Contracts Practice Exam #25

During each month of 1980, Buyer, a retail florist, had placed telephone orders with Seller, a flower wholesaler, for cut long stem roses. In each instance, the telephone order was followed by a signed printed 'acknowledgment' form from Seller to Buyer. In each instance, the roses were shipped by Seller and accepted and paid for by Buyer.

On May 1. 1981. Buyer telephoned Seller and placed an order for 1,000 long stem roses at 60 cents each. Buyer orally accepted the order and sent her signed 'acknowledgment' form which arrived on May 2. The printed form included a statement, not included in the prior acknowledgment forms, that 'all disputes are to be settled by arbitration.'

On May 2. Seller shipped the roses and they arrived a day later. When Buyer inspected the shipment, she discovered that all the roses were red, rather than of assorted colors as had been the roses received on all prior shipments.

Buyer immediately consults you, tells you she wants to reject the shipment, and asks your advice on:

(1) Must any dispute be settled by arbitration rather than litigation?

(2) If she (Buyer) rejects the shipment will SeIler have a cause of action against Buyer for breach of contract and, if so, what would be Seller's recovery?

(3) If she (Buyer) rejects the shipment will she have a cause of action against Seller and, if so, what would be Buyer's recovery?

What advice would you give Buyer as to each inquiry? Discuss.

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