Beta Computers ("Beta") manufactured personal computers (like Dell or Apple), and Ace Electronic ("Ace") manufactured component processor chips (like Intel) for use in the manufacturing of such computers. Ace regularly published a price list for its chips, which it regularly mailed to all computer manufacturers, including Beta. Ace's price list included the following clause: "All orders are subject to current available inventory."

On January 15. Beta faxed to Ace a letter, signed by Beta's President, in which Beta stated, in relevant part, the following:

Beta is very interested in the Ace X55 chip shown on Ace's current price list at $90 per chip in quantities of 1000 or more. Beta would like to order up to 5000 of these Ace X55 chips for shipment on or before February 1, with Ace's standard price, shipping, payment, and warranty terms to apply. Please confirm available quantity ad countersign this fax in the spaces provided, and fax the countersigned document to Beta on or before January 25."

On January 16, Ace faxed to Beta an order acknowledgement form, complete with the details of Beta's order, sowing* a quantity of 5000 X55 chips, and promising to give timely consideration to the order. Ace was elated to receive the order from Beta, because Ace had a significant inventory of X55 processor chips and was planning to introduce a new and faster chip, the X65, which would immediately reduce the value of the X55. On January 18, Ace announced the new X65 chip, priced at $85 per chip in quantities of 1000 or more and, simultaneously, lowered the price of the X55 to $60. The January 18 announcement stated in bold print: "All new prices stated herein are effective only on orders received on or after January 18. All outstanding orders made prior to January 18, shall be filled at the price in effect at the time of the order."

On January 20,Ace shipped 5000 X55 chips to Beta and sent an invoice at $90 per chip.The President of Beta wonders whether Beta is contractually obliged to accept and pay for the chips from Ace, and if so, how much.

Before delivery of the goods, the ship which carried the chips sinks due to unexpected storm and the whole batch of chips is destroyed. The President of Beta thinks it is a good opportunity to benefit from the situation and seeks compensation from Ace due to non-fulfilment of its obligations.

Please analyze the case and fully explain your analysis, including answering the following questions:

1) Is Ace obliged to sell chips at the price indicated in the published price list?

2) Does the fax of 15 January of Beta contractually bind Ace? Does is bind Beta itself?

3) Does the fax of 16 January of Ace contractually bind either Ace or Beta?

4) Does the announcement of 18 January of Ace alter the terms of negotiations (or contract, if any) with Beta? Does Beta have right to request reduction of the price of the chips or revoke its initial offer to contract with Beta?

5) Does Beta have obligation to receive the shipment of 20 January from Ace? What rights does Ace have (if any) if Beta does not accept the shipment and pay for them?

6) Does Beta have right to seek compensation for non-delivery of the chips?

* SOW order - A statement of work is a document that describes the terms and conditions for the execution of a project's scope of work.