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Commercial Law
Southern Illinois University School of Law
Robertson, RJ

Sales of Goods Under Article 2 of the UCC
 
Assignment 1
Scope of Article 2
Article applies to transactions for the sale of goods. The goods must be movable at the time of identification to the contract for sale.
            2-106(1)-contract for sale can be both a present sale or a contract to sell at a future time
 
NOT Goods(not subject to article 2)
-intangibles(contract rights, copyright interests, patent rights, right of access to information)
-services(haircut)
-real estate(land, fixtures)
 
Nature of Article 2 Rules
1-103: Unless displaced by particular provisions of the UCC, principles of law and equity supplement
            -if we have a UCC section on it, it should displace common law rules
            -if we do not have a UCC section, the common law applies
 
1-302 Most Article 2 rules are not mandatory
(a) the effect of most provisions of the UCC may be varied by agreement
            -parties can change the outcomes of the UCC by agreement
            -parties can change the rights, obligations, and remedies provided by the UCC, and in particular Article2
(b)
-“good faith, diligence, reasonableness, and care” cannot be disclaimed by agreement
-parties may determine standards by which these things are measured
 
1-201 (generally coextensive & overlapping, but not entirely)
Agreement: The language of the parties defines agreement as well as the way the parties conduct their obligations-the bargain in fact
Contract: The legal obligations actually created by the contract
 
§ 1-303(e) –order of precedence
1-express terms of the contract
2-course of performance-conduct to which the other party does not object
            -only applies in installment contracts
            -relevant in ascertaining the meaning of the parties agreement
            -may supplement or qualify terms of an agreement
3-course of dealing-sequence of conduct concerning previous transactions
-has same effect as course of performance
4-usage of trade-practice or method of dealing with regularity of observation to justify expectation of observation in particular transaction
            -only relevant if both parties are engaged in the trade(merchants)
5-Article 2 gap-filling provisions
 
Mixed or Hybrid Contracts
Does article 2 apply if the contract is for both goods and something else(services, land, etc)?
 
Predominant Purpose Test-If the main purpose of the contract is the goods, article 2 applies & vice versa.
            -either contract will be entirely subject to article 2 or not at all
Gravamen Test-Is dispute over defects in the quality of the goods, or in the services?
 
Merchants
Person who:
            -deals in goods of the kind (narrowest)
            -by occupation holds self out as having knowledge or skill peculiar to practices or goods involved
-knowledge or skill may be attributed to by employment of agent who holds self out as having knowledge or skill
 
3 Types of Merchants –some sections only apply to certain types of merchants
-Any person engaged in business
-Party who deals in goods of the kind
            -warranty of merchantability, entrustment
-Special merchants in certain circumstances
 
Goods v Real Estate
2-107
(b) If items can be removed w/o doing material harm to the land(trees, crops, etc) is a contract for sale of goods
(a) Contract for sale of minerals(oil, gas, etc) to be removed from realty is sale of goods if seller will remove goods from the land. However, article 2 does not apply until severance has been made by seller.
 
 
Assignment 3
 
General Topics Involved with Section 2 of UCC
1. Sales Contract Formation
2. Terms of the Sales Contract
3. Performance Obligations in the Sales Contract
4. Remedies for Breach of a Sales Contract
 
Definiteness of Contracts 2-204(3)
§ 2-206(1)(a) so long as method of acceptance is left open, acceptance by any method or reasonable circumstances is ok. This repudiates the common law rule that acceptance must be in similar form to the offer(if offer is by telegram, acceptance must be by telegram to be valid)
 
§ 2-207 does not apply if seller accepts by prompt or current shipment of goods. A later acknowledgement with different or additional terms would not be relevant and no battle of the forms issue would arise.
 
Two Battle Questions                                                            Common Law                        UCC
Is a contract formed by exchange of the forms?                    “mirror image” rule                 2-207(1)
If a contract is formed in any way, what are the                    “last shot” rule                                    2-207(2) or
terms of the contract?                                                                                                             2-207(3)
 
Has Contract Been Formed under subsection (1)?
Subsection (1)
A contract is formed by a definite and seasonable expression of acceptance.
            -Definite-bargained for(negotiated) terms are the same in acceptance as in offer
            -Seasonable-offer has not lapsed
If both of these criteria are met, a contract has been formed.
 
 
 
Exception:
Definite & seasonable acceptance does not form contract if acceptance is made expressly conditional on the additional terms of the acceptance
-Requirement met only if exact language is used: expressly made conditional on the additional terms
            -this makes the acknowledgement a rejection and counter-offer
 
Yes-Whose Terms Control?
Subsection (2)
This provision takes effect when the parties’ writings have formed a contract under Subsection (1).
 
If either party is not a merchant:
The offeror’s terms are controlling

ause that party is admitting the contract
3-it must specify a quantity (need not be accurately stated-can state the wrong quantity, but cannot enforce beyond the quantity shown) (quantity is the one thing you can’t gap-fill on the quantity)
 
(2) Exception (if writing enforceable against sender, it is also good against recipient if all requirements are met)
            1-Both parties must be merchants
                        Merchant: (broad definition of merchant)
            2-Writing in confirmation of the contract
                        -just confirming deal, not offer or proposal for contract
                        -must indicate that at least sender believes contract has already been made
            3-must be sufficient against sender under subsection (1)
                        -must meet the three requirements of subsection (1)
            4-within a reasonable time after an oral agreement
                        (3-5-8 days ok, reasonably soon after transaction : 8 months too long)
            5-party receiving had reason to know of contents
            EXCEPTION
**-unless recipient gives written objection within 10 days of receipt, contract is enforceable against both
-must object to entire contract, not just one of the terms. If you merely object to, say, the delivery date, you admit existence of contract. Party must object to existence, not merely terms.
 
 (3) Exceptions
(a) goods are to be specially manufactured for buyer, goods are not suitable for sale to others in ordinary course of business, and seller has made substantial beginning of manufacture or commitments for procurement before buyer repudiates
(b) party against whom enforcement is sought admits in pleading, testimony or otherwise in court that contract was made, but not enforceable beyond quantity admitted
            (c) contract enforceable if:
                        (conduct is such good evidence of contract that we don’t need writing)
-if goods are shipped and accepted
            OR
-Goods are paid for and accepted
                        (once you have established part payment, you can introduce evidence of price to show quantity)
                                    -for partial payment, can only enforce for quantity of goods paid for pro rata