SALES- PROF. KWESTEL SPRING 2018
SCOPE OF ARTICLE 2
Transactions in goods-
Scope- Certain security and other transactions excluded from this article- article covers sale of 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 xaction nor does it cover sales to consumers, farmers or other classes of buyers when another statute is enacted. Does not cover mortgages.
Merchant = one who deals in goods of the kind or otherwise by his occupation holds himself as having knowledge or skill peculiar to the goods
SECTION 2- CONTRACT FORMATION
OFFER AND ACCEPTANCE – 2-204, 2-205, 2-206
2-204 – Formation in general => a contract for the sale of goods can be made in any manner sufficient to show agreement (needs mutual assent even if it’s not in the UCC), including conduct by both parties which recognizes the existence of such a K.
2-204(3) – failure to include all pertinent terms does not invalidate a K. Only requirements are: 1) an intent to K and 2) a reasonably certain basis for giving an appropriate remedy.
may be found even though the moment of its making is undetermined.
2-205 – Firm Offers – An offer by a merchant to sell or buy goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, of lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event to exceed 3 months.
E.g. If there is a revocation after signed writing + assurance => only good for 3 months V. if no revocation occurs and offer is left open for a year, then no limitation and offer remains open for 1 year
2-206 – Offer and Acceptance in Formation of a K. – 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;
(b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an ACCOMMODATION to the buyer.
Accommodation is not an acceptance or breach
It’s a counteroffer
(2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.
Give notification if you don’t want the offer to be treated as lapsed
Modification of K. – Pre-Existing Duty Rule – 2-209 modifies the common law pre-existing duty rule. The pre-existing duty rule did not allow a modification to a K where the party was already obligated to perform. Performance of a pre-existing duty was not considered consideration for a modification. 2-209 modifies the pre-existing duty rule and does not require new consideration for a modification BUT:
the modification must be sought in good faith (tun on good faith instead of technical consideration)
HOWEVER, a signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.
You can have a no oral modification clause, but ongoing K people change things orally all the time.
The requirements of the statute of frauds section of this Article (Section 2-201) must be satisfied if the contract as modified is within its provisions.
An attempt at modification or rescission can operate as a waiver (when modification is oral and not effective). A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.
THE STATUTE OF FRAUDS – 2-201 provides any contract for the sale of goods of $500 or more is not enforceable absent a writing.
A writing is not insufficient because it omits or incorrectly states a term agreed upon, but the contract is not enforceable beyond the quantity of goods shown in such writing.
The only required term under 2-201(1) is QUANTITY. The court will not read in quantity. However, the price, time and place of payment or delivery, the general quality of the goods, or any particular warranties may all be omitted.
MERCHANT EXCEPTION (SECTION 2) = takes away defense of SOF even if party to be charged never signed the written document – Merchant confirmation letters may give rise to a K.
If within a reasonable time (between merchants) a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, SOF satisfied against such party unless written notice of objection to its contents is given within 10 days after it is received.
Analytical framework:
Is there a confirmatory memo?
writing “in confirmation of the contract” and “sufficient to indicate” a contract.
The standard for determining whether a confirmatory writing is sufficient to satisfy the SOF is whether the writing affords a basis for believing that the offered oral evidence rests on a real transaction.
Neither explicit words of confirmation nor express references to the prior agreement are required.
The writings are sufficient so land as they afford a basis for believing that they reflect a real transaction between the parties.
NOTE: On their face, purchase orders are no more than offers to enter into an agreement, and thus inadequate to satisfy the SOF.
Is the memo received by the other side?
Does the other side have reason to know the content?
Is it objected within 10 days by a written notice?
If no, then SOF is satisf
mer transaction, the purchaser is the offeror (e.g. computer company accepted the plaintiff’s offer)
Is there an unless clause?
Did the P expressively agree to those terms? Keeping the computer and saying nothing might not be enough.
New terms are a proposal – they are not a counteroffer when the language is missing “this acceptance by me is conditional on you accepting all the additional terms”
2. PAROLE EVIDENCE – bars introduction or contemporaneous or prior oral or written agreements which are offered in evidence to contradict the writing at issue.
Analytical framework
Is there a written agreement?
If no, inquire ends there and no parole evidence rule
If yes, parole evidence rule may be implicated
Is one party seeking to introduce evidence of another agreement, either oral or written, to show that the terms of the agreement are different than the ones in the writing?
If separate agreement with separate consideration, no parole evidence rule
If subsequent agreement, no parole evidence rule
If a condition precedent (evidence shows that the contract was subject to that condition/future uncertain event), evidence of that condition is not barred by parole evidence rule
If evidence introduced for another purpose (lack of consideration, mistake, fraud, duress, misrepresentation, illegality), not barred
BUT, if prior or contemporaneous agreement, parole evidence rule applies
Is the writing integrated? Complete or partial integration?
Judge makes threshold determination of integration
Test for integration different than common law – evidence of terms not included in the writing are not admissible if the additional terms are such that, if agreed upon, they would certainly have been included in the document
“Certainly” is the key word vs. common law “naturally”
If not certainly in the document, writing is not integrated
Two possible outcomes:
If judge finds the writing complete and exclusive (final and complete statement of the parties’ agreement) = evidence of consistent additional terms may not be admitted BUT
writing may be explained or supplemented by course of dealings, usage of trade, or course of performance
Look Farnsworth – 9.3
If judge finds the writing partially integrated, evidence of consistent additional terms is admissible UNLESS
the court finds the alleged extrinsic term, if agreed upon, would certainly have been included in the writing.