that the two men did not talk price but, instead, discussed the quantity of the order, which was set at 20.
However, DeVault did admit that Cain said he needed to produce more than 20 units to cover the set-up costs for that initial 20 units. DeVault told him not to worry because they would later figure out what a fair price would be. XCEL did, in fact, manufacture the units and sent them to DeVault. Once DeVault received the units, they sent a check to XCEL for $1,080. The check included a notation that read, "pymt in full PO#27 60 pcs@18.00 ea."
Someone at XCEL cashed the check and deposited the proceeds in an XCEL bank account. Nevertheless, Cain continued to claim that DeVault had not paid the full amount owed under the contract. Later XCEL sent its own check for $1,080 back to DeVault.
By this time it was too late. DeVault would no longer listen to Cain and Cain refused to hear DeVault. That was when the lawsuit erupted. So what do you think? Did DeVault and XCEL enter a contract here? If so, when was the offer made? When did the acceptance occur? Did the parties need to put all of this in writing? Consider these questions as you read this chapter on selling and leasing goods.
(See XCEL Mold & Machine v. DeVault Indus., 146 Ohio Misc. 2d 32, 2008-Ohio-269.)
Opening Case Questions
1. Is the case of XCEL v. DeVault governed by common law or by the Uniform Commercial Code? Explain.
2. Does the contract involved in this case have to be in writing to be enforceable? Explain.
3. When was the offer made here? When was it accepted? When did mutual assent emerge during the flow of events? Explain.
4. Will the court listen to and consider evidence based on the content of the phone conversations? Why or why not?
5. Is the cashed check significant in this case? Why or why not?