UCC Article 2 Outline

 
 
UCC SALES
BRENNAN
SPRING 2013
 
 
ARTICLE 1
§  §1-201General Definitions:
·         (3) Agreement- Need not be a K, bargain by parties by writing or inferred from circumstance, including:
§  Course of performance:  sequence of conduct concerning a particular transaction if there is performance by a party or an acceptance w out objection.
§  Course of dealing: common practice established evidenced by a prior transactions by the parties.
§  Usage of trade: regularly observed w in a vocation/trade creating an expectation that it will be observed the same in the current transaction.
·         (9) BIOC: Buys in good faith, without knowledge that sale violates rights of another person in the good, and buys from a merchant who  deals in those goods (other than a pawnbroker)
·         (11) Consumer: Individual buying for household or personal use.
·         (20) Good Faith: honesty in fact and observance of reas. cml std’s of fair dealing. Observed in ALL dealings.
§  §1-202 Notice/Knowledge required for reasonableness. Of any event outside the standard practice or called upon in the agreement. Sent/rec’d in the ordinary course.
ARTICLE 2
§  Transacting in Goods. This article applies to the sale of goods. Goods, §2-105, all things movable at time of ID for the contract of sale. Need to be existing and ID’able.
·         Does Article 2 apply to the following:
§  Sale of insurance policy- No, option created, something is inherent in the paper.
§  A home attached to ground is not a good, but if its unattached movable home, may be a good.
§  Building materials- Goods until affixed to the unmovable property.
§  False teeth- teeth themselves are goods, but preparing them and implanting them is not, that’s service.
·         Milau Assoc. v. North Avenue Dev. Co’: Installation of pipe burst, subsequent water damage is issue. Contractor, party, services it and that later servicing causes the change in its resistance.
§  Test used: Predominant Purpose (majority) – was for installation of a pipe, not the good itself, the good was just incident to the installation. They sold a service, not the good itself. Installer was not negligent.
§  Services ≠ Goods.
·         Analysts Intl Co’ v. RPP: Software a good or service? Co’ needs certain software that needs to be specifically made. A designs, but does so late and with defects, requests more $. The final product is what was K’d for. A claiming it’s not a good.
§  Ct says it’s a good bc it’s for a good intended for a particular use only by buyer. Not a good defense fails.
§  Customization becomes important, access to a service on a universal platform then “on-going service.”
·         Anthony Pools v. Sheehan: Injuries from falling on diving board. Board was sold separately. Ct agreed that the building of the pool was a service.
§  Ct applies minority Graveman Test: Was board moveable at time of sale? Yes- good. Diving board was separately and pitched differently than the pool. Case may be different if board sold tandem with pool.
§  Ct reaches out to the Sheehan’s as NOT merchants but as consumers, protection in equity.
§  Merchants. §2-104, person who deals in goods of the kind or by occupation has knowledge/skill in a specific area in which is being transacted.
·         Siemen v. Alden: saw bought and injuries from it exploding. Was the seller of the saw a merchant, i.e. seller dealing in goods of those kinds. Seller argues that he is not a merchant dealing in those goods and should not be held to the std. of strict liability as merchants selling defective product typically are.
§   Has to be more than an isolated transaction to bring a consumer/avg. joe within bounds of seller strict liab.
§  Seller must reasonably rely on skill/judgment in buying a product.
·         Ex’s: A quits teaching job, opens hat store – Merchant depending on expertise, sophistication of shop.
§  Farmers- Ct.’s split, may be merchant if part of large agro business, but not if selling 1 little cow/year.
§  Leases. Distinguish sale v. lease – title isn’t transferred. Re sale- full title and economic life given.
·         Leases must describe what your leasing and for how much in the agreement. Sales agreement just needs quantity.
·         Be wary of disguised sales/sec. trans., option at end to buy product for nominal fee, economic life runs out.
·         If in lease term, a clause permits lessee to terminate and return good, true lease.
§  Statute of Frauds. §2-201 K for sale of goods not enforceable if (beyond quantity denoted):
·         For $500 or more, must be in writing sufficient to establish sale;
·         Signed (symbol as representation suffices) by party against whom enforcement sought;
·         Part performance.
·         If bw merchants, SOF satisfied if a writing within reas time is sent, and receiving party has reason to know contents; unenforceable if contents objected too w/in 10 days of receiving.
·         SOF also enforceable under this section if buyer asks for custom made goods, and seller begins performance.
§  Payments made and accepted and goods delivered and accepted.
·         Ex’s: A calls B and places order, B writes it on a pad and then later confirms via letter, not until a month after letter rec’d did A deny existence of the K, which was too late, SOF requires 10 days from receipt.
§  Quantity was indicated on the pad; need to ask whether they had a course of dealing. If this was their normal way of transacting, thence.
§  A letter of confirmation with a quantity may be enough to be ok with SOF, combine with circum’s.
·         St. Ansgar Mills v Streit: course of dealing bw grain merchant and buyer merchant. They always made oral K and then followed up with confirmation ltr that buyer later signs. This time late more than a month to sign. Grain price plummets in that time, so doesn’t want to commit to buy anymore. When you have a course of dealing and you want to deviate, must give notice.
§  Issue: delay unreasonable as matter of law? Jury Q. there was sufficient evid for jury to find dealing.
·         Ct points out reas considerations to deviate: OK if going out of business, NOT OK to save some $.
·         Oral K’s may be enough for equitable estoppel when goods have been ID’d, can be compelled by specific performance.
·         Ex. a city orders custom made statute for town. Uniquely designed. City sends check with statute in memo line. New city council wants to back out and says K unenforceable. City can be considered sophisticated merch buyer.
§  Check is good enough for SOF. Buyer partly performed exception to SOF. Only argument that city can make is to have them strip tank to have cost mitigated.
§  Even if no actual K entered into, equitable estoppel would prevent city from backing out of K.
·         Important to note that SOF will only bind to extent in writing, or somehow proved if orally backed by a writing.
·         2-201b3 applies as an exception to an SOF writing requirement when you have a party admission: “We agreed to the sale but we never put in writing.”
§  Parole Evidence Rule. §2-202, parties’ memo’s or agreed upon K’s may be explained or supplemented by course of perf/dealing, usage of trade (by exp. testimony) and with evidence of consistent addt’l terms unless ct finds the original writing to clearly constitute a complete and exclusive stmt of all terms in the agreement.
§  Finality determined by “merger clause”: “this constitutes full writing.” Need to argue that terms may not add full scope of party intent, or that they are vague in defining a particular terms for parole evid.
·         Co’ K’s for a fully custom plane being built. K has merger clause, now party alleging that flight lessons were negotiated prior but weren’t in the K.
§  The test is whether there would be a material alteration to the K. In this case, the lessons wouldn’t affect the plane. Another way to look at it is custom i.e. would that be something that would be reasonably included given the circumstances, if so, then likely will be amended to K.
·         Columbia Nitrogen v. Royster: R agrees to sell C 31k tons of phosphate. Enter into K with price and Q. price drops significantly after. C doesn’t want to pay high amount. R offers discount on first 3 months. C then says they will only accept 1/10 of what was K’d for initially. Issue was whether C could offer evid of prices/dealing/ usage of trade. Ct says 2-202 should be liberally construed to include them esp. where there’s ambiguity.
§  Express final provisions may be subject to ambiguity bc cml practices aren’t built into the agreement.
§  Bc K’s must be cml reasonable, can’t K out of that threshold, hence those practices are good extrinsic evid.
·         Note: parties shaking hands may be K, especially if its 57th K by shake of hand. Ex. of course of dealing.
§  Offer and Acceptance. General rules:
·         §2-204: K for sale of goods may be made in any manner showing agreement, including conduct by both parties recognizing the existence of the K; date of creation may be irrelevant if contested; if certain terms left open, the K as a whole may still be valid subject to interpretation of said terms.
·         §2-205: an offer by a merchant to buy/sell goods, saying it will remain open is not revocable for time stated, or if no time stated for a reasonable time which would be limited then to 3 months. If a term of assurance exists separately created by offeree, it must be signed by offeror. This § known as firm offers.
·         §2-206: unless otherwise unambiguously shown by language or circum’s:
§  Acceptance of K may be shown by any medium reasonable by circum’s; an order/offer requiring shipment may be shown by promise of circum’s of the shipment, but not a full acceptance if seller provides it as an accommodation to buyer.
§  If acceptance is requested by a performance and not done w in reas time, an offeror may treat offer as lapsed.
·         §2-208: (1) course of performance admitted w out objection can be used to determine meaning of agreement (2) express terms of K, along with course of perf/dealing/usage of trade construed as consistent w each other when reas; but unreas construction, exp terms control course of perf which will control dealing and usage of trade. (3) course of perf may show waiver,
·         §2-209: K’s may be modified w out consideration. K’s signed excluding mod’s or rescissions may not be modified or rescinded unless by a signing.
·         §2-210: a party to a K can delegate their task unless specifically K’s for. Rights of a seller or buyer can be assigned so long as no material alteration arises from it.
·         Note on Unconscionable K’s: §2-302, if ct finds K or term of K unconscionable, may invalidate whole K, part of K, just the term, or may limit application of a specific term. When a term rendered unconscionable, parties may present evidence showing cml setting, purpose, and effect to make argument for court.
·         Ex: Co orders goods requesting a reply by mail, instead seller just ships goods which turned out to be defective. Acceptance of the offer was made by perf of shipping which turned into a K. Hence seller thence opens up to breach of warranty by its defective product. The failure of acceptance by mailing alon