Reference no: EM131378678

In the balancing act that is the law, judges and attorneys must often weave their way through a series of overlapping and inconsistent legal dimensions before arriving at a solution to their problems.

Unfortunately, even that does not always work. Such was the case in a multidimensional lawsuit entitled Tubelite Co., Inc. v. Original Sign Studio. The lawsuit concerns two agreements between Tubelite, the seller, and Original Sign Studio, the buyer. The first agreement was an application for credit, in which Original Sign agreed to pay for all materials shipped by Tubelite and to remit an 18 percent finance charge for overdue payments.

In the second agreement, Tubelite agreed to be Original Sign's exclusive supplier. The terms of the contract were reduced to writing in a letter written by an agent of Original Sign but never signed by anyone from Tubelite. The agreement stated that Tubelite would supply Original Sign with all the material that it requested but that it would bill Original Sign only for the materials that the sign company actually used and then, in exchange for being Original Sign's exclusive supplier, it would charge a discounted rate of somewhere between 10 and 25 percent. Tubelite also agreed to install shelving at Original Sign's warehouse for proper storing of the materials. Tubelite shipped the materials that Original requested and installed the shelving as per the agreement. So far so good. Then the trouble started. Tubelite billed Original for all the material it shipped, not just the material used.

Moreover, the bill that Tubelite sent to Original ignored the discounts promised under agreement number two. Original ignored the bill as written by Tubelite and, instead, paid only for the materials it had used at a 25 percent discount rate. Tubelite insisted that, under agreement one, Original still owed money for the unused portion of the material. In addition, since that payment was now late, Tubelite tacked on its 18 percent penalty (remember the "finance charge"). Original argued that agreement two, the discount agreement, superseded, agreement one, the credit agreement. Tubelite argued that agreement one, the credit application, was still in effect because agreement two, was never signed by anyone from Tubelite.

Therefore, the agreement failed to meet Statute of Frauds requirements (the statute that tells us what contracts must be written), and was unenforceable. Besides, Tubelite added, agreement number two was too vague to be enforced, even if the writing were okay. It should be clear that, if any dispute is multidimensional, this one is. Look at all the questions in these two contacts that remain. What law applies here? Common law or the Uniform Commercial Code (UCC)? Which contract rules? Did Original err in not getting a Tubelite agent to sign the agreement? Is the writing really too vague or is Tubelite pulling a fast one? These and other similar questions will be addressed in the Unit called Contract Law.

[See Tubelite Co., Inc. v. Original Sign Studio, 176 Ohio App.3d 241 (Tenth District).]

Opening Case Questions

1. Would Tubelite Co., Inc. v. Original Sign Studio be a civil lawsuit or a criminal action? Explain.

2. What law will the court apply in this case to answer the questions noted above? Will the court use common law or the Uniform Commercial Code (UCC)? Explain.

3. What is the legal status of a contract that is supposed to be in writing under the law, but is never reduced to writing? Explain.

4. What legal exceptions exist to the rule that says that certain contracts must be in writing? Explain.

5. When an agent fails to perform one of the many duties imposed on agents by law, what are the legal consequences for that agent? Explain.