UCC Outline – Prof. Meiklejohn
UCC Articles
1. General Provisions
2. Sales
A. Leases of Goods
3. Negotiable Instruments
4. Bank Deposits and Collections
A. Funds Transfers
5. Letters of Credit
6. Bulk Sales (Repealed in most states)
7. Documents of title
8. Investment Securities
9. Secured Transactions
Does the UCC cover this?
1. Section 1-102 – Scope
This article applies to a transaction to the extent that it is governed by another article of the UC,C
Another article must also apply for the UCC to apply whatsoever
2. Section 1-103 – Purpose
A. The Uniform Commercial Code must be liberally construed and applied to promote its underlying purposes and policies, which are:
1. To simplify, clarify, and modernize the law governing commercial transactions;
2. To permit the continued expansion of commercial practices through custom, usage, and agreement of the parties; and
3. To make uniform the law among the various jurisdictions.
B. Unless displaced by the particular provisions of the UCC, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions.
UCC displaces Restatements where the two disagree
3. Section 1-302 – Varying the UCC
A. Except as otherwise provided in subsection (b) or elsewhere in the UCC, the effect of provisions of the UCC may be varied by agreement.
B. The obligations of good faith, diligence, reasonableness, and care.
GasMark v. Kimbell – by making a “mutually agreed formal contract” the parties agreed to work under the less liberal common law, as opposed to the more liberal UCC
Van Iderstine v. Barnet – Cannot waive the obligation of good faith
4. Section 2-102 – Scope
Unless the context otherwise requires, this Article applies to transactions in goods; it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction nor does this Article impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.
A. Section 2-105 – Goods
1. “Goods” means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action. “Goods” also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (Section 2-107)
5. Distribution Contracts
A. Distribution contracts are usually treated as sales of goods – Sally Beauty
UCC Contract:
1. Liability
A. Formation
1. Formation in General – Section 2-204
1. A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
a. “Agreement” – Section 1-201(3)
i. “Agreement”, as distinguished from “contract”, means the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade.
Cotton Yarn Antitrust – usage of trade is included! Court looked at yarn rules to decide arbitration is usage of trade.
B. “Contract” – Section 1-201(11)
1. “Contract”, as distinguished from “agreement”, means the total legal obligation that results from the parties’ agreement as determined by the UCC as supplemented by any other applicable laws.
B. An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
C. Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
Lefkowitz v. Great Minneapolis Surplus – no certainty in one advertisement because three different kinds of coats, so you couldn’t do a PK-PB. Other advertisement was certain because you knew exactly what you would be getting.
4. Misunderstanding – Section 20 of the Restatements
a. No Misunderstanding section in UCC.
b. Janke v. Vulcan – Vulcan thought “C-302,” Janke thought “C-300 or C-301.” Restatment 20(2)(a) and (b) Janke doesn’t know or have reason to know meaning attached by Vulcan, so use Janke’s meaning. So the quote was an offer to supply pipe that met the proper requirements.
2.Offer and Acceptance in Formation of Contract – Section 2-206
a. Unless otherwise unambiguously indicated by the language or circumstances,
a. An offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances
i. Offer
A. Under section 1-103(b), since “offer” is not defined in either Article 1 or Articl
aling prevails over Usage of Trade.
g.Delegation and Assignability – Section 2-210
1. Can delegate duty unless otherwise agreed, or unless other party has a substantial interest in having original promisor do it.
Sally Beauty- Court says Nexxus has substantial interest in not having Sally Beauty perform because Sally Beauty was bought by a direct competitor of Nexxus.
h.Parol or Extrinsic Evidence – Section 2-202
1. Thought process:
1. Is it contradictory, explanatory, or supplementary?
i. If it’s explanatory, 2-202 does not displace the common law, as needed under 1-103. Sunbury shows us this. Go to common law.
2. Is it final?
i. O’Neil – conduct before and after the sale shows that the defendant may not be bound by the agreement totally, therefore not final.
3. Is it complete and exclusive?
2. With a final expression of agreement, terms may not be contradicted by any other evidence, but may be explained or supplemented.
1. By course of dealing or usage of trade or by course of performance (1-303)
2. By evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement
· “Consistent additional terms” suggests adding, and not explanation (this is why explanations/interpretations go to common law)
· Nanakuli suggests that a merger clause is not necessarily enough to show that it is complete and exclusive if it is a boilerplate clause. Court must look at whether the additional terms are “such that, if agreed upon, would certainly have been included in the document.” This is a liberalization of Williston’s third test – if there’s any doubt here, the terms get admitted.
· IFC – If the application and Equipment Rental Agreement are seen as 1 transaction then the courts look at both and harmonize them.
Palladino v. Contadina
The court suggests that there was an integration clause, so this was probably a final agreement.
Therefore, cannot be contradicted by the prior terms
