A contract for the sale of goods for the price of $500 or more is not enforceable … unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought…. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.
Uniform Commercial Code, Section 2-201 (emphasis added)
What about a written contract where a party agrees to buy paper from a counter-party that specifies no particular quantity of paper?
We look at the UCC’s provision, “the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing,” and the answer seems unambiguous, does it not?
It does not. Or at least it did not to Sr. U.S. District Court Judge Donovan W. Frank (D. Minn.) in Taylor v. Georgia-Pacific Consumer Products (“G-P”).
Judge Frank denied G-P’s motion to dismiss this past week based on the UCC statute of frauds. Judge Frank was persuaded by the plaintiff that other provisions in the Taylor/G-P contract muddied the waters, precluding dismissal of plaintiff’s complaint. That is, the contract included provisions (a “Preferred Supplier Provision” and a “Consignment Provision”). These terms, Judge Frank held, are “arguably relevant to quantity.” That, in turn, might make the contract a “requirements contract” to which the UCC statute of frauds would not apply, Judge Frank concluded.
A party who seeks to invalidate a requirements contract … bears a heavy burden. Certainly the mere existence of an open quantity term does not support invalidation, since indefiniteness is inherent in requirement contracts.
J. White & R. Summers, Uniform Commercial Code 122 (1980).