A and B are companies who have a meeting. A wants to buy systems for its PC from B. A offered two installments, $40,000 for first 500 systems, $30,000 for the second 500 systems. The systems had to conform to A's specifications. Those specifications have not been discussed in detail.

A drafted a memo, he wrote the following: Two installments: $40,000 and $30,000; A specs.

Only A signed the memo. Four moths later, B phoned A and informed him of his acceptance. B sent invoice in the mail. On the back of the invoice were two provisions. The first provision waived all warranties with respect to the systems. The second provision indicated that A's acceptance of a single of a single system meant acceptance of all the terms and conditions on the invoice.

A did not respond to the invoice. A few months later, B shipped the first 500 systems. A tried without success to install the systems in its PCs. The two companies spent next two years trying to get the system to work. At the end of the second year, A decided to seek another supplier and stopped the payments. At that point, A paid $10,000 for the first 500 systems. B phoned A and claimed that A breached the contract. A responded that no contract existed between the two. B also notified A of its intention to send the second 500 systems because they just finished manufacture.

Q1. Does a contract exist between A and B? If so, what are the terms? In particular, can A refuse to pay the remainder of the money due on the first installment or the entire second installment or both.

Q2. Assuming there is a contract between A and B, can B sue for damages? If so, what damage remedies are available to B? Which damage remedy provides B with the highest potential recovery? Should B ship the second installment?