This Email Isn’t Worth the Paper It Isn’t Written On

Tuna

You know the old expression, variously attributed to Samuel Goldwyn and others, “ a verbal contract isn’t worth the paper it’s written on.”  In fact, of course, unless the statute of frauds applies, an oral contract is as good as any other contract.  And an email contract, under E-SIGN, the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. ch. 96, and UETA, the Uniform Electronic Transactions Act (applicable in every state except Illinois, New York and Washington), is, with some small exceptions for deeds, wills and the like, just as good as a written contract.

But not all writings form part of a contract, and neither do all emails.

A recent (unpublished) case out of New Jersey
involving the purchase and sale of seafood is illustrative.

Here is the base correspondence that, there seemed to be no question at all, made up the contract.  A seafood supplier sent a “blast” email to buyers and brokers that it was taking pre-orders for a particular parcel of tuna product, including “a description of the tuna, its volume and prices.”  A broker sent back the following email:

i will take it all

po 125151 thanks

dan

The supplier responded:  “Done, thank you, Marc”.

The elements of a simple contract:  offer, acceptance, consideration.  They’re all there in remarkably clear language.

Now comes the complication.  An additional email is sent.

thank you

please send me the pics when you have them taken at the freezer

thanks

dan

Now let’s play with this for a bit, before I tell you what really happened.

Imagine that the supplier did not send the requested pictures, and the tuna arrived and the buyer simply refused to pay for it, on the grounds that no pictures were sent.  The question is, did the last email alter the contract in any way?  And the answer is, no.  All the essential elements of a contract were already formed and the provisions about the pictures was never agreed to by the seller.  So the buyer would be obligated to buy the tuna anyway.

Imagine that the pictures were instead sent, but they showed tuna that did not meet the description that was in the offer.  The buyer then rejected the tuna on the grounds of the pictures.  Here we have an interesting question of the difference between the picture, which is evidence of the condition of the tuna, and the actual condition of the tuna.  If the pictures were accurate, the buyer would be justified in rejecting the tuna because it did not conform to the description in the offer.  That’s a basic ground for rejection under Section 2-602 of the UCC, “if the goods . . . fail in any respect to conform to the contract.”  We call it the “perfect tender rule”.  But that would apply whether there were pictures or not.  If the tuna wasn’t as described, then the buyer could reject.

If for some reason the tuna was better than the pictures, the rejecting buyer would be at risk that the seller could prove that.  That’s an unlikely, though not impossible, scenario.  Note that there are variations within official grades for products like tuna.  One could, reasonably, condition one’s acceptance on the pictures being acceptable, even if the tuna met a particular specification.  But that wasn’t the parties’ contract.

Now let’s consider what really happened.  The seller simply sold the tuna to someone else.  The buyer had already re-sold the tuna in a back-to-back sale to yet another buyer, and was unable to perform that contract, where he had locked in a sure profit.  The seller defended on the ground that, since it had never sent pictures, it had never been bound to the contract.

The court took this argument at face value.  But it found that in order to prevail, the email would have had to have been sent at the initiation of the contract.  So instead of saying “I will take it all,” it should have said, “I will take it all subject to pictures.”

This would have been the right result if the buyer had had remorse as I suggested in my examples before revealing what happened.  If the buyer had made pictures a condition precedent to his purchase, and no pictures were forthcoming, then the buyer would have been excused from buying because the seller hadn’t fulfilled the required condition.

But that’s not what happened here.  The condition, if it had been part of the contract, would have run in favor of the buyer, not the seller.  Yet it was the seller who was trying to get out of the contract.  The alleged contract, again assuming the pictures were part of it, was not “if you choose to provide me pictures and I am satisfied with them, I’ll buy”, it was “I’ll buy, but send me pictures first.”  A condition precedent like this is an obligation of the seller for which the seller can be in breach by not complying, but it is not optional with the seller to fulfill the condition precedent, excusing him from performing the rest of the contract.  It is a fundamental quality of a condition precedent that it can be waived by the party in whose favor it runs.

So even had the email been part of the contract, the seller’s failure to sell would not have been excused by the seller’s failure to provide the pictures.  This email wouldn’t have been worth the paper it wasn’t written on no matter what happened.

Food Liability Law Blog Launches New Responsive Design and Enhanced Reader Features

Dear Food Liability Law blog readers. Originally conceived by our former colleague Ken Odza – now food safety counsel at Kellogg’s -  and Rick Goldfarb, Food Liability Law blog has been bringing you news on major food liability law developments for more than six years. While our commitment to keep you informed hasn’t changed, technology certainly has. Back when Ken and Rick first started posting, it was still a desktop- and RSS-dominated world. Today, more and more of you are reading our posts on tablets and smartphones. As readers ourselves, we understand your need for news on-the-go and at your convenience.

So we’re very excited to announce to you today a completely new – and improved – blog design, along with new feature sets we think will enhance your content experience.

  • First, Food Liability Law Blog now uses a responsive design format. So no matter where – or on what device – you visit us, you can be assured of a consistent, clean and crisp reader experience.
  • Second, we’ve added new social sharing features to our posts. With easy-to-read social icons, sharing Food Liability Law blog posts with your social networks is now a snap.
  • Third, we’ve improved our content subscription options. We’ve expanded the number of RSS subscription feeds, optimized the look and feel of our email subscription service, and added links to our Twitte feed as an alternative content consumption option.

We hope you enjoy these changes and enhancements. Thanks again for visiting and keeping us on your list of must-read food liability news sites!

Seed Libraries Don’t Breed Agri-Terrorism and Other Reasons We Are Not a Breaking News Blog

In July, there was a story going round about how the Seed Library at the Joseph T. Simpson Public Library in Mechanicsburg, Pennsylvania was being shut down for fears of “agri-terrorism.” Indeed, according to one story, this was being done by the USDA and “Cumberland County Library System Executive Director Jonelle Darr was told that the USDA would, ‘continue to crack down on seed libraries that have established themselves in the state.’”

I saw the articles and noted them for a future piece on here. Then I waited a bit while things settled down. And there isn’t much tempest to this particular teapot.

 

First, the good citizens of Mechanicsburg, Pa. will continue to be able to swap seeds through their public library. What this is all about is the Pennsylvania Seed Act (the USDA has nothing to do with this controversy), which is like Seed Acts in many states in that it requires those who sell seed, and selling is defined broadly so as to avoid anyone getting around the act to include, among other things, barter, to have that seeded tested first. This puts a true seed library, one that allows you to check out seed and then return seed from your harvest at the end of the growing season, on the edges of legality under that statute. But the Pennsylvania Department of Agriculture made it clear that non-commercial seed swaps were perfectly okay and the library could host them. 

 

Second, the person who used the term “agri-terrorism” was a Cumberland County Commissioner. While she is, in fact, a former Marine with a background in intelligence and lives on a farm, determining the nation’s response to agri-terrorism is not really in her bailiwick.

 

So basically, this was a nothingburger from start to finish. The very first letter from the Pennsylvania Department of Agriculture ended like this: “I’m sure a creative, innovative way can be found to continue to promote healthy gardening while maintaining seed quality and meeting the requirements of the PA Seed Act.” This is just the tone you’d want a bureacrat who is reluctantly applying a law to a situation where its very application is counterintuitive to take.  But a bunch of bloggers took the “agri-terrorism” comment and made it sound like the government (indeed, the federal government) was coming down like a ton of bricks on some poor gardeners. That was simply never the case. They came up with their solution and by all accounts they’re happy with it.

This gives me sympathy for those who were caught up proclaiming USC cornerback Josh Shaw a hero last Monday only to have egg on their faces Wednesday when his purported heroism was admitted to be a hoax. I’ll take my long leadtime over a rushed deadline anytime.

Supreme Court Creates New Food Labeling Battleground, plus GMO Labeling Primer

My colleague Anne Glazer recently co-authored an article with Connie Kirby of Northwest Food Processors Association titled “Summary of Regulatory Intersection between the Federal Trade Commission and the Food and Drug Administration over the Labeling and Advertising of Food Products: Implication for Genetically Engineered Foods.”

Prepared for Oregon Governor Kitzhaber’s Task Force on Genetically-Engineered Agriculture, of which Connie is a member, the article provides a helpful summary of the jurisdictional arrangements and regulatory approach to GMO labeling by the federal agencies charged with regulating food product manufacturing. It also provides an excellent breakdown of the recent U.S. Supreme Court decision in POM Wonderful, LLC v. The Coca-Cola Company, which paved the way for a new battleground in food and beverage labeling litigation: competitor-to-competitor lawsuits.

Readers can download a PDF copy of the article here.

Also a quick shout-out to Connie Kirby and her fellow bloggers on their new “NWFPA Issues Blog.” NWFPA members can follow their commentary on the recent decision in POM Wonderful and other current topics relevant to the food industry at http://www.nwfpa.org/resources/issues-blog.

FDA Issues Gluten Free Labeling Compliance Guide

Nearly a year ago on August 5, 2013, we reported on the blog that the Food and Drug Administration (FDA) had published a final rule establishing a regulatory definition of the term “gluten-free” for voluntary use in the labeling of foods. The final rule is intended to provide a uniform definition of the term “gluten-free” so that consumers, particularly those who have celiac disease, will know what it means when they see it on the labeling of food.

The rule became binding and effective on September 4, 2013, but August 5, 2014 is the date when FDA-regulated foods labeled “gluten-free” must comply with all requirements established by the final rule. In preparation of the upcoming compliance date, FDA prepared a Small Entity Compliance Guide which restates in plain language the requirements concerning use of the term “gluten-free” in the labeling of foods.

Specifically, the guidance states that any label claiming that a food is “gluten-free” must not contain any of the following ingredients:

  • An ingredient that is a gluten-containing grain (such as wheat, rye, or barley or any of their crossbreeds); or
  • An ingredient that is made from a gluten-containing grain and that has not been processed to remove gluten. For example, “wheat flour” is an ingredient made from wheat that has not been processed to remove the naturally occurring gluten in wheat. Therefore, wheat flour cannot be used as an ingredient to make a food labeled “gluten-free;” or
  • An ingredient that is made from a gluten-containing grain and that has been processed to remove gluten, if the use of that ingredient contains 20 parts per million (ppm) or more gluten.

The claim can also appear on the labels of foods that inherently do not contain gluten, such as fresh vegetables or juices.

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“Tanning Salons” Versus “Edible Art”: What is Artisan Bread?

This is a follow-up on the entry on VPN Pizza.  It results from this interview by a blogger with Eli Colvin, head baker of the MODEL Bakery in California, and Don Sadowsky, whom the interviewer identifies as a "bread pal."  Don happens to be my bread pal, too, which is how I found the interview.

A lot of the interview has to do with the question of whether there is a definitive standard for what constitutes "artisan bread".  As I argued in the prior article, in the end these are two words in the English language you’re not going to get complete agreement on.  Don sums it up nicely:

Artisan bread has a cachet that is well deserved, and lots of big boys want in on it. Should we care that a lot of factory bread has the label “Artisan”? “Natural”, “Gourmet” and similar designations have been so debased that they mean nothing (if they ever had any real meaning), though people may react subliminally. Same thing with artisan?

Australia has an Artisan Baker Association, which, much like VPN for pizza, sets standards for bread.  While its name is obviously generic, it has a whimsical logo that most likely gives it a strong trademark in Australia, or anywhere else.  Indeed, it has members in Georgia, Massachusetts, New York and even Alaska.  It’s a mark that could mean something to consumers, but of course there is a lot of excellent bread in the marketplace that doesn’t have that mark. 

In Britain, there is the Real Bread Campaign, which has a comprehensive FAQ about its goals.  It coined the term "tanning salons" to apply to bakeries in large grocery stores that simply bake pre-prepared loaves.  Sadowsky asks,

Are the people who shop at grocery store “tanning salons” people who might otherwise shop at an independent bakery, or are they merely moving from the prepackaged bread aisle to the “artisan” aisle? I read over and over again about the decline of small bakeries, but I don’t know if it’s just that people won’t spend the money for handmade bread period, regardless of what kind of bread they find in the supermarkets.

That’s not a question that will have the same answer for everyone who buys bread in a supermarket bakery.  Like it or not, the availability of bread that meets these standards is not, and is unlikely ever to be, universal.  The families you can see doing their grocery shopping, sleepy kids in tow, after midnight (the only time the parents working two jobs have time to shop), is not going to have a chance to sample Eli Colvin’s bread.  Even those who might shop when the MODEL or its peers is open don’t all live in what he calls a "progressive food area".  And even he has taken to using machinery for some of his production, just to keep up with demand. 

As a lifelong home baker I entirely agree with Eli that "bread is edible art."  I grew up in a home where the paintings on the wall were by my dad and my son grew up in a house where the bread in the kitchen was made by his dad.  But not everyone is going to get there. 

New York “Big Gulp” Ban Bites It For Good

The New York Court of Appeals has ruled in the case of Statewide Coalition of Hispanic Chambers of Commerce v. New York City Department of Health & Mental Hygiene to strike down, permanently, New York City’s attempted ban on sugar-based beverages in containers larger than 16 ounces. 

As we suggested when the case was just before the Supreme Court (confusingly, the trial court in New York), the case really had to do with the powers of the New York Health Department, an administrative agency beholden basically to the mayor, and not to any question of the merits of its rule. 

Yet, the New York Times, as seems to be required in all reporting of legal decisions in mainstream publications, overstates the effect of the decision:

 

The Court of Appeals ruling will most likely be seen as a significant defeat for public health advocates who have urged state and local governments to discourage the consumption of high-calorie beverages, saying the drinks are prime drivers of a nationwide epidemic of obesity.

 

Not really.  It should be seen as a proper corrective to an admininstrative agency that overstepped its bounds.  The New York City Council and the New York Legislature, the Court of Appeals made clear as had the lower courts, remain perfectly empowered to enact laws to accomplish exactly what the Health Department was not empowered to do.  Whether they do it or not, of course, is up to them. 

The court decided the case 4-2, with one concurrence and one judge recused (The Times of course called the dissent "blistering", as though they are dissents that are not).  And at least one media outlet copied my prior headline (I have no idea if it was original then, of course).

As I prepare for another trip to New York, I’m glad to know that the 24-hour McDonald’s up the street from my hotel will continue to serve Diet Dr Pepper in the larger size, so I don’t have to walk to the 7-11 (which wasn’t covered by the regulation in the first place), which is several blocks further.

POM Also Thinks Justice Kennedy Wonderful (Indeed, his colleagues, too)

In its much-anticipated decision, the United States Supreme Court last week declared that the Federal Food, Drug and Cosmetic Act and the federal Lanham Act can coexist side-by-side.  In other words, even if you comply perfectly with the FDA’s labeling rules on something, you can still be sued by a competitor for a misleading label under the Lanham Act.

The facts of the case are better explained by John Oliver than by me. 

And the decision itself is remarkable for being unanimous (Justice Breyer recused himself; either he owns Coca-Cola stock or he drinks POM Wonderful every morning) and stating a relatively clear rule (and one that Congress could override if it chose; the Constitution is not present in this case). 

Note finally that the case simply gives POM Wonderful the right to continue to sue to vindicate its claim that the label was misleading. 

Constitutionality of Vermont’s Recently Enacted GMO Labeling Law Challenged

In a lawsuit filed yesterday, June 12, 2014, in United States District Court for the District of Vermont, four national trade associations representing food producers and manufacturers sued the state of Vermont claiming that the state’s recently passed Act 120, which would require certain food containing ingredients derived from genetically engineered crops to be labeled as such, violates the United States Constitution.

Enacted on May 8, 2014, Act 120 amends Title 9 of the Vermont Statutes to include a new chapter 82A, “Labeling of Food Produced with Genetic Engineering.” The new law requires food that is intended for human consumption and that is offered for sale on or after July 1, 2016 to be labeled as produced from genetic engineering if the food was entirely or partially produced with genetic engineering.

The act also prohibits a manufacturer of a food produced entirely or in part from genetic engineering from labeling the product on the package, in signage, or in advertising as “natural,” “naturally made,” “naturally grown,” “all natural,” or any other similar words. Most importantly, though, unlike other recently passed GMO labeling laws in Connecticut and Maine, Vermont’s law does not require passage of similar laws by other states in order to take effect. It is the first “no-strings-attached” GMO labeling bill to pass in any state.

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Astiana’s End: “All Natural” Case Against Ben & Jerry’s Dismissed

The Astiana case against Ben & Jerry’s, about which we’ve written here and here, has been voluntarily dismissed.  Since the case was no longer a class action, the parties are not required to announce whether any money changed hands and one suspects that there is an ironclad confidentiality agreement around those terms. 

 

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