Contract Formation Under Article 2 of the UCC

UCC 2-105 Goods

(1) "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. "Goods" also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (Section 2-107). (2) Goods must be both existing and identified before any interest in them can pass. Goods which are not both existing and identified are "future" goods. A purported present sale of future goods or of any interest therein operates as a contractto sell. (3) There may be a saleof a part interest in existing identified goods.

UCC 2-204 Formation in General

1. Contracts for the sale of goods may be made in any manner sufficient to show agreement. 2. An agreement sufficient to constitute a contract for sale may be found even though its making is undetermined. 3. If one or more terms are left open, the contract does not have to fail for indefiniteness if the parties intend to make a contract and there is a reasonable basis for giving an appropriate remedy.

UCC 2-207 (battle of the forms)

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.

E.C. Styberg Engineering Co. v. Eaton Corp.

Rule: Where parties' communications evidence ongoing negotiations with no agreement reached as to key terms, such as price, quantity and monthly production volume, the Uniform Commercial Code (U.C.C) states that such a contract for the sale of goods have not been formed. Facts: From 1998 to 2000, E.C. Styberg Engineering Company (Styberg) (plaintiff) manufactured a custom brake assembly part for inclusion in Eaton Corporation's (Eaton) (defendant) six-speed transmission motor vehicle part. In 1999, the parties began negotiating an agreement under which Styberg would produce large quantities of the part for Eaton. During this time several e-mail exchanges and telephone calls between employees of both parties occurred that discussed quantity and price. Lisa Fletcher, an Eaton employee, sent an email to a Styberg engineer committing Eaton to purchase 13,000 parts. However, Styberg wanted a larger purchase commitment from Eaton to offset its capital investment in manufacturing the parts. Thereafter, no purchase order was ever issued by Eaton for the 13,000 parts. Styberg filed suit against Eaton in district court for breach of contract and sought approximately $3.4 million in damages. After a four-day bench trial, the court held that no contract had existed because the parties had failed to agree on terms. There, the court characterized the various discussions by e-mail, telephone, and letter as evidence of continued negotiations that did not constitute the basis of a formed contract. Styberg appealed.

Paul Gottlieb & Co., Inc. v. Alps South Corp.

Rule: The rules of engagement for the "battle of the forms" are set out in the Uniform Commercial Code (UCC) § 2-207. the limitation of limited liability clause found on the back of a standardized contract for the sale of goods between merchants as stipulated under the Uniform Commercial Code (U.C.C.) S 2-207, does not significantly alter the contract where it does not as a matter of law, cause unreasonable surprise or hardship. This is the case where they used one fabric but then the supplier changed the fabric without telling the company and the company had to recall a bunch.

Jannusch v. Naffziger

FACTS The Jannusches owned Festival Foods, a concessions business. The Jannusches contended that they had as enforceable oral contract with Naffzigers to buy Festival Foods because essential terms were identified, i.e., price and the goods to be conveyed, and the Naffzigers breached that contract. RULE: It is not necessary that the parties share a subjective understanding as to the terms of a contract; the parties' conduct may indicate an agreement to the terms. Holding: The essential terms were agreed upon. The purchase price was $ 150,000, and the items to be transferred were specified. No essential terms remained to be agreed upon. The buyers took possession of the items to be transferred and used them as their own. The fact that the buyers were disappointed in the income from the festivals was not inconsistent with the existence of a contract. Further, one buyer admitted in deposition that there was an agreement to purchase the business for $ 150,000. The buyers breached the agreement when they failed to pay the additional purchase price and returned the business assets at the end of the festival season.

Princess Cruises, Inc. v. General Electric Co.

Hybrid Contract: Which was greater the goods or service part of the contract? Contract for services for cruise ship, battle of forms ensued re: liability clause. Ship was repaired negligently, causing missed income from Christmas and Easter cruises ii. Trial jury was instructed on UCC2-207, appeals court found that UCC should not have applied. iii. Holding: GE did breach contract, but under common-law, their terms govern and they are protected by indemnity clause, judgment for P, but in amount of $231,925.

Brown Machine, Inc. v. Hercules, Inc.

Plaintiff, Brown Machine, Inc. sold a trim press to Defendant, Hercules, Inc. An indemnity provision was included in Plaintiff's acknowledgement of order form, but not in Defendant's purchase order. Plaintiff is bringing the present cause of action to enforce the indemnity provision. Rule: Under the UCC, additional terms become part of a contract between merchants unless the offer expressly limits acceptance to the terms included in the offer, the additional terms materially alter the contract, or notification of objection to the additional terms has been given or is given within a reasonable time. Holding: The indemnification provision did not become part of the k. https://www.casebriefs.com/blog/law/contracts/contracts-keyed-to-knapp/reaching-agreement-the-process-of-contract-formation/brown-machine-inc-v-hercules-inc/

U.C.C. 2-102 - Scope; Certain Security and Other Transactions Excluded From This Article

Unless the context otherwise requires, this Article applies to transactions in goods; it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction nor does this Article impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.