Business Law Ch.20

The single most comprehensive codification of the broad spectrum of laws involved in a total commercial transaction

The UCC

Seasonably

Within a specified time period. If no period is specified, within a reasonable time.

The conduct that occurs under the terms of a particular agreement is called...

a course of performance

A writing, including an email or other electronic record, will be sufficient to satisfy the UCC's Statute of Fraud as long as it:

1. Indicates that the parties intended to form a contract. 2.Is signed by the party (or agent of the party) against whom enforcement is sought

To qualify as a firm offer, the offer must be:

1. Written (or electronically recorded, such as in an e-mail). 2. Signed by the offeror

The CISG provides that an offer will be irrevocable if:

1.The offeror states orally that the offer is irrevocable. 2.The offeree reasonably relies on the offer as being irrevocable.

A firm offer arises when ...

a merchant-offeror gives assurances in a signed writing that the offer will remain open.

Under the CISG, an offer can become irrevocable without...

a signed writing.

CISG states that an acceptance by return promise (a unilateral contract) "becomes effective when....?

at the moment the indication of assent reaches the offeror."

The prompt shipment of nonconforming goods constitutes ...

both an acceptance, which creates a contract, and a breach of that contract.

fully integrated contract cannot be contradicted by...

evidence of any prior agreements or contemporaneous oral agreements.

Tangible property has ...

physical existence—it can be touched or seen.

Under the CISG, however, the definition of a "material alteration" include0...

s almost any change in the terms.

To the extent that it has not been modified by the UCC, however, the common law of contracts also applies to ...

sales contracts

Article 2 of the UCC (as adopted by state statutes) governs ,,,,

sales contracts, or contracts for the sale of goods.

Conforming goods accord with...whereas....

the contract's terms, nonconforming goods do not.

Specifically, if the clause denies one party an effective remedy, or is the product of fraud or unconscionable conduct, the clause ...

will not be enforced.

CISG, however, states that a contract of sale "need not be concluded in or evidenced by ...=

writing and is not subject to any other requirements as to form. It may be proved by any means, including witnesses

Classify a merchant

1. A merchant is a person who deals in goods of the kind involved in the sales contract. 2. A merchant is a person who deals in goods of the kind involved in the sales contract. ` 3. A person who employs a merchant as a broker, agent, or other intermediary has the status of merchant in that transaction.

When consistent construction is not available, the UCC establishes the following order of priority

1. Express terms. 2,Course of performance. 3. Course of dealing. 4. Usage of trade.

The UCC allows a court to evaluate a contract or any clause in a contract, and if the court deems it to have been unconscionable at the time it was made, the court can do any of the following

1. Refuse to enforce the contract. 2. Enforce the remainder of the contract without the unconscionable part. 3. Limit the application of the unconscionable term to avoid an unconscionable result.

An oral contract for the sale or lease of custom made goods will be enforceable if:

1. The goods are specially manufactured for a particular buyer or specially manufactured or obtained for a particular lessee. 2.The goods are not suitable for resale or lease to others in the ordinary course of the seller's or lessor's business. 3.The seller or lessor has substantially started to manufacture the goods or has made commitments for the manufacture or procurement of the goods.

Under UCC 2-207(2), in contracts between merchants, the additional terms automatically become part of the contract unless one of the following conditions arises:

1. The original offer expressly limited acceptance to its terms. 2. The new or changed terms materially alter the contract. 3.The offeror objects to the new or changed terms within a reasonable period of time.

the UCC states that a sales or lease contract will not fail for indefiniteness even if one or more terms are left open as long as both of the following are true

1. The parties intended to make a contract. 2. There is a reasonably certain basis for the court to grant an appropriate remedy [UCC 2-204(3), 2A-204(3)].

In regard to Article 2 of UCC, keep two points in mind

1.Article 2 deals with the sale of goods. It does not deal with real property (real estate), services, or intangible property such as stocks and bonds. Thus, if the subject matter of a dispute is goods, the UCC governs. If it is real estate or services, the common law applies. 2. In some situations, the rules can vary depending on whether the buyer or the seller is a merchant.

Choice of law clause

A clause in a contract designating the law (such as the law of a particular state or nation) that will govern the contract.

Choice of language clause

A clause in a contract designating the official language by which the contract will be interpreted in the event of a future disagreement over the contract's terms.

Forum Selection Clause

A forum-selection clause designates the forum (place, or court) in which any disputes that arise under the contract will be litigated.

requirements contract

An agreement in which a buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires.

output contract

An agreement in which a seller agrees to sell and a buyer agrees to buy all or up to a stated amount of what the seller produces.

If the CISG and the UCC conflict, the ___applies, why?

CISG , (because it is a treaty of the U.S. national government and therefore is supreme).

The UCC provides rules of construction for interpreting contracts. They are....

Express terms, course of performance, course of dealing, and usage of trade are to be construed to be consistent with each other whenever reasonable.

Under ISG, If an additional term relates to payment, quality, quantity, price, time and place of delivery, extent of one party's liability to the other, or the settlement of disputes, the CISG considers the added term as...

a material alteration.

The UCC permits acceptance of an offer to buy goods "either by...

a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods"

course of dealing is...

a sequence of actions and communications between the parties to a particular transaction that establishes a common basis for their understanding

In summary, a person is a merchant when she or he....

acting in a mercantile capacity, possesses or uses an expertise specifically related to the goods being sold.

The offeree's response is not an acceptance if it contains ...

additional or different terms and is expressly conditioned on the offeror's assent to those terms

CISG provides that a contract can be formed even though the acceptance contains ...

additional terms, unless the additional terms materially alter the contract.

In general contract law, the moment a definite offer is met by ...

an unqualified acceptance, a binding contract is formed..

Intangible property: such as corporate stocks and bonds, patents and copyrights, and ordinary contract rights, has only ....

conceptual existence and thus does not come under Article 2.

Under CISG, it is the offeree's reliance, rather than the communication of acceptance to the offeror, that ,...

creates the contract.

very contract, and particularly those involving international transactions, should have a...

force majeure clause.

Under the UCC, good faith means ...

honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade [UCC 2-103(1)(b)].

The UCC contains Statute of Frauds provisions covering sales and lease contracts. Under these provisions, sales contracts for goods priced at $500 or more and lease contracts requiring total payments of $1,000 or more must be

in writing to be enforceable

The UCC is more stringent than the common law in this regard (acceptance) because...

it requires notification.

nlike the common law, however, the UCC does not require a contract modification to be supported by...

new consideration as long as made in good faith

if the parties do not specify a quantity...

no contract is formed.

Merchants can satisfy the Statute of Frauds if, after the parties have agreed orally, ...

one of the merchants sends a signed written confirmation to the other merchant within a reasonable time.

The UCC attempts to provide a consistent and integrated framework of rules to deal with all the phases ____arising in a commercial sales transaction from start to finish.

ordinarily

For instance, Article 1of the UCC sets forth an obligation to...

perform in "good faith" all contracts falling under the UCC [UCC 1-304].

The concepts of good faith and commercial reasonableness ....

permeate the UCC.

The UCC views the entire "commercial transaction for the sale of and payment for goods" as a....

single legal occurrence having numerous facets.

An unconscionable contract is one that is ...

so unfair and one sided that it would be unreasonable to enforce it.

To be characterized as a good, an item of property must be...

tangible, and it must be movable.

Force majeure clauses often stipulate ...

that other events (in addition to acts of God) will excuse liability for nonperformance. Occurrences such as adverse governmental orders or regulations, embargoes, and extreme shortages of materials commonly excuse a party's nonperformance.

Whenever a choice of law is not specified in a contract, the Hague Convention indicates...

that the law of the country where the seller's place of business is located will govern.

In general, the rule is that whenever a conflict arises between a common law contract rule and the state statutory law based on the UCC......

the UCC controls.

If a court decides that a mixed contract is primarily a goods contract, any dispute, even a dispute over the services portion, will be decided under....

the UCC.

Similarly, if the designated forum causes substantial inconvenience to one of the parties, or violates public policy....

the clause may not be enforced.

In interpreting a commercial agreement, a court will assume that.....were taken into account when the agreement was phrased.

the course of dealing between the parties and the general usage of trade

The merchant's firm offer is irrevocable without...

the necessity of consideratiom for the stated period or, if no definite period is stated, a reasonable period (neither to exceed three months)

Under the common law, because a unilateral offer invites acceptance by performance,...

the offeree need not notify the offeror of performance unless. the offeror would not otherwise know about it.

Under the UCC, if the offeror is not notified within a reasonable time that the offeree has accepted the contract by beginning performance, then...

the offeror can treat the offer as having lapsed before acceptance

If arbitration is anticipated, an additional clause must be added to indicate ...

the official language that will be used at the arbitration proceeding.

When contracts involve a combination of goods and services, courts generally use....

the predominant-factor test to determine whether a contract is primarily for the sale of goods or the sale of services

A course of dealing is restricted to ...

the sequence of conduct between the parties in their transactions prior to the agreement

Note, though, that many contracts do not fall under the UCC, because ...

they do not involve commercial transactions.