The Pen & Pencil Company is based in Baltimore, Maryland. It is a retail shop that specializes in selling expensive, ornamental pens. Mr. Jones is the owner of this business, which operates as a sole proprietorship.

The Pen & Pencil Company is based in Baltimore, Maryland. It is a retail shop that specializes in selling expensive, ornamental pens. Mr. Jones is the owner of this business, which operates as a sole proprietorship.
Mr. Jones attends a conference in New York City, where various manufacturers from throughout the world of high quality pens display their products to prospective buyers. The conference is limited to retail businesses – consumers are not allowed to attend.
At the conference, Mr. Jones talks with Mr. Schmidt – who is the sales representative of a German company, Germany Writes Company of Berlin, that manufactures high-priced pens.
Mr. Jones tells Mr. Schmidt that he wishes to buy 100 ornamental pens from Germany Writes at a price of $100 a pen. Mr. Schmidt says there would be no problem filling this order. They agree in principal that Germany Writes will sell and Pen & Pencil Company will buy 100 ornamental pens for $100 per pen.
When Mr. Jones returns to Baltimore, he sends an email to Mr. Schmidt that says the following: “Pen & Pencil Company of Baltimore, Maryland agrees to buy from Germany Writes of Berlin, Germany, a total of 100 ornamental pens at the price of $100 per pen. Please process and arrange for delivery of such pens to the headquarters of Pen & Pencil in Baltimore, Maryland.” Mr. Schmidt emails back and writes: “This will confirm our agreement for Germany Writes or Berlin, Germany, to sell and Pen & Pencil of Baltimore, Maryland to buy a total of 100 ornamental pens for $100 per pen. These pens will be delivered to a carrier in Germany for transport to Pen & Pencil in Baltimore, Maryland.”
Mr. Schmidt takes the necessary steps to fill the order arranges for a carrier company to transport the pens by ship to Pen & Pencil of Baltimore, Maryland.
Unfortunately, the ship carrying the pens to Baltimore sinks at sea and all the pens are lost.
Mr. Schmidt now insists that Mr. Jones pay the full price of the pens, arguing that Germany Writes fulfilled its obligations to Pen & Pencil by delivering the pens to the carrier in Germany. Mr. Jones insists that he does not owe any money to Mr. Schmidt because he never received the pens he ordered.
Three legal issues with this scenario