Contracts and Sales Multistate Bar Practice Exam

What is a merchant's confirmatory memo primarily intended for?

1. Confirming an oral agreement

2. Establishing a written contract

3. Providing additional warranty terms

4. Replacing all prior communications

The correct answer is: Confirming an oral agreement

A merchant's confirmatory memo is primarily intended for confirming an oral agreement. In commercial practices, especially under the Uniform Commercial Code (UCC), when two merchants have a discussion and reach an agreement but do not put it in writing immediately, one of the parties may send a confirmatory memo to the other. This memo serves as a written confirmation of the terms that were agreed upon orally. The significance of the confirmatory memo lies in its ability to help facilitate the enforcement of the agreement in case of disputes. It helps to mitigate misunderstandings by reiterating the essential terms of the contract that were discussed previously. If the recipient does not object to the memo within a reasonable time, it is often regarded as solidifying the agreement, thus reinforcing the original oral contract. The other options do not capture the primary function of a confirmatory memo. While it may somewhat contribute to establishing a written contract, its main purpose is not to create a contract but rather to affirm the oral arrangement already reached. Additionally, it does not focus on providing warranty terms or replacing all prior communications; it is instead a tool to clarify and confirm what has already been discussed between the parties involved.