1. What does this case teach us about our responsibilities when we receive a confirmation memo?

2. Explain the agency question and what works in favor of the memo being valid.

Brooks Peanut is a peanut shelling company operating in Samson, Alabama. Great Southern Peanut, LLC (GSP), is a competing peanut sheller. Peanut shellers and other businesses handling peanut products often use brokers to buy and sell peanuts. Typically, the broker’s fee is paid by the seller. Mazur & Hockman, Inc. (M & H), is a broker used by both Brooks Peanut and GSP. In mid-September 2010, Barrett Brooks, president of Brooks Peanut, called Richard Barnhill and Jay Strother, peanut brokers with M & H, and asked them to find peanuts for his company to buy. Brooks requested that Brooks Peanut not be identified as the buyer when M & H contacted potential sellers. M & H solicited offers from several peanut shellers, including GSP, and conveyed them to Brooks. On  September 20, Brooks asked Strother to communicate a counteroffer to GSP’s manager, Doug Wingate. Specifically, the counteroffer was an offer to buy 3,168,000 pounds of 2010 crop medium runner shelled peanuts for $.4675 per pound, to be delivered monthly throughout 2011.

Wingate accepted the counteroffer that same day, September 20. After Wingate accepted these terms, Strother revealed that Brooks Peanut was the buyer. According to Strother, Wingate “sighed” upon learning that a competitor was involved in the transaction; however, he did not reject the deal. Wingate testified that, although he initially accepted the deal, he declined to consummate it when he learned that Brooks Peanut was the buyer.

On the same day, M & H prepared and then faxed to GSP and Brooks Peanut a written confirmation of the sale of peanuts. The confirmation stated: “We confirm a Sale and Purchase Transaction as described below[.]” The confirmation was printed on M & H letterhead and listed the names and addresses of the seller and the buyer, as well as terms covering price, quantity, quality, crop year, delivery schedule, and payment method. The confirmation stated that “[t]his confirmation is subject to the following condition[ ]: Seller’s contract and Buyer’s purchase order to follow [.]” Next to the term “Quality,” the confirmation noted that the “American Peanut Shellers Association Trading Rules” applied to the transaction. The confirmation was signed by M & H’s Strother.

GSP and Brooks Peanut each received the faxed confirmation from M & H. GSP did not issue a contract and Brooks Peanut did not issue a purchase order. After Strother sent the confirmation to GSP and Brooks Peanut, he continued communicating with the parties to finalize the logistics of the deliveries. For example, on September 21, he told Brooks that GSP had offered to haul the peanut loads. They also discussed increasing the monthly shipments, but Wingate stated that he wanted “to stay at 6 loads a month on the [B]rooks [Peanut] contract for right now[.]” GSP did not raise any objection to the fax confirmation until late January 2011, almost four months after M & H sent it. Wingate testified that he “did not see the need” to object to the confirmation. Beginning in January 2011, GSP took the position that, despite the confirmation, GSP and Brooks Peanut had not entered into that particular transaction because Wingate had rejected the sale when he learned that it involved his company’s competitor, that M & H was not authorized to confirm the sale or to send the confirmation, and that a condition precedent had not occurred because GSP had not issued a written contract.

M & H had routinely brokered thousands of peanut sales between other peanut companies, shellers, and manufacturers using the same form of trade confirmation. GSP had sold peanuts to Brooks Peanut in June 2009 and April 2010 and that their agreements were memorialized solely by M & H sending the parties confirmations substantially similar to the one issued this time. The trial court concluded that GSP had a defense of the statute of frauds as a matter of law. Brooks Peanut appealed. ……………………