Hasbro used to manufacture a toy called "Wonder World Aquarium". The toy included a powder that, when mixed with water, formed a gel that filled a plastic aquarium. Children could then place plastic fish in the aquarium and create underwater scenes. Cloud Corporation supplied the powder to Hasbro. The toy sold poorly, and Hasbro's need for the powder diminished. The two companies discussed changing the powder's formula. Cloud believed the conversation amounted to an indication that Hasbro would continue to buy powder, so it produced large quantities. Although it did not receive an order from Hasbro, Cloud sent an order acknowledgement for 9.5 million packets to Hasbro. Hasbro made no objection to it.

1. What is the issue in this case?
2. Are both parties' merchants? How do you know?
3. What is the merchant's exception under the Statute of Frauds?
4. Did the order acknowledgment create an enforceable contract? Explain.
5. What specific facts determine your answer?