INTRODUCTION

GENERAL INFORMATION

Sec. 2‑102. Scope

• Unless the context otherwise requires, this Article applies to transactions in goods.

1-103(c) – unless displaced by UCC, may look to other law for guidance.

1-302 – cannot contract around obligations of good faith, diligence, reasonableness, and care. These obligations will be part of every contract.

• For any other obligations imposed by the UCC, can contract around them

• Parties can define good faith, so long as their definition is manifestly reasonable

1-303 – Course of Performance, Couse of Dealing, and Usage of Trade

• Course of performance – sequence of ongoing conduct between the parties

• Couse of dealing – past conduct establishes understanding for future conduct

• Usage of trade – practices or methods of a particular trade or industry

1-304 – Good Faith

• Good faith is required in every contract

• However, UCC only talks about good faith in performance and enforcement, no Code requirement of good faith in formation

• Good Faith in and of itself is not a cause of action, it must be attached to some other cause of action

  • Look for clause that requires interpretation. The duty of good faith will kick in when interpreting the clause

Sec. 2‑105. Definitions. "Goods" means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action.

HYBRID TRANSACTIONS

• Contract which involves both goods and services.

MAJORITY VIEW ‑ PREDOMINANT FACTOR TEST.

• If the Predominant purpose of the transaction was the provision of the goods, Article 2 Applies

• If the predominant purpose was the provision of services, Article 2 does NOT apply

MINORITY VIEW ‑ SEPARATION. Separate parts of contract into goods and services. If it involves just goods, use UCC. If involves service, don’t use UCC.

Formation and Interpretation

Under 1-103(b), we can bring in general contract law ideas of offer and acceptance to supplement UCC

BASIC CONCEPTS

Sec. 1‑201(3). "Agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided for in U.C.C. Whether agreement has legal consequences is determined by provisions of U.C.C if applicable; otherwise, by law of contracts.

1‑201(11). "Contract" means the total legal obligation which results from the parties' agreement as affected by the provisions of the U.C.C. and any other applicable rules of law.

RULES FOR CONTRACT FORMATION

Sec. 2‑204(1). 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.

2‑204(2). don’t have to pinpoint a single moment when the parties became bound

2‑204(3). (OPEN AND IMPLIED TERMS) Even though one or more terms are left open contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a REASONABLY CERTAIN BASIS for giving an appropriate remedy.

2-205 – An offer by a merchant to buy or sell goods in a signed writing which gives assurances that the offer will be held open is not revocable, for lack of consideration, during the time stated or, if no time stated, a reasonable time.

• Offer to hold open must be signed separately by the offeror.

2-206 – An offer to make a contract invites acceptance in any manner and any medium reasonable under the circumstances.

"BATTLE OF THE FORMS"

Under common law, there was no agreement if the forms were not mirror images. 2-207 eliminates that rule

Sec. 2‑207(1). A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

• Written confirmation is a written form of a previous agreement (i.e. purchase on telephone)

• Thus, a discrepancy does not prevent a purported acceptance from creating a contract unless the offeree takes pains to expressly to say that it does. CONSEQUENCES: CONTRACT EXISTS, OFFEROR'S TERMS CONTROL

• Unless clause will kill the contract if the other party does not agree to the additional or different terms.

2‑207(2). The additional terms are to be construed as proposals for addition to the the contract. Between merchants such terms become part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

• When not between merchants, additional terms become proposals for addition and die.

• EXAMPLES OF TERMS MATERIALLY ALTERING AGREEMENT

  • Mandatory arbitration clauses

  • Clauses negating standard warranties (i.e. merchantability, fitness for particular purpose)

2‑207(3). Conduct by both parties which recognize existence of contract is sufficient to establish a contract for sale although writings of parties do not otherwise establish contract. In such case, terms of particular contract consist of those terms on which writings agree, together with any supplementary terms incorporated under any other provisions of this act.

• Creates contract by performance

• Comment 6 (Knock-out rule) – when clauses on confirming forms conflict, each party must be assumed to object to the conflicting terms. Therefore, the conflicting terms do not become part of the contract

• Even if one party make acceptance of the offer conditional on acceptance of additional terms under 207(1), continuing with performance creates a contract under 207(3) and under (3)’s terms.

STATUTE OF FRAUDS

Scope of Statute. SoF Applies to all contracts...

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