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

I.                   Article 2: Sales of Goods
a.      Contract Formation
                                                              i.      Scope of Article 2
1.      Transactions in Goods: §2-102
a.      Goods (§2-105): All things movable at the time of the identification to the contract.
b.      Future Sale of Goods: §2-106 
2.      Mixed Goods and services:
a.      Predominant purpose test (majority):
                                                                                                                                      i.     
RULE: Before you analyze whether a buyer can “disclaim warranties” make sure the UCC applies and the transaction is in goods
Is the predominant purpose of the contract to get good OR services?
                                                                                                                                    ii.      If price is higher than normal, it might reflect the service portion. 
                                                                                                                                  iii.      If predominantly goods, Article 2 applies, even to the services portion.
b.      Gravamen of the action: 
                                                                                                                                      i.      Is the complaint with the goods or services aspect of the contract?
                                                                                                                                    ii.      If a complaint lies with goods, Art 2 applies, even if predominant purpose is services. 
                                                                                                                                  iii.      If complaint lies with services, Art 2 does not apply, even to the goods portion. 
3.      If Art 2 applies, do you need a writing? (SOF)
a.       No: Less than $500
b.      Yes: §2-201
                                                                                                                                      i.      Yes:
1.      Sufficient to show contract
2.     
RULE: Must know WHEN the K is formed to decide WHAT is in the k. The rule on additional terms doesn’t apply if the K was formed already. Once the K is formed, the terms are set and any additions will be modifications. 
Signed
3.      Quantity Stated
                                                                                                                                    ii.      No. Exceptions:
1.      Merchants: §2-201(2)
2.      Specially Manufactured Goods: §2-201(3)(a)
3.      Admits in pleading or testimony: §2-201(3)(a)
4.      Payment/Goods Accepted (Partial Performance)
                                                            ii.      Sales Contract Formation
1.      Formation in General: §2-204
a.     
EX: S and B have a contract to sell goods not subj to SF. B writes that he wants all remedies in K. S agrees and ships goods. If S sends acknowledgment then they are modifications, not additions. K was made when S accepted.   
Contract may be made in any manner sufficient to show agreement, including conduct which recognizes existence of contract
b.      Do not have to determine moment contract was formed to show contract existed
c.       OK of some terms left out if parties intend to form contract and there is reasonable basis for remedy.
d.      Even if one of more terms are left open, a contract doesn’t fail for indefiniteness is the parties have intended to make a contract and there is a reasonable basis for giving a remedy. 
2.      Firm Offers: §2-205
a.     
Merchant: Comment 2: only applies to them in “mercantile” capacity – if party buys for their own use, won’t be considered a merchant. 
Need offer by a merchant in a signed writing holding offer open (Broad def §2-104).
b.      Hold as long as stated or for a reasonable time, but either way, no longer than 3 months.
c.       If there is consideration, no time limit
d.      If reliance, no time limit.
e.       Promissory Estoppel: if there is no consideration given, and the person wants the option to stay open longer than 3 months, even though there is no consideration, argue detrimental reliance to keep it open longer. 
3.      Ambiguous Contract Formation: §2-206
a.      Unless otherwise unambiguously indicated…
                                                                                                                                      i.     
Mirror Image Rule:
Common law rule that the acceptance has to mirror the offer. This is no longer the rule b/c it was becoming unfair. 
An offer to make a contract shall be construed as inviting acceptance in any manner reasonable in circumstances
                                                                                                                                    ii.      For prompt performance, acceptance can be either promise or performance of conforming/non-conforming goods.
b.      If offer requested performance and offeror is not notified of acceptance in reasonable time, offer has lapsed.
4.      Battle of Forms:
a.       Is a contract formed (a definite and seasonable expression of acceptance)?
                                                                                                                                      i.     
Last Shot Rule:
party that fired the last shot had an unwanted advantage – so if the person sends the acceptance with an additional term was boiler plate and the other party didn’t object b/c they just kept the goods unknowing of the term, that party would be bound. 
Start with §2-207 for contract by writings
                                                                                                                                    ii.      If no contract by writing, use §2-207(3)
b.      What are the terms?
                                                                                                                                      i.      Additional terms: §2-207(2)
                                                                                                                                    ii.      Different terms: Knock-out or §2-207(2)
                                                                                                                                  iii.      Contract by conduct: §2-207(3)
5.      Knock-Out Rule:
a.       Mix of common law and Statute
b.      Conflicting terms knock each other out and are replaced with UCC Gap Filler
6.      Knock Out v. §2-207:
a.       Treatment of Additional terms
                                                                                                                                      i.      Def and seasonable expression of a

-201)
Merchants Exception (2-201(1))
Payment is made on the goods.
Formal Requirements: §2-201 (look at all writing)
1.      Not enforceable unless…
a.       Writing sufficient to show contract exists
b.      Signed by parties whom enforcement is sought against (the signature portion is loosened in the merchants exception)
c.       May omit agreed/incorrectly states agreed upon term
d.      Not enforceable beyond quantity of goods shown (quantity must be in writing)
                                                                                                                                                                                                              i.      Writing: §1-201(43)
                                                                                                                                                                                                            ii.      Signature: §1-201(37)
                                                                                                                                    ii.      Exceptions to SOF, where a sufficient writing is not required. A contract which does not satisfy §2-201(1) but is in other respects enforceable if…
1.      Specially Manufactured Exceptions (2-201):
a.      
Sp. Mnfg. Goods Example:
 
B and S have an oral K for 3 chairs for 8x each plus and extra 1x for consulting. So, the seller spends upfront 3x on consulting. After the 1st chair is made the buyer backs out. Seller can get money for only the one chair (8x) + the entire 3x for consulting.
Goods specially manufactured
b.      Not suitable for sale to others in ordinary course of business
c.       Before repudiation, seller has made substantial beginning of manufactured or commitments for procurement
d.      Does not specify if it applies to entire contract or only goods so far manufactured, so argue both. 
2.      Merchants Exception:
a.      
Merchants Exception Example:
 
•Seller sends written confirmation and buyer objects by stating “You said you would send me the goods in 3 weeks, not 5- this is not a sufficient objection
•To have a valid objection it must be CLEAR and reject the WHOLE k, NOT just some terms. If it is then the case is outside the SOF and the K is unenforceable. 
Between Merchants Broad Def: §2-104
b.      Within a reasonable time
c.       Writing in confirmation of contract
d.      Sufficient against sender (satisfies §1-201 against sender, i.e., contains 3 requirements)
e.       Is received, with quantity listed
f.       party receiving has reason to know of its contents
g.      §2-201 is satisfied unless written notice of objection given within 10 days of receipt. 
h.      Signature: §1-201(37)