SALES AND LEASES OUTLINE
GENERAL PROVISIONS
§ 1-102
– Articles 1-10 should be liberally construed to promote underlying policies and procedures:
o Permit the continued expansion of commercial practices through custom, usage, and agreement of the parties
o Make uniform amongst the states
– (3)
o Can contract around Code provisions – cannot be disclaimed by parties’ agreement
§ EXCEPT:
· Good faith
· Diligence
· Reasonableness
· Care
§ But, parties may by agreement determine the standards by which these duties are to be measured
§ 1-103
– Can use principles of fraud, estoppel to supplement Code; most Article 2 = law, equity is rare (2-716 is one)
– Age of majority = 18 yrs old, no one of such age shall be considered w/o capacity on such ground
– Still valid defenses or claims
– Estoppel
o Conduct upon which someone else reasonably relies and that party would be harmed if the actor is not held to that conduct
– Fraud
o Material misrepresentation of an existing fact or future intention that actor did not intend to perform
o Made w/ intent to deceive
o Upon which the other person has reasonably relied to his detriment, which proximately causes damages
§ 1-106
– Remedies are to be liberally administered to give aggrieved party the benefit of the bargain – aggrieved party may be put in as good a position as if the other party had fully performed
– Punitive damages are unavailable
– No shifting of attorney’s fees (so “winning” party can still come out w/ a loss”
o But K could provide for shifting fees b/w parties – Code merely failsafe in event that K is silent
§ 1-201 Definitions
– Agreement v. Contract
o Agreement
§ Bargain of the parties as found in their language or by implication from other circumstances including course of dealing, usage of trade, or course of performance
§ Whether an agreement has legal consequence is determined by the Code
o Contract
§ Agreement in fact + all of the UCC provisions
– Buyer in the Ordinary Course (§1-201(9))
o A person that buys goods in GF w/out knowledge that the sale violates the rights of another person in the goods and buys from a person in the business of selling goods of that kind
– Conspicuous (§1-201(10)
o Term is conspicuous when written such that a reasonable person against whom it is to operate ought to have noticed it
o What is conspicuous:
§ A printed heading in capitals
§ In the body of a form –
· Larger or contrasting type or color
§ Any stated term in a telegram
o Examples:
§ Agreement to arbitrate
§ Waiver
o Question of law for the court to decide
– Fault
o Wrongful act, omission, or breach
o NOT an act of God
– Good Faith – 2 standards
o Honesty in fact
§ Subjective
o Merchants need honesty in fact (subjective) + R commercial standards of fair dealing (objective)
§ Reasonableness generates issue of fact for jury
– Notice v. Knowledge
o Notice (§1-201(25))
§ A person has notice of a fact when
· He has actual knowledge of it; or
· He has received a notice or notification of it; or
· From all the facts and circumstances known to him at the time in question he has reason to know it exists
o Knowledge
§ Actual knowledge of a fact
§ = discover or learn
– When does someone give notice or notifies? (§1-201(26))
o Taking such steps as may be reasonably required to inform the other in ordinary course whether or not that person actually comes to know of it
– Receive notification or notice when (§1-201(26))
o (a) It comes to his attention; or
o (b) It is duly delivered at the place of business through which the K was made or at any other place held out by him as the place for receipt of such communications
– Notice to an organization (§1-201(27))
o Notice, knowledge, or a notice or notification received by an organization is effective when it gets to the person responsible for that transaction or but for their failure to use due diligence, it would have gotten to the right person
o Org. is responsible for maintaining their own in-house due diligence to distribute notice
o Once in house, cannot say that mail room ate it
§ 1-203 Obligation of Good Faith
– every K or duty obligates duty of GF
§ 1-204 Seasonable v. Reasonable
– (1) Whenever Titles 1-10 of this article require any action to be taken within a reasonable time, any time which is not manifestly unreasonable may be fixed by agreement
– (2) What is a reasonable time for taking any action depends on the nature, purpose, and circumstances of such action
– (3) An action is taken “seasonably” when it is taken at or within the time agreed or if no time is agreed at or within a reasonable time
o Action taken within the time the K specified
– Reasonable
o Depends on nature, purpose, and circumstance of action to be taken at that time
o Question for the jury
o Use when K does not specify time
– Notes:
o If parties’ K specifies a time, that = seasonable
o If K is silent, then must be reasonable
§ 1-205 Course of Dealing and Usage of Trade and Course of Performance § 2-208
–
– otherwise holds himself out as having knowledge as having skill peculiar to the practice or goods involved in the transaction
o not considered a merchant re: any particular item, but would be held to general merchant standards
o Must be acting in mercantile capacity – lawyer or bank president buying fishing tackle for his own use is not a merchant
– “Goods Merchant” v. “Practice Merchant”
o Goods = someone who deals in goods of that kind
o Practice = has a level of sophistication higher than the ordinary consumer/merchant
§ Ex: Tiger Woods holds himself out as having skill, sells me club = PM
o But generally can’t be GM without being PM
§ 2-501 Identification of Goods
o Must be existing and identified before any interest in them can pass
o No property interest in the painting sitting in gallery just because I agreed to buy one – no insurable interest
o Once identified, buyer has insurable interest
– Can occur at the moment the K is made or much later when manufactured
– If not IDed, request specific performance to make seller make good or Court can order seller to ID the goods
– How does seller ID goods?
o Says “these are the ones”
o In the absence of agreement,
§ When K is made for sale of goods already existing and IDed
§ If for future goods (haven’t been IDed), when shipped, marked, or otherwise designated by the seller as the goods to which the K refers
· Applies when buying from inventory or when something is to be specially manufactured
§ 2-106 Conforming Goods
– goods are conforming if they are in accordance w/ the obligations under the K
FORMATION AND READJUSTMENT OF CONTRACT
§ 2-201 Statute of Frauds (not enough writing)
Within SOF = SOF applies to it = need a sufficient writing
Outside SOF = SOF does NOT apply to it
Does not apply to oral Ks that have already been performed; only ever serves as a bar to enforceability of an executory K
Applies to:
– Ks incapable of being performed within 1 year
– Sales $500 or more
o If $499.99 outside SOF