Ch 21 Introduction to Sales Flashcards
Development and Scope of The UCC
Over time, lawmakers in all 50 states were persuaded to adopt many parts of the UCC. They responded to these persuasive arguments:
* Businesses will benefit if most commercial transactions are governed by the modern and efficient contract law principles that are outlined in the UCC.
* Businesses everywhere will be able to operate more efficiently, and transactions will be more convenient, if the law surrounding most of their transactions is the same in every state.
Noah and Nina, Revisited
i.e.
Noah and Nina each negotiated what they believed was an enforceable agreement, and both filed suit: Noah for the sale of his land, Nina for the purchase of drones. Only one prevailed.
This Unit and This Chapter
This unit covers three principal subjects, all relating to commercial transactions that the Code governs.
A house is not a good, but the stuff in the house—the car in the garage, the computers, the furniture, and the art hanging on the wall—is.
The UCC is pro-business. The whole point of the UCC is to make business transactions more reliable, convenient, and predictable.
Tie goes to the contract. In baseball, a tie goes to the runner. Under the UCC, the preference is to declare an agreement to be a contract if no clear reason exists to declare it invalid.
Code’s Purpose
UCC §1-102(2): Underlying purposes and policies of this Act are:
a. To simplify, clarify and modernize the law governing commercial transactions;
b. To permit the continued expansion of commercial practices through custom, usage and agreement of the parties; and
c. To make uniform the law among the various jurisdictions.
Scope of Article 2
-UCC §2-102: Article 2 applies to the sale of goods.
* goods: Are things that are movable, other than money and investment securities
Mixed Contracts
Was it one for the sale of goods (UCC) or one for services (common law)? In fact, the agreement combined both goods and services and was therefore a mixed contract. In a mixed contract, the UCC will govern if the predominant purpose is the sale of goods; the common law will control if the predominant purpose is providing services.
Merchants
- merchant: Generally, someone who routinely deals in the particular goods involved
-The UCC frequently holds a merchant to a higher standard of conduct than a non-merchant.
Good Faith and Unconscionability
-The UCC imposes a duty of good faith in the performance of all contracts. For a non-merchant, good faith means honesty in fact. For a merchant, good faith means honesty in fact plus the exercise of reasonable commercial standards of fair dealing
- unconscionable: A contract that is shockingly one-sided and fundamentally unfair
UCC Contract Formation
The common law expected the parties to form a contract in a fairly predictable and traditional way: The offeror made a clear offer that included all important terms, and the offeree agreed to all terms. Nothing was left open and there was little flexibility. The drafters of the UCC recognized that businesspeople frequently do not think or work that way and that the law should reflect business reality.
Formation Basics: Section 2-204
UCC §2-204 provides three important rules that enable parties to make a contract quickly and informally:
1. Any manner that shows agreement.
2. Moment of making is not critical
3. One or more terms may be left open
-Under the UCC, a court may enforce a bargain even though one or more terms were left open.
Statute of Frauds
(UCC §2-201 requires a writing for any sale of goods of $500 or more., Writing Sufficient to Indicate a Contract, Incorrect or Omitted Terms, Enforceable Only to the Quantity Stated, Exceptions)
-UCC §2-201 requires a writing for any sale of goods of $500 or more.
[Contracts for Goods of $500 or More]
[Writing Sufficient to Indicate a Contract]
- In general, the writing must be signed by the defendant,
[Incorrect or Omitted Terms]
[Enforceable Only to the Quantity Stated]
-The Code will enforce the contract only up to the quantity of goods stated in the writing.
[Exceptions]
(Merchants)
-When two merchants make an oral contract, and one sends a confirming memo to the other within a reasonable time, and the memo is sufficiently definite that it could be enforced against the sender herself, then the memo is also valid against the merchant who receives it, unless he objects within ten days.
(Specially Made Goods.)
(Judicial Amdission)
Added Terms: Section 2-207
(Intention, Additional or Different Terms)
-Under §2-207, an acceptance that adds or alters terms will often create a contract
[Intention]
[Additional or Different Terms]
(Additional Terms.)
- Additional terms:Proposed contract terms that raise issues not included in the offer.
-When both parties are merchants, additional terms generally become part of the bargain.
In three circumstances, however, additional terms do not bind the parties:
1. If the original offer insisted on its own terms.
2. If the additional terms materially alter the offer.
3. If the offeror promptly objects to the new terms.
(Different Terms.)
-If there is no clear oral agreement, the Code supplies its own terms, called gap-fillers,
Open Terms: Sections 2-305 and 2-306
(Open Prices)
-Under §2-305, the parties may conclude a contract even though they have not settled the price.
-the price is a reasonable price at the time of delivery.
Output and Requirements Contracts
-The UCC requires that the parties in an output or requirements contract make their demands in good faith.
Modification
- they may agree to prohibit oral modifications and insist that all modifications be in writing and signed. Between merchants, such a clause is valid. But if either party is not a merchant, such a clause is valid only if the non-merchant separately signs it.
