Corinthian Pharmaceuticals v. Lederle Labs(IN. 1989)
Author: Andrew Dong Wook LEE

Facts: Sale of goods btwn merchants  D(Lederle Laboratories) makes a number of drugs inclusive of the DTP vaccine. P has purchased supplies from mfgers such as D and resells the products.

1985-1986 P made a number of purchase orders for the vaccine. The largest single order during

this period was 100 vials. But during this period of time, product liability increased. D had to

make a substantial increase for self-insurance.

1986/5/19 D’s notice of DTP’s price increase from $51 to $171/vial effective from 5/20è these

price letters were sent to D’s sales rep but not to customers respectively.

1986/5/20: D’s Customer letter for the increase of price and P got the info on 5/19 and ordered

1,000 virals of DPT and P put the order on its telephone ordering system and the system sent

out the tracking number and confirmation of its order.

1986/6/3: D sent invoice to P for 50 vials of DPT priced $64.32 each saying it is an accommodation. Enclosed letter of price when the shipment was made. But in light of the magnitude of price increase, D decided to make an exceptioin and ship a portion of the order at the lower price. The balance wd be at $171.00 to be shipped on 6/16 and the order is cancelable before 6/13.

Legal Proceedings: P’s legal action seeking specific performance.

Issues: Whether a valid K to sell was formed when Lederle put the order of Corinthian at

its telephone ordering system although it was an unusually large quantity at the low price just

one before the huge price hike of the product or Whether or not an acceptance was made when only 1/20^th order was sentout as namely accommodation ?

1)     Whether D Aed the O prior to sending the 50 vials of vaccine?(para2, p282)

2)       What is to be made of the shipmentof 50 vials and the accompanying letter?

3)      Whether D’s response to the O was a shipment of non-conforming goods not constituting an A becuz it wa Oed only as an accommodation under UCC2-206?

(para3, p283)

Rules: 1) UCC 2-52: Rights and Remedies: An O is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

2) UCC2-207:Mirror Image rule not necessary. But Oee must do sth that manifests the intention to A the O and make a K.

3) UCC2-206: O to make a K shall be construed as inviting A in any manner and by any medium reasonable in the circumstances.

4)       Foremost v. Eastman Kodak; Southern Spindle v. Flyer: An automated ministerial act cannot constitute an A.

5)       Quaker State Mushroom v. Dominick’s Finer Foods: Interstate Ind. V. Barclay Ind.No O where price quotations is subject to change and orders are subject to seller’s confirmation.

6)       UCC2-206: a shipment of non-conforming goods does not constitute an A if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

7)       Black’s Law Dictionary: an accommodation is an arrangment or engagement made as a favor to another. Something done as favor rather than for C.

Application

1)Price list does not constitute an offer.

2) No intention of D to sell a large quantity of product at lower price through the internal memo.

3)Order was placed by P when D confirmed its order for 1,000 vials at the lower price but it remains as a question whether D accepted that O. (3^rd para, p282)

4) D did not communicate or do any act prior to shipping the 50 vials that cd support the finding of an A. Thus there was no A of P’s O prior to he deliver of 50 vials.(bttm para, p 282)

5)D’s shipment was non-conforming, for it was for only 1/20^th of the quantity desired by the buyer.

  6) An accommodation si a favor to another, not as a C. D’s shipment of 50 vials was Oed merely as an Aè D had not obligation to make the partial shipmentn and did so only as a favor to the buyer.  The balance of the O wd be invoived at higer price and D’s proposal to ship the balance cd be rejected by the buyer. Moreover the standard terms of D’s invoice stated that A of the order was expressly conditioned on the buyer’s assent to the seller’s terms.

Conclusion:

Notification was properly made and the shipment of non-conforming goods is treated as an counter offer and the buyer had the choice to accept or reject. There being no genuine issues of material facts on these issues and summary judgment for D, the seller.