B-LAW Chapter 19

Statute of Frauds and the UCC

UCC requires a writing for any sale of goods worth $500 or more.

Open prices

Under 2-305, the parties may conclude a contract even though they have not settled the price. If the parties have not stated one, the price is a reasonable price at the time of delivery.

Added Terms

an acceptance that adds or alters terms will often create a contract. (not a counteroffer like in common law).

Why is the UCC pro -business?

The whole point of the UCC is to make business transactions more reliable, convenient, and predictable.

What are the 3 codes of purpose for the UCC?

> To simplify, clarify, and modernize the law governing commercial transactions. > To permit the continued expansion of commercial practices through custom, usage and agreement of the parties. >To make uniform law among the various jurisdictions.

Unconscionable

A contract that is shockingly one sided and fundamentally unfair

A good

A good is a moveable physical object except for money and securities.

Additional or different terms:

Decide whether new language is an additional term or a different term..

Different Terms

Different terms are terms that contradict those in the offer. How the court (UCC) handle different terms: Different terms cancel each other out. If there is no clear oral agreement, the code supplies its own terms, called gap- fillers

Modifications

Does away with common law consideration requirement so long as both parties agree to modification.

Merchant

Generally someone who routinely deals with the particular goods involved. The UCC frequently holds a merchant to a much higher standard of conduct than a non merchant.

Mixed Contracts

In a mixed contract involving sales and services, the UCC will govern if the predominant purpose is the sale of a good, but the common law will control if the predominant purpose is providing a service.

In what 3 circumstances does the UCC statute of frauds turn off ?

Merchant Exception: When two merchants make an oral contract, and one sends a confirming memo to the other within a reasonable time, and the memo is sufficiently definite that it could be enforced against the sender herself, then the memo is also valid against the merchant who receives it, unless he objects within 10 days. Specialty Goods Exception: If a buyer orders goods that are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business, then a verbal agreement is enforceable even if it exceeds $500. Judicial Admission Exception: If a defendant admits in his pleading, testimony or otherwise in court that a contract for sale was made, then the contract he admitted to is enforceable against him.

Is moment of making critical?

No. The UCC will enforce a deal even though it is difficult, in common law terms, to say exactly when it was formed.

What is the one term that is essential to state under UCC code?

One term is essential to state: quantity. The code will enforce the contract only up to the quantity of goods stated in the writing. (otherwise the court wouldn't know what amount to enforce.

Intention

Parties must still intend to create a contract.

Additional terms

Terms that introduce issues not covered in the offer. Under 3 circumstances, additional terms do not bind the parties If the original offer insisted on its own terms If the additional terms materially alter the offer. If the offer promptly objects to the new terms.

The UCC and good faith

The UCC imposes a duty of good faith in the performance of all contracts. >Non merchants: good faith means honesty in fact >Merchants: honesty in fact plus the exercise of reasonable commercial standards of fair dealings

Output and requirement contracts

The UCC requires that the parties in an output or requirements contract make their demands in good faith. Output contract = seller must sell all output to a buyer Requirements contract = buyer must purchase all his needed goods from the maker of goods. Parties may change or alter the output or the requirement so long as doing so in good faith.

In contracts worth $500 or more

The code only requires a writing sufficient to indicate that the parties made a contract. In other words, the writing need not be a contract. In general, the writing must be signed by the defendant, that is, whichever party is claiming there was no deal.

What does Article 2 of the UCC apply to?

The sale of goods

Why does the tie go to the contract?

Under the UCC the preference is to declare an agreement to be a contract if no clear reason exists to declare it invalid.

Lex Mercatoria / Law merchant

is the body of rules that England relied on in the 16th century.

Article 2 applies to contracts that ....

sell goods, as well as to contracts that sell a mix of goods and services if the predominant purpose of the deal is to sell goods.