## Facts

- Hans Holterbosch, Inc. obtained the right to operate the Löwenbräu Pavilion at the 1964 New York World’s Fair and sought to serve high-quality German food alongside beer under severe time constraints.
- Design consultants and Raytheon (promoting microwave equipment) recommended using Graulich Caterer Inc.’s commissary-freeze-deliver approach: prepare German meals centrally, freeze them, deliver platters, and reheat/finish by microwave at the pavilion.
- Holterbosch approved Graulich’s food samples after testing; the parties treated the sample quality as the benchmark for performance.
- On April 1, 1964, Graulich sent a written “letter of intent” setting menu items, quantities, pricing, delivery, and quality; Holterbosch signed it with a rider stating the writing expressed “intent only” pending a later formal contract and conditioning acceptance on delivered food matching the approved samples’ quality.
- Both parties proceeded in reliance on the arrangement: Graulich created a commissary, hired staff, acquired supplies, and prepared for large-volume deliveries; Holterbosch planned pavilion operations around Graulich’s supply.
- Graulich delivered an initial shipment shortly before opening; Holterbosch rejected it as not matching the samples in taste and consistency.
- Graulich delivered a second shipment claiming changes to cure the defects; Holterbosch again rejected it and terminated the arrangement, then prepared food itself using conventional equipment.
- Graulich sued for breach of contract seeking expenses and lost profits; the trial court ruled for Holterbosch on the ground no binding contract existed due to “intent only” language and open terms.

## Issues

1. Whether the April 1 writing, the rider, and the parties’ conduct formed a binding sales contract under the UCC despite “intent only” language and contemplated later documentation.
2. If a contract existed, whether Holterbosch could reject the food and cancel because the failure to match the approved samples substantially impaired the value of the contract.

## Decision

- The Appellate Division reversed the trial court’s no-contract analysis and held a binding contract existed under the UCC based on the parties’ manifested intent, agreed core terms, and performance.
- The court nevertheless affirmed judgment for Holterbosch because the food did not conform to the agreed sample-based quality standard and the nonconformity substantially impaired the value of the whole contract, permitting rejection and cancellation.

## Legal Principles

- Under the UCC, a contract for the sale of goods may be formed in any manner sufficient to show agreement; open terms and contemplation of a later formal writing do not defeat formation if the parties intended to be bound and there is a reasonably certain basis for a remedy.
- “Intent only” language may be outweighed by the totality of circumstances, including course of performance and reliance, showing present contractual commitment.
- Where goods are sold by sample (or quality is expressly tied to approved samples), the samples supply the operative standard of conformity.
- A buyer may reject and cancel when nonconformity substantially impairs the value of the whole contract, particularly when the nonconforming aspect (here, quality) is central to the buyer’s business purpose.

## Conclusion

The court held that the parties’ interim writing and performance created an enforceable UCC sales contract, but the buyer lawfully rejected and canceled because the delivered food failed to match the approved samples and the resulting quality defect substantially impaired the contract’s value.


Graulich Caterer Inc. v. Hans Holterbosch, Inc., 243 A.2d 253 (N.J. Super. Ct. App. Div. 1968)