Assignment:
Question 1. After lengthy telephone negotiations, Bernstein and Metal Manufacturers (MM) entered into an agreement whereby MM agreed to sell Bernstein 20,000 pounds of nickel cathodes at $4.60 per pound. To secure the deal, Bernstein promised to send MM a check for $20,000, which MM was to hold in escrow until the nickel cathodes were ready for shipment. About a month later, Bernstein sent a letter confirming the oral negotiations and enclosed a $20,000 check as a “good faith deposit”. Bernstein also indicated in his letter that the check was to be held in escrow awaiting preparation of the nickel cathodes. When MM attempted to deposit Bernstein’s $20,000 check in an escrow account, it was rejected by the bank because Bernstein had stopped payment on it. MM immediately ceased production of the nickel cathodes. Subsequently, Bernstein purchased 20,000 pounds of nickel cathodes on the open market at a price substantially higher than the price it had contracted to pay MM. Bernstein then sued to recover this difference in price. What argument does MM have to defend against Bernstein’s suit? Who will succeed?