UCC Article 2 Sale of Goods

What is the UCC?

Statute that governs contracts for the sale of goods

What happens when the UCC is silent on a subject?

Common Law governs

What are considered ‘goods’?

Something that is moveable and tangible (land is not moveable)

Merchants under the UCC

A merchant is generally someone who deals in goods or has a specialized knowledge or skill relating to the goods or commercial practices involved

Terms of an offer under UCC

Intent

Reasonable Certainty (reasonably certain for a court to grant a remedy when there is a breach)

Open Terms

Open Terms

Under UCC, definite terms is not necessary: you just need quantity! A simple purchase order can prove the parties’ intent to form a contract, even if many of the terms are missing

How terms are automatically determined under UCC

Price: Reasonable price at the time of delivery

Payment Terms: due at time and place where buyer receives the goods

Delivery Time + place: Reasonable time, buyer should pick up at seller’s place of business

Quantity: MUST BE LISTED! (no quantity=no contract)

Merchant’s Firm Offer

Offer that is signed by a merchant for the sale of goods stating that the offer will remain open for the offeree to consider (cannot be canceled or changed for the time open)

Can stay open for a maximum of 3 months

Acceptance Under the UCC

Additional Terms do not terminate the offer

How are additional terms treated under the UCC?

Between merchants: additional terms are treated as a proposal

Between merchants: additional terms are included unless the offer limits acceptance, the terms would materially change the contract, or if offeror objects to the new terms within a reasonable time

What is the “battle of the forms”

When merchants exchange standardized forms that agree on the deal’s basics but disagree on boilerplate terms

How are different terms treated under the UCC?

Knock Out Rule

Knock Out Rule

Conflicting terms that cancel each other out—> in which UCC gap-fillers apply

The UCC and Statute of Frauds

Sale of goods of $500 or more must be written to be enforceable

For UCC, writing must include:

• Indication of Intent

• Signed by the party to be charged

Exceptions to the Statute of Frauds under the UCC

• Part performance

• Admission in Court

• Specially manufactured goods

• Merchant’s Confirmatory Memo

Part performance under UCC

• goods that were already delivered and accepted

• Payments made and accepted

Admission in Court

• If a party admits in pleadings, testimony, or court

Specially Manufactured Goods

• Goods are custom made

• Not suitable for resale

• Seller has substantially started manufacture

Merchant’s Confirmatory Memo

When a merchant sends another merchant a written confirmation of the oral agreement they made early on—> no objection within 10 days—> contract can be assumed to be accepted

Implied Duty of Good Faith

Honesty in fact and observance of reasonable commercial standards of fair dealing in the trade