Contract Formation and Shipping Costs Obligation
Was a contract formed between Milliners, Inc. and Lydia?
Does the statute of frauds apply to the contract between Milliners Inc. and Lydia? Why?
Are Milliners Inc. and Lydia considered merchants? What effect does this have on the contract?
Does Lydia have to pay the shipping costs? Explain your reasoning.
Contract Formation and Obligation to Pay Shipping Costs
According to the given scenario, a contract was formed between Milliner, Inc. and Lydia. A contract is formed when there is an offer, acceptance, consideration, and a mutual intention to be bound by the agreement.
The statute of frauds does not apply to this contract. Both parties are considered merchants, which affects the contract. Lydia is obligated to pay the shipping costs based on her acceptance of the terms in the confirmation email.
In this case, Milliner, Inc. advertised the hats for sale, stating the price per hat as $30. Lydia responded by saying, "I'll take them," which can be seen as an acceptance of the offer. This creates a valid offer and acceptance, forming a contract.
The statute of frauds requires certain contracts to be in writing to be enforceable. However, this contract for the sale of hats does not fall under the statute of frauds because it is not for the sale of goods priced at $500 or more.
Both Milliner, Inc. and Lydia are considered merchants in this case. A merchant is a person who deals in goods of the kind involved in the transaction. Being merchants affects the contract because it implies that both parties have knowledge and experience in the relevant industry, and certain rules and provisions of the Uniform Commercial Code (UCC) will apply.
Regarding the shipping costs, Lydia is obligated to pay them. In the confirmation email, Milliner, Inc. stated that the price of $30 per hat was "plus shipping." Lydia did not object or respond to this email, indicating her agreement to pay the shipping charges. By accepting the hats and making no complaint about the charges, Lydia implicitly accepted the terms of the contract, including the shipping costs.