Uniform Commercial Code (UCC) Article 2

Express vs. Implied Contracts (Quasi Contracts

As if

Statute of Frauds

Generic term referring to statutes requiring certain contracts to be in writing.

Uniform Commercial Code (UCC) Article 2

Governs contracts for the sale of goods. Adopted by all states except Louisiana. Contracts can be formed easier, standards for performance are more defined, & the remedies are more easily determined.

Novation

Process of reworking a contract to substitute parties or terms, so that the old contract is abandoned & the new contract becomes the only valid contract.

Covenants not to Compete

Promises to protect employers & buyers from loss of goodwill through employee or seller competition. (ex 253)

Bill of Lading

Receipts for goods issued by a carrier; used as a means of transferring title in exchange for payment or draw on a line of credit. Is a contract for the shipment of the goods & provides evidence of who has title to the goods.

Void Contract

One the courts will not honor, & neither party is obligated to perform under that agreement

Age Capacity

Parties to the contract must be at least the age of the majority (most states, 18). Before the time a party reaches the age of capacity, his or her contracts are voidable.

Void Contract

An agreement to do something that is illegal or against public policy, or one that lacks legal elements.

Valid Contract

Parties, subject matter of contract, price, payment terms, delivery terms, performance terms

Article 2A

Applies to leases of goods

Voidable Contract

A contract that can be unenforceable at the election of one of the parties i.e. voidable contracts give one party the option disaffirming the contract.

Unconscionable Contract

A contract that gives all the benefits to one side & all the burdens to the other.

Express Contract

A contract that is written or orally agreed to

Contract Defense

A situation, term, or event that makes an otherwise valid contract invalid

Limitations:

Acceptance by the offeree cuts off the right to revoke

Accord & Satisfaction

An agreement (accord) to pay a certain amount, the payment of which constitutes full payment (satisfaction) of that debt.

Capacity

Both parties to a valid contract must have capacity. Legal term for the ability to enter into a contract

UCC vs. CISG

CISG follows common law mirror image rule & not the UCC "battle of the forms" modification exception, CISG also requires the presence of a price for an offer to be definite enough to be valid, Merchant's offers exist under CISG but their validity is not subject to time limitations, as w/ the UCC 3 month limit.

Under Common Law, options

Can't be revoked

Counteroffer

Changes & rejections in original offer. Response by offeree to offer or when offeree changes terms of offer. The effect of a counteroffer is that the original offer is no longer valid & the offeree now becomes the offeror as the counteroffer becomes the new offer.

Force Majeure

Clause in an international contract that excuses performance in the event of war, embargo, or other generally unforeseeable events

Substantial Performance

Contract defense for performing a contract slightly differently from what was agreed upon; justification for substitute but equal performance; generally applicable in construction contracts.

Liquidated Damages

Damages agreed to in advance & provided for in the contract; usually appropriate when it is difficult to know how much damages will be.

Consequential Damages

Damages resulting from a contract breach, such as penalties or lost profits.

Incidental Damages

Damages suffered by the nonbreaching party to a contract as a result of the breach; for example, late performance fees on a buyer's contract b/c the seller failed to deliver on time.

Terms

Definitions

Point & Click

E-commerce. (internet)

Exceptions to the Statute of Frauds

Ex: If Alan agreed to sell his land to Berth under an oral contract & Bertha has paid, has the deed, & had moved in, Alan can't use the statute of frauds to remove Bertha & get the land back

Parol Evidence

Extrinsic evidence regarding a contract

Scienter

Knowledge that the info given is false

Common Law Statute of Frauds

List of types of contracts required to be in writing under most state laws: Contracts for the Sale of Real Property (sales, certain leases, liens, mortgages, & easements) Contracts That Can't be Performed in One Year Contracts to Pay the Debt of Another

UCC, the requirements for an offer

Must include only the parties involved & the subject matter

Duress

Occurs when a party is physically forced into a contract or deprived of a meaningful choice when decided whether to enter into a contract.

Misrepresentation

Occurs when one party to a contract is not given full or accurate information by the other party about the contract subject matter

Revocation

Occurs when the offeror notified the offeree that the offer is no longer good.

Voidable Contract

Of a minor allows the minor to choose not to honor the contract, in which case the other party to the contract will have no remedy. Exceptions to minor contract rules: Student loan contracts are enforceable

Rejection by Counteroffer Under Common Law

Offer ends when the offeree does not fully reject the offer but rejects some portion of the offer or modifies it before acceptance.

Under the UCC

One form of option makes the offer irrevocable, even without the offeree's payment

Bilateral Contract

One in which both parties promise to perform certain things

Acceptance by Stipulated Means

Required means of acceptance, If the offeree uses the stipulated means of acceptance, the acceptance is effective when it is properly sent, i.e. mailbox rule applies. (Ex: If the offeror has required a mailed acceptance & the offeree properly mails the letter of acceptance.

Statute of Frauds Contracts

Statutes requiring certain contracts to be in writing

Battle of the Forms

Term used to describe the problem of merchants using their purchase orders & invoices w/ conflicting terms as their contractual understanding; problem is remedied by section 2-207 of the UCC.

Rejection by Counteroffer Under the UCC (2-207) For Nonmerchants

The addition of terms in the counteroffer does not result in a rejection; there will still be a contract if there is a clear intent to contract, but the additional terms will not be a part of the contract. (Ex 232)

"Terms Later"

The effect of the new Section 2-207 is to leave issues of what is or is not included in a contract to the courts that then determine the intent of the parties. The new Section 2-207 is now referred to as the "Terms Later" provision b/c it permits parties to go forward w/ contract performance & decide on terms later or resolve any disputes only if they arise during the course of performance.

Fraud

The knowing & intentional disclosure of false information or the knowing failure to disclose relevant information

Merchant's Firm Offer

The offer must be made by a merchant, put in some form of record, & signed by the merchant. If these requirements are met, the merchant must hold the offer open for a definite time period (no longer than 3 months).

Acceptance

The offeree's positive response to the offeror's proposed contract, & only persons to whom the offer is made have the power of acceptance

Parol Evidence Rule

The prohibition on extrinsic evidence for fully integrated contracts. It is a means for stopping ongoing contradictions to contracts that have been entered into & finalized. Exceptions to the PER: If a contract is incomplete or the terms are ambiguous, extrinsic evidence can be used to clarify or complete the contract, as in the case of UCC contracts in which price, delivery, & payment terms can be added. Evidence that shows lack of capacity or fraud does not violate the PER.

Material Fact

The type of info that would affect someone's decision to enter into the contract. Statement of fact that would influence an individual's decision to buy or sell.

Rejection by Counteroffer Under the UCC (2-207) For merchants

There is a more complicated set of rules & details on additional terms in acceptance called the battle of the forms. If the parties reach a basic agreement but the offeree has added terms, there will be an enforceable contract; the added terms are not a rejection. Whether the added terms will become a part of the contract depends on the following questions: Are the terms material? Was the offer limited? Does one side object?

Usury Laws

These contracts are credit or loan contracts that charge interest in excess of the state's limits for interest or finance charges

CISG (United Nations Convention on Contracts for the International Sale of Goods)

U.N. version of Article II on sales of goods for international transactions. 4 Parts: I. Application II. Formation III. Sale of Goods IV. Final Provisions

Commercial Impracticability

UCC version of impossibility. Excuses performance if the basic assumptions the parties made when they entered the contract have changed.

UCC Statute of Frauds

Under the UCC, a separate statute of frauds applies to contracts covering the sale of goods. Contracts for the sale of goods costing $500 or more must be evidenced by a record to be enforceable, Under Revised Article 2, the amount has been increased from $500 to $5,000