CHAPTER 20: UCC Sales Contracts

UCC Sales contracts

-most common one accepted

-provides standards

-states can adapt all/part/none

Intro

-comprehensive statute

-provides consistent/integrated framework of rules to deal with all phrases of an entire commercial transaction for sale and payment of goods

-contracts for sale of goods/leases

-transaction may involve payment including negotiable instrument and banking system

-credit can be extended to buyers

-ALL contracts are to be performed in good faith

the sale of goods

-if no rule in UCC-another statute or common law will apply

-goods NOT real property, services, intangible personal property (bank account)

-rules vary if buyer or seller is merchant

sale

passing of title from seller to buyer for price

-NOT gifts or bailments (pawn shop)

goods

-tangible

-moveable items of personal property

-moveable in ordinary course of business

goods associated with real property

-contract for sale of structure/minerals/the like are contracts for sale of goods if severance is to be made to seller

-severance-removal-seller removing minerals/structure

-sale of growing crops/timber to be cut is sale of goods regardless of who severs them

-”things attached” to realty but capable of severance without material harm to land are considered goods regardless of who severs them - heater with coils, window AC

Goods and Services combined

-determine which factor is predominant

-general rules

ex: go to mechanic-get part and service

combined goods and services rules

-serving of food/drinks have been treated as contracts

-contracts for specialty manufactured goods is goods not services

ex: custom drapes-good

merchant

-deals in goods of kind involved in sales contract

-holds himself out because of occupation as having knowledge/skills peculiar to business/goods involved in transaction-optometrist

-employs other people who are merchants to act on his behalf

formation of sales contracts

-offer

-good faith

-acceptance

-consideration

-statute of frauds

offer

-agreement sufficient to constitute contract can exist even of moment agreement formed is not determined

-open terms

-merchants firm offer

open terms

-contract will not fail for indefiniteness because some terms are left open as long as:

-parties must have intended to make contract

-reasonably certain basis for court to grant remedy

-QUANTITY IN CONTRACT

-open price term

-open payment term

-open delivery term

-open quantity term

Open price term

-must have intent to enter into contract

-no set price

-reasonable price at time of delivery

-FMV at time of delivery

open payment term

-payment terms not specified

-at time/place at which buyer is to receive goods

open delivery term

-place of delivery not specified

-goods delivered at:

sellers place of business-buyer picks up goods

sellers residence

neutral location decided by both parties

open quantity term

-essential to contract offer

-exceptions

open quantity terms exceptions

requirements clause-buyer buys all they require

-output contracts-buyer buys all sellers output

-use last years output/requirements to make it easier

merchants firm offer

-offer for sale of goods made by merchant

-merchant gives assurance in signed writing

-offer will remain open for stated period or reasonable time

-no consideration necessary

-merchants firm offer irrevocable for period stated

acceptance

-means of acceptance

-promise to ship or prompt shipment

-communication of acceptance

-additional terms

-EFFECTIVE WHEN SENT

means of acceptance

-if none is specified

-any reasonable means of communication may be used

promise to ship OR prompt shipment

-offer to buy goods for current/prompt shipment is accepted when seller promises to ship or promptly ships conforming goods

-seller doesnt promise to ship but accepts by shipment-shipment of nonconforming goods constitutes as acceptance and breach of contract

-seller however NOTIFIES buyer that nonconforming goods are being shipped as accommodation-shipment in counteroffer

communication of acceptance

-if offeree to unilateral contract does not notify offeror within reasonable period of time that offeree is beginning performance offeror may treat offer as having lapsed before acceptance

additional terms

-when offeree communicates that offeree intends to accept offer but adds different/new terms

-if offerees response indicates definite acceptance contract formed even if acceptance includes new terms

-buyer/seller are nonmerchants: new or additional terms viewed as proposals and do not become part of contract

-rule between merchants

-not acceptance if modifications are conditional on offerors assent

rule between merchants

-new or different terms become part of contract

-exceptions:

-offer expressly limits acceptance to only its terms

-terms materially alter offer

-offeror objects to new terms within reasonable period of time

consideration

-STILL REQUIRED

-not necessary for modification of contract

-but modifications require

good faith

sometimes must be in writing

-agreement provides that any modification must be in writing

-any modification that brings contract under statute of frauds

UCC statute of frauds

-contract for goods $500 or more not enforceable unless writing signed by party against whom sought is to be enforced

-contract usually not enforceable beyond quantity stated in writing but other terms proven in court by oral testimony

written confirmations between merchants

-exception to signature

-buyer/seller are both merchants entering into oral agreement

-one merchant sends signed writing confirmation to the other

-written confirmation must indicate terms of agreement

-merchant receiving confirmation must have reason to know contents

-receiving merchant DOES NOT object within 10 days after receiving contract then contract enforceable against both parties even though receiving merchant hasnt signed

exceptions to UCC statute of frauds

-specially manufactured goods

-admissions

partial performance

specially manufactured goods

-contract for goods specially manufactured for particular buyer

when goods not suitable for resale in ordinary course of business

-seller has begun production

admissions

-party admits in court or pleadings that contract has been formed

partial performance

-payment for goods or receipt and acceptance of goods by buyer to extent of performance