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Case Study - The Teetotaling Winebibber McKenzie McCormick in sole owner of a chain of restaurants called "Tapas and Vino" in Colorado, primarily located along the front range in cities like Denver and Colorado Springs, among others. Along with tapas (small plates), McCormick designed wine tastings that patrons could order as sample pairings with the food. Over time, the collection of wines served grew impressively, particularly with customers desiring to try high quality wines by the glass. As a result, her customer base grew rapidly. With the popularity of the restaurant chain growing, McCormick decided to expand to Utah, Arizona, and New Mexico. Over time, many of her customers asked whether they could sample low alcohol or non- alcoholic wines, of which McCormick was unfamiliar. Non-alcoholic wines were becoming more popular. In particular, her customers were interested alcohol-free red wine because recent medical studies showed that red wine that was alcohol-free reduced blood pressure just as effectively as regular red wine. Of course, they also wanted the wine to taste very good. As a result, McCormick did some research and discovered that while non-alcoholic wines were readily available, high-quality versions were relatively scarce. She noted that many of the non- alcohol wines that were available came from Europe. As a result, McCormick made some phone calls to find possible sources of vintners that produced or would be able to produce high quality alcohol-free wines. She eventually called Vasilis Doukas, a native of Greece who owned the renowned "Doukas" vineyard and winery in the Peloponnese area of the country, near Corinth, Greece. Vasilis had a French mother whose family owned a large winery estate near Burgundy, France. Doukas studied wine-making in France and later returned to Greece to enter the winemaking business. Doukas had been producing wines for about 20 years and had an excellent reputation as a master winemaker known for some of the very best red wines in all of Europe. McCormick, who was familiar with the Doukas's reputation, flew to Athens on July 1 and drove to the winery to see what Doukas had to offer. McCormick tried tastings of several of the wines, but particularly enjoyed the highest quality reserve red wines that Doukas offered, which sold wholesale for between 80 and 450 euros per bottle, depending on the type, quality, and age. McCormick was interested in purchasing his existing wines, and she especially wanted to learn if he could produce high-quality alcohol-free wines, especially from his wines that currently sold for around 100 euros per bottle. Doukas stated he could use his existing stocks of wine to produce a non-alcoholic wine by employing either a reverse osmosis process or vacuum distillation. The first was more expensive but, very importantly, did not affect the nose of the wines (their aromas), whereas the second removed many of the floral aromas of the wine. McCormick told Doukas she was only interested if the resulting wine would be of the same quality, it was before removing the alcohol and asked him to provide her some prices on alcohol- free versions of his highest quality wines. Doukas told her he would need a few days to determine what a reverse osmosis process would entail and would let her know. On July 10, Doukas called McCormick at her office to tell her that he would be able to produce a non-alcoholic version of his existing wines in her price range that would taste just as good as the originals. McCormick was pleased and stated she preferred both red and white wines that were fruit-forward but not sweet, with moderate tannins for the red, and low tannins for the white. Doukas stated that he would remove the alcohol from several different small batches of his wines in her price range and send samples to her see if she was satisfied with the results, and which ones she preferred. Doukas then asked McCormick what quantity of wine she had in mind. McCormick said she thinking about 20 cases of red wine for the first shipment (240 bottles) and 20 cases of white wine. Doukas stated that it would take a little time do the calculations to determine the final cost and that he would let her know. On July 12, Doukas sent an email to McCormick proposing that he could produce high- quality non-alcoholic Greek-style red and white wine from several of his existing premium wines. Regardless of which sample McCormick selected, the final cost would be 48,000 euros for 40 cases. The proposal stated that Doukas's winery could begin producing the wine once McCormick let him know which wine sample she preferred and that McCormick would need to make an initial payment of 20,000 euros before Doukas would start production and a final payment of 28,000 euros upon delivery. Doukas also stated that the wine could be ready for shipment within 60 days of McCormick letting him know which wine sample she had chosen for production. His proposal also stated that his price quote was valid for 30 days. He attached a document to his email entitled "Terms and Conditions," which stated, among other things, that the terms of payment would be cash against documents, and that if any disputes arose between the parties, they would be arbitrated in Athens using Greek law. On July 21, McCormick sent an email asking Doukas to send sample wines, along with some possible bottle label designs. Attached to the email was an acknowledgment form that stated that the proposal was "accepted subject to the Conditions of Sale contained in this acknowledgment. Receipt of this acknowledgment by you without prompt written objection constitutes acceptance of these terms and conditions." The Conditions of Sale contained the following clause: "This contract shall be governed by the commercial law of the State of Colorado." McCormick also sent the down payment of 20,000 euros by wire transfer the same day. Doukas did not object to McCormick's order acknowledgment. On August 15, Doukas air-shipped three samples each of the red and white wines to McCormick he hoped would she would like, along with three possible bottle label designs for McCormick's approval. McCormick was thrilled with the results and liked all of them, but chose the red and white sample she liked best. She also selected one of the bottle label designs and notified Doukas of her selections. Doukas replied that he was delighted, and would produce and ship the wine on or before September 15. McCormick received the shipment on September 30 and opened one of the cases to inspect. She was very pleased with the label design that she had picked but when she read the label, she notice it stated in small print at the bottom that the wine "Contains Less Than 0.5% Alcohol by Volume." Concerned about the statement on the label, McCormick called Doukas and inquired about the alcoholic content of the wine. McCormick reminded Doukas that she wanted a wine that was completely free of alcohol. Doukas responded that in the wine industry "alcohol-free wine" is commonly understood to contain a small amount of alcohol. McCormick

was not satisfied with the explanation and stated she would not send the final payment. Needless to say, Doukas was extremely upset.

Case Study Questions 1. If there is an agreement between Doukas and McCormick, does the CISG apply to this contract? Why? Colorado uses the UCC for its commercial law. What if both parties want the UCC to apply and not the CISG, what should they do?