Select Page

Sales & Leases
University of Toledo School of Law
Barrett, John Q.

1. UCC Art 2
a. Scope
i. UCC 2-105 – GOODS = all things movable
1. Must be existing and identified
2. Does not include:
a. real estate
b. stocks / bonds
c. services / intangibles
ii. UCC 2-107 – GOODS SEVERED FROM REALTY
1. Must be severed by the seller (apart from the land) for Article 2 to apply:
a. minerals,oil,gas, ice, water
b. any structure on the land
c. growing crops
iii. Hybrid situtations – mixed sales of goods and services
1. Predominant purpose of the contract test for contract formation:
a. 1. language of the contract
i. Ex: if contract says services / maintenance, predominant purpose probably not sale of goods
ii. Note also: “P’s Complaint Test” – what injured party is suing for:
1. if suing for faulty services, probably services contract, not sale of goods
b. 2. nature of the business of the supplier
i. what does this supplier normally do?
c. 3. intrinsic worth of the materials
i. how much are these materials worth?
2. Split among courts – how to deal with hybrid “goods + sales” contracts
a. Some jurisdictions: if any goods, ucc applies
b. Other jurisdictions: any hybrid, common law applies
c. Third way: hybrid, then split up contract and apply appropriate law by piecemeal
i. Ex: contract to install carpet in house
1. carpet itself covered by UCC article 2
2. installation = service – covered by common law
ii. However, can’t split up contract when you have a formation issue
2. UCC Art 2A- Lease of goods
a. Temporary transfer of possession with the intent to use some goods
i. Does the leasor take the property back
3. CISG- international sale of goods
a. Only applies to countries that have signed it
b. You may make it a term of the contract to opt into something other than the CISG
i. Need clear, express language to do so
4. UCITA- License/access to computer information/software
a. Buy rights to software
b. Governs distribution, use, etc of software and computer information use
5. K FORMATION UNDER ARTICLE 2
a. UCC 2-204 : contract formation in general
i. 2-204 (3) Test for contract formation:
1. 1. the parties intend to make a contract
2. 2. AND the court can fashion and appropriate remedy
ii. contract can be made in any manner sufficient to show agreement, including conduct
iii. the moment of the contract’s making need not be determined
iv. can leave some terms open
1. place of delivery – 2-308
2. warranty – 2-312 to 2-318
3. open price term – 2-305
b. UCC 2-206 : offer and acceptance in formation of contract.
i. if buyer says, please ship promptly, that’s usually an offer
ii. seller can manifest assent these ways:
1. 1. promptly promise to promptly ship goods – acknowledgement form
2. 2. promptly ship – what is asked for – conforming goods
3. 3. promptly ship non-conforming goods – still is a contract.
a. Buyer may have a right to reject
b. see UCC 2-601
c. 2-205: FIRM OFFER
i. 1. Was the offer made by a merchant?
ii. 2. Was the offer in writing and signed by the offeror?
iii. 3. Did its terms assure that the offer would be held open?
1. If 1, 2, and 3 are yes, then the offer is a firm offer and the offeror may not revoke the offer for either:
a. a reasonable time (if no time is stated)
b. the time stated on the offer (if it is stated)
c. NOTE: irrevocability can never exceed 3 months
i. after 3 months, if the offer was not revoked, it is still an offer, just not an irrevoccable offer
1. the offeror may revoke any time before acceptance.
d. 2-504: Shipment by Seller
i. If seller is required to send the goods to buyer and contract does not require the seller to deliver them at a particular destination, seller must
1. Put conforming goods in the possession of a carrier and make a proper contract for their transportation
2. Obtain and promptly deliver or tender in due form any document necessary to enable the buyer to obtain possession of the goods; and
3. Promptly notify the buyer of the shipment
e. 2-207: ADDITIONAL TERMS IN ACCEPTANCE OF CONFIRMATION
i. 1. Do we have a definite and seasonable expression of acceptance OR a written confirmation?
1. Was it sent with a reasonable time?
ii. 2. Did the “expression of acceptance” state terms additional to or different from those offerred or agreed upon?
1. If 1 and 2 are satisfied, the “expression of acceptance” becomes an acceptance UNLESS acceptance is expressly made co

e indicated
3. 3. express / implicit determination for quantity or price
ii. (2) What if the proposal is not addressed to one or more specific persons?
1. Then it is not an offer, but an invitation to make offers
2. UNLESS, something else is indicated by the person making the proposal
b. Article 15 – No Mailbox Rule for Offers in CISG
i. (1) Has the offer reached the offeree?
1. Then it is effective
a. offers are NOT effective merely on dispatch.
ii. (2) Has the offeror tried to revoke the offer?
1. Did the revocation reach the offeree before OR after the offer?
a. Then the revocation is effective
b. EVEN IF the offer was irrevocable
c. Article 16 – Revocation of offers under the CISG:
i. (1) Has the offeror’s revocation reached the offeree before the offeree has dispatched acceptance?
1. If so, the revocation is valid
ii. (2) Offers cannot be revoked if:
1. they state they are irrevocable
2. the offeree reasonably relied on the offer
3. see 15(2)
d. Article 17 – Rejection of Offers
i. Has an offeree’s rejection of an offer reached the offeror?
1. Then the rejection terminates the offer
2. EVEN IF the offer is irrevocable
e. Article 18 – Acceptance
i. (1) Do we have an acceptance?
1. can be made by statement or conduct
2. NOT silence
ii. (2) Is the acceptance effective?
1. acceptance not effective if it doesn’t reach offeror within the time fixed
2. circumstances are taken into account.
3. oral offers must be accepted immediately unless circumstances indicate otherwise
iii. (3) Must notice be given to the offeror in order to accept?
1. NOT IF:
a. the practice of acceptance by performance has been established by U/T or C/D
b. requirements of (2) are met
THEN, acceptance is effective the moment