Under the Uniform Commercial Code, in the jelly bean order scenario, the candy store reserved the right to cancel before December 15. The manufacturer shipped 500 bags of conforming jelly beans on January 20 and the store refused to accept. Which statement is correct about contract formation?

• A. The contract was formed only if the store accepted before December 15.
• B. The contract was formed when the manufacturer shipped conforming beans on January 20.
• C. No contract ever formed.
• D. The contract was formed the moment the store signed the order.

Answer: (B)

Under the UCC, a contract for the sale of goods can be formed when the seller ships conforming goods in response to an offer for prompt shipment. This shipment acts as an acceptance by performance, so a contract is created at the moment the conforming goods are shipped, even if the buyer has not explicitly accepted in any other way.

In this scenario, the store’s option to cancel before a certain date does not prevent formation once the seller ships conforming beans. When the manufacturer sent 500 bags on January 20, that shipment constitutes acceptance of the store’s offer for prompt shipment, thereby forming a contract. If the store then refuses to accept, it breaches the contract.

The other statements aren’t correct because acceptance by shipment can create a contract independent of the store’s signing or of acceptance before a cancellation deadline; the contract is formed at shipment, not merely at the moment the order was signed.