Select Page

University of South Carolina School of Law
Nelson, Eboni S.

–          Goods or services?
–          2 Tests (apply both):
o   Gravamen Test – look at source of the complaint, post-breach facts
o   Dominant Purpose Test – What is the essence of the K? parties intentions?
–          Definition: (1) someone who is engaged/dealing in the selling goods of the kind at issue in the transaction; (2) a person who hold themselves out as having a particular skill or judgment b/c of their profession (e.g. collector not necessarily in business of selling)
o   One-time players/sellers not held to same standard as a merchant
o   Amount of time having been a merchant seller is irrelevant; newcomers held to same standard
–          Definition (2A-103(j)): a transfer of the right to possession and use of goods for a term in return for consideration; but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is NOT a lease
–          Temporary possession right to possession and use of the goods
–          Understanding that goods are to be returned to lessor
–          Still must have economic life in goods at end of lease period
o   Economic Realities Test – if no economic life, then it’s either a disguised sale or secured arrangement
o   Look at time transaction was entered into when determining economic value → reasonable person standard
–          Can lessee terminate and return goods at any time (“walk away” test)? If yes, then lease
–          Required to renew lease for remaining economic life or bound to purchase at end of lease? If yes, NO lease
–          Can still have lease if good leased for more than FMV
–          Using term “lease” does not necessarily create a lease
–     Prevent people from fraudulently claiming they had an oral K
–          Addresses the over-enforcement problem
Requirements under 2-201(1):
–          A writing
–          K > $500
–          Quantity Term
–          Signature of person against whom enforcement is sought (letterheads, initials suffice)
–          Language indicating oral K
o   Writing does not have to be sent to other party
Merchant Exceptions:
–          Written letter of confirmation – 2-201(2)
o   Requirements:
§ Between merchants
§ Written confirmation/memo sent w/in a reasonable time after purported oral K
§ Recipient must have reason to know of its contents
§ Must satisfy 2-201(1), i.e. quantity term, signed by sender
§ No objection by written letter w/in 10 days
·         Letter must object to existence of K, not merely a term
2-201(3) Exceptions:
(a) Specially manufactured – enforceable if:
      – Goods specially manufactured for buyer
      – Not suitable for sale to others in seller’s ordinary course of business
      – Before notice of repudiation
      – Circumstances indicate goods are for the buyer
– Made a substantial beginning of their manufacture or commitments for their procurement
      (b) Party admission in legal proceeding
            – Not enforceable beyond quantity admitted
      (c) Part performance – enforceable if:
– Payment for goods has been made and accepted or go

ng acceptance
                        (b) Shipment or a prompt promise to ship acts as acceptance
            (2) Beginning of performance can act as acceptance only if notice is given to the offeror after a reasonable time
                        – Shipping non-conforming goods does NOT equal acceptance
– Acceptance of a shipment of non-conforming goods still acts as an offer.
3 Situations Where K Formed Under 2-207:
(1) Oral agreement followed by confirmation
(2) Written documents exchanged w/ additional or different terms
(3) Conduct establishing the existence of a K
2-207(1) – K formation
            – A definite and seasonal expression of acceptance or a written confirmation sent w/in a reasonable time acts as an acceptance even though it states additional or different terms from the offer, unless the acceptance is conditional on the assent to the additional terms (i.e. proviso clause; NOTE: “subject to buyer accepts” is not proviso clause)
                        * Writing must show intent to enter into K
                        * Requires specific and unequivocal assent to additional terms.
                        * If proviso clause and no assent, no K as of writings so go to (3)
2-207(2) – K based on writings