Business Law 2 Flashcards
UCC-2 applies to sales of “goods” (and UCC-2A applies to leases of “goods”). What
are “goods”?
goods” refer to tangible, movable items that are primarily used for personal, commercial, or industrial purposes. Examples of goods include clothing, electronics, raw materials, equipment, and vehicles. Intangible items such as software, patents, or copyrights are generally not considered goods under the UCC. Additionally, real estate, services, and securities are also excluded from the UCC’s definition of goods.
Under UCC-2, “goods” are defined as “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”
- This means that goods are any type of property that can be classified as personal property and can be moved at the time of sale 2. Is there anything else you would like to know?
What is UCC-2
. UCC-2 refers to Article 2 of the Uniform Commercial Code (UCC), which governs contracts for the sale of goods between merchants or between a merchant and a non-merchant
What types of sales of goods contracts does UCC-2 cover?
As long as the transaction involves the sale of goods, which are defined as “all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale,” UCC-2 can apply.
Business-to-Business sales of goods contracts
Business-to-Consumer sales of goods contracts
Consumer-to-Consumer sales of goods contracts
Under UCC-2, what is the definition of a “merchant”?
A “merchant” is defined as a person who deals in goods of the kind involved in the transaction or who otherwise holds themselves out as having knowledge or skill peculiar to the practices or goods involved in the transaction. A “non-merchant” is anyone who does not meet this definition of a merchant.
What is a valid offer under UCC-2 rules?
Under UCC-2, an offer to make a contract is considered valid if it invites acceptance in any manner and by any medium reasonable in the circumstances 1. For example, an offer can be made by email, a contract management system, or any other medium 2.
In the case of a firm offer made by a merchant to buy or sell goods in a signed writing, the offer is not revocable for lack of consideration during the time stated or, if no time is stated, for a reasonable time. However, the period of irrevocability cannot exceed three months 3. Is there anything else you would like to know?
Under UCC-2 contract law, if the offeror states that the offer to sell the goods will be held open (say, for 3 weeks), when is the offeror bound to hold the offer open for that time period:
For merchants: an offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable.
For non-merchant:
the common law rule of revocability would apply. Under common law, an offer can generally be revoked at any time before it is accepted, even if the offeror has promised to keep the offer open for a certain period of time.
What is the mirror image rule”
The “mirror image rule” is a principle in contract law that requires an acceptance to be an unconditional assent to the terms of the offer 1. This means that for an offer to be accepted and a contract to be formed, the acceptance must match the offer exactly, with no changes or modifications If the acceptance does not reflect the terms of the offer, it is considered a rejection and counter-offer
Is the UCC-2 does NOT follow the “mirror image rul
UCC-2 does not strictly follow the “mirror image rule” in the same way as traditional common law contract principles. Under UCC-2, a contract can still be formed even if the acceptance contains additional or different terms from the offer., unless the acceptance is expressly made conditional on assent to the additional or different terms.
The difference between
The Common law image rule and the UCC-2 rule
The common law mirror image rule requires that the acceptance of an offer must match the offer exactly, with no changes or modifications,
If the acceptance does not reflect the terms of the offer, it is considereda rejection and counter-offer.
In contrast, under UCC-2-207, A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operate as acceptence even though its term are different from what being offered or agreed on.
unless acceptance is clearly made under the condition og agreeing the additional or different terms.
Under UCC-2, is “Consideration” necessary
In a contract for the sale of goods?
However, under UCC-2, the contract for the sale of goods is formed as soon as the parties have reached an agreement on the essential terms of the sale, such as the identification of the parties, the identification of the goods, the price, the quantity, and the delivery terms. Once an agreement is reached, the parties are bound by the contract, regardless of whether there was any exchange of consideration.
This means that a contract for the sale of goods under UCC-2 can be formed even if one party promises to pay for the goods at a later date, or if the parties agree to a “conditional sale” where the buyer’s obligation to pay is contingent on certain events occurring, such as the buyer’s ability to resell the goods at a certain price.
Under UCC-2, is “Consideration” necessary in an agreement to modify an existing contract for the sale of goods?
Under UCC-2-209, additional consideration is not necessary to modify a contract for the sale of goods if the modification is made in good faith.
This means that parties to a contract for the sale of goods can agree to modify the terms of their contract without providing additional consideration, as long as the modification is made in good faith.
Does the contract have to be in writing under UCC-2?
Under UCC-2-201, a contract for the sale of goods at a price of $500 or more is not enforceable unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought
However, there are some exceptions to this rule. For example, between merchants, if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection
against such party unless written notice of objection to its contents is given within 10 days after it is received.
What is the general rule in writing contracts under UCC-2?
The general rule under UCC-2-201 is that a contract for the sale of goods at a price of $500 or more is not enforceable unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought.
if one party has already partially performed under the contract, the contract may be enforceable even if it is not in writing. Additionally, if the goods are specially manufactured or if the parties are merchants who have previously conducted business together, an oral contract for the sale of goods over $500 may be enforceable.
This means that for contracts involving the sale of goods at a price of $500 or more, there must be some written evidence of the contract in order for it to be enforceable. Is there anything else you would like to know?
What are the most important exceptions to the general rule under UCC-2 which allow certain contracts to be enforced even if they are oral agreements?
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There are several important exceptions to the general rule under UCC-2-201 that allow certain contracts for the sale of goods to be enforced even if they are not in writing. These exceptions include:
- Between merchants: If within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received.
- Specially manufactured goods: If the goods 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 and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement.
- Admissions: If the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made.
- Payment or acceptance: With respect to goods for which payment has been made and accepted or which have been received and accepted.
Under UCC-2, what remedies does the buyer have if the seller makes a “major” breach of contract?
Under UCC-2, if the seller makes a major breach of contract, the buyer has several remedies available.
If the seller fails to make delivery or repudiates or if the buyer rightfully rejects or justifiably revokes acceptance, then with respect to any goods involved and with respect to the whole contract if the breach goes to the whole contract, the buyer may cancel and may also recover so much of the price as has been paid.
In addition, the buyer may “cover” and have damages under the next section as to all the goods affected whether or not they have been identified to the contract; or recover damages for non-delivery as provided in this Article (Section 2-713)1
Canceling the contract: The buyer may cancel the contract and stop any further performance under the contract.
Cover: The buyer may purchase substitute goods from another seller and recover the difference between the cost of the substitute goods and the contract price.
Specific performance: If the goods are unique or rare, the buyer may ask the court to order the seller to perform under the contract and deliver the goods.
Damages: The buyer may seek damages to compensate for any losses suffered as a result of the seller’s breach. This may include direct damages, such as the difference between the contract price and the market price of the goods, as well as consequential damages, such as lost profits resulting from the breach.
Replevin: The buyer may seek possession of the goods if they have already been delivered to the seller but the seller has not yet paid for them.
