Scandinavian House owned an apartment building that needed new windows. Lee Gregory, Inc. doing business as Perma Sash, sent a proposal to Scandinavian offering to remove all old windows and install new ones for $453,000. About $302,000 represented the cost of the windows and approximately $151,000 represented the cost of labor. Scandinavian sent Gregory a letter stating: “Please consider this letter in indication of our intent to purchase the windows contained in your proposal. This is your authorization to begin measuring and the preparation of shop and installation drawings. We reserve the option to negotiate terms and conditions of the proposal which may impact or affect the operation of the building and the installation of the windows.”

Perma Sash then spent three weeks measuring windows and preparing shop drawings, which it sent to Scandinavian House. The drawings were fine, but the parties, which had agreed upon the total price, could not agree on the method of payment. Perma Sash wanted certain payment guarantees that Scandinavian House was not willing to make. Scandinavian House later notified Perma Sash that the deal was off and purchased the windows elsewhere.

Perma Sash sued Scandinavian House claiming breach of contract under Article 2 of the Uniform Commercial Code.

Does Article 2 of the UCC apply in this case? If so, was there a contract between the parties. If so, who will win?

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