What is agreement?
– 1-201 General Definitions
o (b)(3) AGREEMENT = 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 as provided in 1-303.
§ 1-303 Course of Performance, Course of Dealing, and Usage of Trade
· Course of Performance = a sequence of conduct between the parties to a particular transaction.
· Course of Dealing = a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
· Usage of Trade = any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question; question of law.
· Express terms à course of performance à course of dealing à Usage of Trade
· Most important definition of UCC in Levine opinion
· 5 elements
o “infer from other circumstances” is part of agreement
§ Price
o Language = includes written an oral
*****know the facts; know the facts and you will know the answer*****
o Course of performance =
*****start with the index*****
*****every problem starts with what is the agreement?****
§ 1-303
· Sequence of conduct between the parties
· Repeated performance
· Other party had opportunity to object or acquiesce
*** look at what’s going on in the market***
o Course of dealing =
§ Amendment to code from “conduct” to “transaction” perhaps means in business only, however argument under comments to course of dealing that includes more than business transactions
§ Narrow v. broad
· Business v. of any nature
o Usage and Trade =
§ Always important
§ Oranges example – contract for 100% grade A oranges; get 3% defective à maybe trade standard that will always be margin of error
§ Existence of such usage or trade must be proven as fact; however if part of code or record, then question of law
· Def. of record 1-201(b)(31) – info inscribed on a tangible medium or stored …
· Look at trade journals
§ Trade can be defined broadly or narrowly
· Oranges à citrus to “oranges suitable for juicing oranges”
· All this information creates the agreement
o Wants to see all this in the exam answer à tell him what the agreement is
What is Contract?
– 1-201 General Definitions
o (b) (12) CONTRACT = distinguished from agreement; total legal obligation that results from the parties’ agreement as determined by UCC or supplemental laws
– What else supplements the UCC, other laws?
o Legal effect of the agreement
o Agreement + laws that supplement
§ 1-103(b)
· May use anything in the common law, unless displaced by particular provisions
– Remember to bring in policies
o 1-103 Construction of UCC to Promote its Purposes and Policies; Applicability of Supplemental Principles of Law
§ (a) UCC liberally construed to promote underlying purposes and policies:
· Simplify, clarify, modernize
· Permit continued expansion of commercial practices through custom, usage and agreement
· Make law uniform across jurisdictions
§ (b) unless displaced by UCC provision, principles of law and equity . . . supplement its provisions.
– Is this a sale of Goods, and therefore under Article 2?
o 2-102 Scope
§ This article applies to transactions in goods
· 2-105 GOODS = all things 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 and things in action.
o Sale under article 2
§ 2-106 SALE = the passing of title from the seller to the buyer for a price
– Variation by Agreement
o 1-302 Variation by Agreement
§ (a) The EFFECT of provisions the UCC may be varied by agreement
· The obligations of good faith, diligence, reasonableness, and care prescribed by the UCC man NOT BE DISCLAIMED by agreement. The parties may by agreement DETERMINE THE STANDARDS by which the performance of those obligations is to be measure if those standards are not manifestly unreasonable.
§ Comment 1. States affirmatively at the outset that FREEDOM of contract is a principle of the UCC.
– 1-304 Obligation of Good Faith
o Every contract or duty within the UCC imposes an obligation of good faith in its performance and enforcement.
§ 1-201 (b)(20) GOOD FAITH = honesty in fact and the observance of reasonable commercial standards of fair dealing
§ 2-103 GOOD FAITH FOR MERCHANT = honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade
§ Comment 1 – “This section does not support an independent cause of action for failure to perform or enforce in good faith. Rather this section means that failure to perform or enforce, in good faith, a specific duty or obligation under the contract, constitutes a breach of that contract or makes unavailable, under the particular circumstances, a remedial right or power.”
Is it enforceable?
2-201 Formal Requirements: Statute of Frauds
– Contract for $500 or more is not enforceable by way of action or defense unless:
o There is some writing
§ *** 1-201 b(43) “Writing” includes printing, typewriting, or any other intentional reduction to tangible form.
o Sufficient to indicate that contract for sale has been made between the parties
§ A writing is not insufficient because it omits or incorrectly states a term agreed upon
o And signed by the party against whom enforcement is sought (or by authorized agent).
§ 1-201(37) “Signed” includes using any symbol executed or adopted with present intention to adopt or accept a writing.
o Not enforceable beyond the quantity of goods shown in such writing.
– (2) Between MERCHANTS
o If within reasonable time
§ 1-205 (a) whether a time for taking an action as required UCC is REASONABLE depends on the nature, purpose, and circumstances of the action.
o A writing
§ 1-201 b(43) “writing” see above
o In confirmation of the contract
o And sufficient against the sender
o Is received
o And the party receiving it has reason to know of its contents
§ Objective v. subjective standard
o Subsection (1) is satisfied against the receiving party
§ UNLESS written
adequate assurance of its cure the buyer must accept the installment.
o (3) Whenever non-conformity or default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole.
§ But the aggrieved party reinstates the contract if he accepts a non-conforming installment without seasonably notifying of cancellation
· or if he brings an action with respect only to past installments or demands performance as to future installments.
Gap Fillers needed?
– Terms provided by code
– 2-307. Delivery in Single Lot or Several Lots.
o Unless otherwise agreed all goods called for by a contract for sale must be tendered in a single delivery and payment is due only on such tender but where the circumstances give either party the right to make or demand delivery in lots the price if it can be apportioned may be demanded for each lot.
– 2-308 Absence of Specified Place for Delivery
o Unless otherwise agreed
§ The place for delivery of goods is the seller’s place of business or if he has none his residence; but
§ In a contract for sale of indentified goods which to the knowledge of the parties at the time of contracting are in some other place, that place is the place for the delivery; and
§ Documents of title may be delivered through customary banking channels
– 2-309 Absence of Specific Time Provisions; Notice of Termination
o 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.
o 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.
o 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.
WARRANTIES
– 2-312 Warranty of Title and Against Infringement; Buyer’s Obligation Against Infringement
o (1) Subject to subsection (2) there is in a contract for sale a warranty by the SELLER that
§ The title conveyed shall be good, and its transfer rightful; and
§ The goods shall be delivered free form any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge
(2) can only be excluded or modified by specific language or by circumstances which give the buyer reason to know that the person selling does not claim