Apex LLC v. Sharing World, Inc.
142 Cal. Rptr. 3d 210
Cal. Ct. App.2012Background
- Apex and Sharing World entered 12 cottonseed sales contracts Feb 2008–Jan 2009 for about 19,375 tons with shipment windows Oct 2008–Aug 2009.
- Sharing World declined to accept/deliver 14,625 tons because its Korea customers lacked letters of credit.
- Apex sent written sales contracts confirming each oral offer; Sharing World did not sign but voiced no objection to terms.
- Market volatility followed, leading to extensions, wash options, and ongoing negotiations rather than immediate breach responses.
- Trial court found no mutual assent, a nonfulfilled condition precedent, improper resales, and lack of proof of damages; judgment favored Sharing World.
- Appellate court reversed, holding gap fillers and confirmatory writings valid, remanding for determination of resell reasonableness and damages, and vacating attorney-fee rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mutual assent under UCC gap fillers | Apex argues written contracts form a complete sale; gap fillers supply missing terms. | Sharing World contends essential terms lacking; no mutual assent. | Mutual assent exists via UCC gap fillers; contracts formed. |
| Effect of confirmatory writings when parties are merchants | Writings confirm the contracts and satisfy the writing requirement. | No signed writings by Sharing World; objections possible. | Writings satisfy the statute of frauds under UCC § 2201 when both are merchants and no objections timely arise. |
| Condition precedent validity | Condition precedent (letters of credit) is inconsistent with final quantities/prices and thus not enforceable. | Condition precedent governed performance. | Condition precedent unenforceable; inconsistent with final agreed terms. |
| Mitigation and timing of resales under UCC | Apex acted in good faith, negotiating and offering resales; timing was reasonable given market volatility. | Apex waited and acted to benefit from market decline, violating mitigation. | Resales and timing must be assessed contract-by-contract; remanded for factual determination of reasonableness. |
| Damages measurement and proof | Damages measured by difference between contract price and resale market value; cost basis not required. | Damages require cost basis evidence. | Damages may be recovered under the resale-difference measure without showing cost basis. |
Key Cases Cited
- Fladeboe v. American Isuzu Motors Inc., 150 Cal.App.4th 42 (Cal. App. 2007) (standards for reviewing factual and legal questions)
- SFPP v. Burlington Northern & Santa Fe Ry. Co., 121 Cal.App.4th 452 (Cal. App. 2004) (standards for mixed questions of law and fact)
- C9 Ventures v. SVC-West, L.P., 202 Cal.App.4th 1483 (Cal. App. 2012) (treatment of contract formation and writings under UCC)
- Hunt Foods & Industries, Inc. v. Doliner, 270 N.Y.S.2d 940 (N.Y. App. Div. 1966) (definition of inconsistency under UCC 2-202)
- Luria Brothers & Co. v. Pielet Brothers Scrap Iron & Metal, Inc., 600 F.2d 103 (7th Cir. 1979) (broader concept of inconsistency under UCC 2-202)
- Snyder v. Herbert Greenbaum & Associates, Inc., 380 A.2d 618 (Md. App. 1977) (definition of inconsistency under UCC 2-202)
- American National Bank & Trust Co. v. Weyerhaeuser Co., 692 F.2d 455 (7th Cir. 1982) (mitigation and timing in resales under UCC 2-706)