Grays Fabricating Co. and Pine Corp. agreed orally that Pine would custom

manufacture a processor for Gray at a price of $80,000. After Pine

completed the work at a cost of $60,000, Gray notified Pine that it no longer

needed processor and has no liability since there was never a formal written

agreement. In response, Pine notified Gray that the processor was ready for

delivery and that it was holding it for Gray. Pine also demanded payment in

full on delivery. Gray again refused the processor. Pine attempted to find

another buyer but has been unable to resell the processor for any price.

Since Pine had insufficient space to hold the processor at its plant, Pine had

the processor move to a nearby warehouse. Pine has incurred storage fees of

$1000 for the processor during this period.

QUESTIONS:

1. Is Grays Fabricating Co. liable on the contact in spite of the lack of

any written agreement between the parties? Explain.

2. If the processor is damaged through no fault of Pine when it is moved

to the warehouse for storage, who will bear the risk of loss.

3. Assuming Gray is held liable on the sale contract with Pine, what

damages might Pine expect to recover? Explain.