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Contracts II
University of Kansas School of Law
Meyer, Keith G.

Contracts II
Prof. Meyers
Spring 2003
Class Notes
Statutory Division of Reading
Article 1
Article 2
Article 2a
PEB Resolution 1 (p.915)
PEB 10 (p.941)
Appendix P (2002 supp.)
Revised article 1
Revised article 2
CISG (p.1697)
Magnuson/Moss Warranty Act (p.1961)
Definitions are located in 1 -201 (p.28) and 2 – 103 (p.46)
Article 2 – 4 parts
2) Terms
3) Performance
4) Remedies
The real world of sales – 2 factors
An agreement can trump the code according to 1-102 unless:
if the code says to can’t
if you are trying to change good faith effort etc.
Gap Filler
Implied terms
You need a gap filler for terms that need more specifics
EXAMPLE 2-305 if price is left out it can be implied by the market price
Warranties (2-312)
1-205(1) Course of dealing
Four ways in which gap fillers can be superseded (page 10)
past repeated performance
past course of dealing
industry custom
For warranty provisions to apply you must have a seller 2-313
Problems #1 (p.20)
Foreign Officer ask these Questions:
What are the benefits are gained by adopting a statutory scheme like the UCC as opposed to letting private agreements handle all commercial dealings?
For which subjects should the Code include so called gap fillers?
Article 1
is general application article
If you look outside Article 2 you look to Article 1
EXAMPLE : The predominate purpose test – comes from Article 1
Problem 1.3 (p.21)
Aunt Millie took home movies to shop to be transferred to VHS.
Shop destroys tapes.
Offers to fiver her new blank movie reels and VHS tapes
Does Article 2 apply
a. NO
b. Look out side of Article 2
c. Is it a tort?
d. Is it a breach of contract?
Problem 1.4 (p. 21)
Your client, K and A, a group of optometrist specializes in making and fitting contact lenses for the “problem wearer.”
The lenses cost 3 to 4 times more than normal but the price includes various test that patients receive both K custom-design the lenses
a. Are these lenses a specialty manufactured goods?
K wants to know if there are any compelling reasons for it to have a patient sign a contract that disclaims all of the UCC warranties
Sections: 2-102, 2-105(1), 2-314(1). 2-315
Gravaman Action Test
b. Is the source of the complaint with the goods or the services portion of the transaction
i. If the problem lies with the goods
1. then article 2 applies
2. If so is look to warrant provisions
a. Is your seller a merchant?
ii. If the problem lies with the services
1. then article 2 does not apply
c. Ask yourself Why is patient unsatisfied with the services
Predominate purpose test
d. Predominate services
Cook v. Downing
Cause of Action
Breach of Warranty
a. sec.2-314
b. seller of the good (must be a merchant) provides that warranty that the goods should be merchantable is implied
c. Must have a sell
d. Must have seller
i. He must be a merchant
Problem 1.5 (p.22)
Authors certificate to royalities
a. Article 2 does not apply
i. 2-102 says it must be a transaction of a good
1. author’s certificate is a future right to royalties
a. not-tangible
b. This is a contract – a thing in action
Sale of gas
b. Article 2 does apply if it is sold by the seller
i. 2-107 (1)
1. Gas does severed by the seller
2. Therefore Article 2 does apply
Sale of a CD
c. Article 2 does apply
i. It is the sale of a good
ii. Reciprocals of the art
Recording Artist sale of an original recording to a music producer
d. Song being sold
e. Art being sold
f. This is a service
g. Therefore Article does not apply
Publishing company’s contract with author to write a book
h. It is a contract
i. Is it a good?
1. NO
i. This is the intellectual property
j. This is not the sell of goods
i. Therefore article 2 does not apply.
Manufacture’s contract to a merchant buyer to specially manufacture and sell a custom-made machine.
k. Is this is a hybrid?
i. Yes – therefore article 2 does not apply
l. Specialty Manufactured goods are not a hybrid
i. It is a regular good
ii. Therefore article 2 will apply
a sculptor’s contract with a patron of the arts to create and sell an original sculpture to the patron
m. Is this a transaction for the sale of goods
n. It is about the creation of art.
A contact with tennis player to get Wimbledon Cup
o. Is this a transaction for sale of goods
i. This is a movable object 2-105(2)
ii. But it doesn’t exist yet (official comments p.48)
iii. Article 2 does apply – it is a contract for the sale of goods
A contract to tennis players rights to the interest of the Wimbledon Cup
p. What is being sold
i. Is this a good? – No
ii. Is this the contingent right? – Yes
iii. A contingent right is NOT the sale of a future good. It is a contingent right
iv. It is NOT covered under Article 2
Sale of a raffle ticket in which the winner gets a car
q. Things in action are not goods
r. Article 2 does not apply
s. What is the subject of the contract
t. If it the sale of a future good – it is covered
u. If it is a contingent right – it is NOT covered
v. If it is a thing in action – it is NOT covered
w. If it was a winning ticket – ask yourself what cause of action you really have
x. A winning ticket is NOT covered under the UCC
i. It is the Right to the car
ii. NOT th

d the leaser reasonably expect to get the car back?
a. If not it is a sale
b. If so it is a lease
Problem 2.5 (P. 39)
WBYU makes custom-designed chairs for executives
Corporate office in Detroit
Only Factory in Mexico
a. Specs. for individual chair faxed to Mexico
b. Carla (NY executive) – consultant visited her
c. 2 chairs – business and home
Does the CISG apply?
d. States = only countries here
e. This is a case of scope
f. The key is that any “place of business” has to be located in the other state
g. Look at Article 10 of CISG – if a party has more than one place of business is the one that has the closest relationship to the contract and it’s performance. The fact that there are 2 places of business must be known by the parties involved
h. Did Carla know that the chair was going to be manufactured in Mexico?
Problem 2.6 (p.39)
Miles owns 10 acres of land with a 1846 farmhouse
Does Article 2 apply to any of the following?
a. Sales of the farmhouse to be severed from the land
i. Article 2-107(1)
b. Sale of the land with the farmhouse
i. Fixture (?)
c. Sales of 6 bushel of apples picked from trees on the land
i. Article 2 says growing crops are personal property
Assignment 3 (p.40)
Gateway 200 Cases
Holding parties agreed to arbitrate
a. Hill v. Gateway 2000 (7th Cir. 1997)
b. Brower v. Gateway 20000 (NY App. Div. 1998)
i. But holding arbitration fees unconscionable
Holding parties do not agree to arbitrate
c. Klocek v. Gateway 2000 (D.Kan. 2000)
Sec. 2-204 = Formation in General:
a contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract..
Gap Fillers – you must have quantity
Sec. 2-205 = Firm Offers
When an offer is made by a merchant if it is made for a specific time it can remain open for a specific time
An offer by a merchant, (not an ordinary person) to buy or sell goods in a singed writing which by its terms fives assurance that it will be held open is not revocable for lack of consideration during the time stated or if ….