Sales and Leases | 68
components virtually unsellable to the manufacturer’s other buyers. [ See Alumax Aluminum Corp., Magnolia Div. v. Armstrong Ceiling Sys., Inc. , 744 S.W.2d 907 (Tenn. Ct. App. 1987).]
(2) A manufacturer of high-end clothing orally agreed to produce a fine men’s suit for a basketball player, at a price of $20,000. The player stood seven feet, two inches tall and weighed around 340 pounds. Only a handful of men in the world boasted dimensions like these. Accordingly, only a handful of men in the world would have occasion to buy the suit that the manufacturer agreed to produce for the player. Here, then, the oral contract is enforceable despite the statute of frauds, assuming the manufacturer has substantially begun to produce the suit. Though the manufacturer was in the business of producing and selling high-end men’s clothing, the player’s specific requirements virtually guaranteed that the suit would be unsellable in the ordinary course of the manufacturer’s business. [ See 2 Anderson U.C.C. § 2-201:310 (3d. ed.), Westlaw (database updated Dec. 2020).] d. Whether the Seller Has Made a Substantial Beginning of Manufacturing the Goods or Substantial Commitment for Their Procurement Ordinarily, the seller has substantially begun to manufacture the goods, or committed for their procurement, if the seller has so far performed the contract that the seller would suffer economic hardship or oppression if the contract were rejected or performance interrupted. Mere lost profits, though, do not necessarily equate to economic hardship or oppression. Finally, mere preparations to manufacture or procure, such as capital investments, decisions about personnel, or creating a prototype, do not equate to a substantial beginning or commitment. [ See 2 Anderson U.C.C. § 2-201:313 (3d. ed.), Westlaw (database updated Dec. 2020).] Example : A jewelry manufacturer orally contracted with a printer to produce 1,000,000 flyers for insertion into direct-mailing advertisements, at a price of $150,000. The flyers would bear the manufacturer’s name, logo, and other trade dress, making them useless to anyone except the manufacturer. When the printer had produced 650,000 flyers (65 percent of the total order), the manufacturer repudiated the oral agreement. In the ensuing lawsuit, the oral contract is enforceable under Article 2’s statute of frauds, despite the lack of a signed writing. The flyers were produced specifically for the manufacturer. Due to the flyers’ content, they were useful to (and, hence, sellable to) no one apart from the manufacturer. Finally, having produced 650,000 of the 1,000,000 total flyers ordered, the printer indeed made a substantial beginning of their manufacture. [ Adapted from Perlmuter Printing Co. v. Strome, Inc. , 436 F.Supp. 409 (N.D. Ohio 1976).]
10.
Made with FlippingBook - Online Brochure Maker