– (D) Lederle – manufacturer and distributor that makes drugs (DTP vaccine is one of them)
– (P )- Corinthian Pharmaceutical- distributor of drugs that purchases supplies from manufacturers. One of them is the (D) largest order ever was 100 vials.
– (D) periodically issues price lists to its customers for all products.
Subject to acceptance – prices are subject to change w/o notice.
Changes in price take immediate effect….unfilled and back orders price effect at time shipment is made.
1985-1986 product liability suits went up- self insured, cost of drugs went up as well.
Price letter no. E-48 – price increase of vial from $51-171 on May 19th ’86, effective May 20th, ’86. (to sales reps).
– The (D) gained knowledge of the price increase statement on the 19th, and ordered 1000 vials on the 19th as to lock in the lower price.
Voice animated system they called the order in at. (TELGO)
– (D) of the 1000 vials requested, just sent 50 at the $64.32 price and stated, with a letter that the remaining 950 would be the new, adjusted price.
– (P) – seeking the 950 vials for the lower price.
• Courts reasoning (offer)
o 1st offer – (P) wanting 1000 vials for $64.32.
o Price lists distributed were NOT offers – invitation for an offer…not binding.
o Internal price memo, was not an offer, or an invitation to make one.
• Courts reasoning (acceptance)
o Did the (D) accept offer by sending 50 vials? NO
o TELGO computer is not an acceptance.
o What is made of the 50 vials sent?…issue, non-conforming goods.
• – (D) moved for summary judgment.
• – U.S. district court, southern district, Indiana
• – Court used UCC codes for this case.
– Was (D’s) shipment of 50 vessels an acceptance of an offer made by (P) for 1000 vessels of the product? Or was it a mere accommodation?
– Thus, under the code a seller accepts the offer by shipping goods, whether they are conforming or not, but if the seller ships non-conforming goods AND seasonably notifies they buyer that the shipment is a mere accommodation, then the seller has not, in fact, accepted the buyer’s offer.
– Accommodation implies no consideration…just a favor or gift.
– (D) clearly stated the rules, regulations and prices…50 was a gift, and the next 950 would be at the higher price…gave an out-clause to the (P).
– Standard terms of (P’s) business practices acceptance of orders was conditioned on buyer’s acceptance of the seller’s terms.
– In favor of (D)
o Is an arrangement or engagement made as a favor to another…implies NO CONDSIDERATION.