UCC contracts outline Flashcards
(61 cards)
What do UCC sections 2-304 to 2-311 address?
§ 2-304. Price Payable in Money, Goods, Realty, or Otherwise.
(1) The price can be made payable in money or otherwise. If it is payable in whole or in part in goods each party is a seller of the goods which the party is to transfer.
(2) Even though all or part of the price is payable in an interest in realty the transfer of the goods and the seller’s obligations with reference to them are subject to this Article, but not the transfer of the interest in realty or the transferor’s obligations in connection therewith.
§ 2-305. Open Price Term.
(1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if
(a) nothing is said as to price; or
(b) the price is left to be agreed by the parties and they fail to agree; or
(c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.
(2) A price to be fixed by the seller or by the buyer means a price for the party to fix in good faith.
(3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at the party’s option treat the contract as cancelled or fix a reasonable price.
(4) Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.
§ 2-306. Output, Requirements and Exclusive Dealings.
(1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.
(2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.
§ 2-309. Absence of Specific Time Provisions; Notice of Termination.
(1) The time for shipment or delivery or any other action under a contract if not provided in this Article or agreed upon shall be a reasonable time.
(2) Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.
(3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable.
§ 2-310. Open Time for Payment or Running of Credit; Authority to Ship Under Reservation.
Unless otherwise agreed
(a) payment is due at the time and place at which the buyer is to receive the goods even though the place of shipment is the place of delivery; and
(b) if the seller is authorized to send the goods the seller may ship them under reservation, and may tender the documents of title, but the buyer may inspect the goods after their arrival before payment is due unless such inspection is inconsistent with the terms of the contract (Section 2-513); and
(c) if delivery is authorized and made by way of documents of title otherwise than by subsection (b) then payment is due at the time and place at which the buyer is to receive the documents regardless of where the goods are to be received; and
(d) where the seller is required or authorized to ship the goods on credit the credit period runs from the time of shipment but post-dating the invoice or delaying its dispatch will correspondingly delay the starting of the credit period.
These sections are designed to fill in missing terms in a contract for the sale of goods, allowing the contract to be valid and enforceable even if the parties haven’t explicitly agreed on every detail. They provide default rules for price, quantity in certain types of agreements, time aspects of the contract, and payment terms.
Sources and related content
Various aspects of contracts for the sale of goods, including price, delivery, and performance.
UCC § 2-311:
(1) Specification of Particulars of Performance:
If the main parts of the sales agreement are definite enough to form a contract (as per UCC § 2-204(3)), the contract doesn’t become invalid just because it leaves some details about how the agreement will be carried out to be decided by one of the parties.
However, any such specification must be made in good faith and within the bounds of what is commercially reasonable. This prevents a party from using the open terms to unfairly exploit the other party.
(2) Options for Assortment and Shipment:
Assortment of Goods: Unless the parties agree otherwise, the buyer gets to choose which specific items will be included in the delivery when the contract involves a variety of goods.
Shipment Arrangements: Again, unless they agree differently, the seller is the one who gets to decide the specifics of how the goods will be shipped (carrier, route, packaging, etc.), except in certain “F.O.B.” and similar shipping terms defined in UCC § 2-319.
(3) Failure to Specify or Cooperate:
This subsection deals with what happens when a necessary specification isn’t made on time, or when one party needs the other’s cooperation to perform their part of the deal, but that cooperation isn’t provided promptly.
In such situations, the party who is waiting for the specification or cooperation has options:
(a) They are excused for any delay in their own performance that results from the other party’s inaction.
(b) They can choose to either:
Proceed to perform their own obligations in any way that is reasonable under the circumstances.
After the time for a significant part of their own performance has passed, they can treat the other party’s failure to specify or cooperate as a breach of contract – specifically, as a failure to deliver or accept the goods.
In essence, UCC § 2-311 promotes flexibility in contract formation and performance while still requiring good faith and commercial reasonableness. It provides default rules for who gets to make certain decisions and offers remedies when a party’s inaction hinders the process.
Under UCC 2-304, how can the price be paid?
In money, goods, or other forms, including realty.
What happens if a contract doesn’t specify the price according to UCC 2-305?
The contract can still be valid if the parties intend to form a contract and there’s a reasonable basis for determining the price.
What is the limitation on quantity under UCC 2-306?
Quantity is limited to actual output or requirements in good faith.
What does UCC 2-307 state about delivery?
Unless otherwise agreed, goods must be delivered in a single lot, and payment is due upon tender.
What is the default delivery location under UCC 2-308?
The seller’s place of business or, if none, their residence.
What does UCC 2-309 state about termination notice?
If no termination time is specified, either party can terminate with reasonable notice.
When is payment due if not specified in the contract according to UCC 2-310?
Payment is due when the buyer receives the goods.
What must parties do with options regarding performance under UCC 2-311?
Exercise them in good faith and cooperate with the other party.
What is established by UCC 2-312 regarding warranties?
The seller warrants that the title conveyed is good and its transfer rightful.
How can the warranty of good title be disclaimed according to UCC 2-312?
Only by specific language or circumstances giving Buyer reason to know the seller does not claim title.
What principle is outlined in UCC 2-403 regarding title?
A purchaser acquires all title that their transferor had.
What does ‘good faith’ mean in UCC 2-403?
Honesty in fact plus observance of reasonable commercial standards of fair dealing.
What does ‘entrusting’ include under UCC 2-403(2)?
Any delivery of goods to a merchant and any acquiescence in the merchant retaining possession.
What is required for a buyer to be considered a ‘buyer in the ordinary course of business’?
Purchasing goods in good faith without knowledge that the sale violates the rights of another.
What remedies are available to a buyer for breach of warranty?
Damages, rescission, and potential recovery of purchase price.
What must a buyer demonstrate to prove damages from a breach of warranty?
That the breach caused them actual damages.
What is the outcome if a warranty is effectively disclaimed?
The warranty will not be enforceable unless the disclaimer is specific and conspicuous.
What does UCC 2-313 establish regarding express warranties?
Three ways to create an express warranty through affirmations, descriptions, or samples.
Do affirmations of value create warranties under UCC 2-313?
No, affirmations of value, opinions, and commendations do not create warranties.
Can a breach of warranty occur if the goods are not as represented?
Yes, if the seller made express or implied warranties about the goods.
What is the significance of privity in warranty claims?
Traditionally, warranties were limited to parties in the contract, but some jurisdictions allow extension to reasonable users.
What does the buyer’s right cover regarding the use of goods?
The buyer’s right covers the use of goods without infringing on the rights of third parties, particularly if the seller is a merchant.
How can the exclusion of warranties be modified?
The exclusion of warranties can be modified only by specific language or circumstances that indicate the seller doesn’t claim title or is only selling the rights they have.
