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Contracts II
University of Kansas School of Law
Drahozal, Christopher R.

Contracts II
 
Article 2: Sales of Goods
 
Scope of Article 2
 
Introduction
(a)    Article 2 vs. Common Law
• § 1-103 allows for common law to supplement the UCC provisions (so long as the provisions don’t displace)
(b)    Art. 2 applies to transactions in goods (§ 2-102)
• § 2-105(1) defines goods as all things which are movable at the time of identification to the contract for sale (including specially manufactured goods)
–          Sale of minerals generally considered “goods” (see § 2-107(1))
–          Sale of custom machines considered “goods”
–          Services, future interests and rights, security transactions, sale of intellectual property (aside from retail sales of CDs and the like) not goods.
• Transactions is broader than sales (includes bailments).
(c)    Mixed Contracts
• Predominant Purpose Test (Majority): Determine whether the predominant purpose of the transaction is to sell goods or services, and apply Art. 2 to the entire transaction if goods are predominant (look to amount paid for goods vs. services as one factor).
• Gravaman of the Action Test (Minority): Determine whether the source of the complaint lies with the goods or the services portion of the contract, and apply Art. 2 if lies with the goods.
 
2. Article 2 As Default Rules
(a)    Article 2 generally applies in providing default terms for such issues as warranties, delivery modes, and remedies, unless otherwise “agreed.”   (§ 1-201(3))
Heirarchy
(1)    Express terms always go first
(2)    Course of performance of the present contract if not objected to (§ 2-208(1)
a)      repeated occasions for performance
b)      knowledge of the nature of performance
c)      opportunity for objection
d)      [only includes K’s involving repeated performance] (3)    Course of dealing (§ 1-205(1))
a)      sequence of previous conduct between parties
b)      establishing a common basis for understanding
c)      [must have previous contracts with same parties] (4)    Usage of Trade (§ 1-205(2))
a)      regular practice or method of dealing in that trade
b)      that justifies an expectation that it will be observed in this particular transaction
 
 
Contract Formation
 
1. Assent (Still need Consideration as well) (§ 2-204)
(1)   Contract for sale of goods may be made in any manner sufficient to show an agreement, inclu

Additional (not different?) terms are to be construed as proposals for addition to the contract. Between merchants (broad definition in § 2-104) such terms become part of the contract UNLESS
 
(a)   offer expressly limits acceptance to the terms of the offer
(b)   they materially alter it
–         delivery terms generally “materially alter”, while arbitration clause may or may not (depends on usage of trade)
–         see Cmt 4 & 5 (hardship, surprise, etc.)
(c)    notification of objection to them has already been given or is given within a reasonable time after notice of them is received
–         note that “different” terms are inherently objected to, and therefore either the original terms always apply (minority view) or “knock-out” rule applies (majority view: UCC)
 
Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do