Contracts Flashcards
The preliminary issue for the essay is whether the contract is governed by common law or Article 2 of the UCC.
Common law governs contracts for service whereas the UCC governs contracts for the sale of goods. Goods are objects that are movable.
Here, the sale of the artwork is governed by Article 2 of the UCC as the painting is a movable item and therefore is considered a good.
UCC Article 2 applies to the contract for the sale of the painting
The issue is whether the grandson has breached an express warranty.
Under the UCC, an express warranty is affirmation, statement, or promise of fact that becomes part of the basis of the bargain. Part of the basis of the bargain means that it is one of the reasons that the individual entered into the contract. While warranties can be disclaimed under the UCC, express warranties once made, cannot be disclaimed. Express warranties can be oral or written.
Application
Here, the grandson did make a written express warranty when the contract he provided for the sale identified that the item being sold was a painting by Artiste. This is a written affirmation that the painting in the transaction is one that was painted by Artiste. Furthermore, the statement was part of the basis of the bargain as Grandson was told by Buyer that he would purchase
the Artiste painting. Artiste is a painter that passed away and therefore is no longer making art, so it was part of the basis of the bargain that the item was a painting by Artiste. Finally, even though the contract had a conspicuous disclaimer stating that the seller disclaimed all warranties, express or implied, the express warranty still exists because once an express warranty is made it cannot be disclaimed. Grandson breached an express warranty.
The issue is whether Buyer has a right to rescind or avoid the contract on the basis of mutual mistake of fact.
Under the UCC, parties are still given common law defenses such as mutual mistake of fact and can avail themselves of the remedies that are provided for those common law defenses. Mutual mistake of fact is a defense to a contract that provides that where both parties are mistaken as to a fact of the contract and that fact is one that strikes at the heart of the bargain. If mutual mistake does occur, then the parties can rescind the contract which means that the parties go back to the original positions as they were before the contract, or
they can avoid the contract which means that neither party must perform their duties provided for under the contract.
Application
While the contract is governed by Article 2 of the UCC, the parties can still avail themselves of the common law defense of mutual mistake of fact. Here both parties had a good faith belief that the painting sold was a genuine work of Artiste; there was nothing that indicated to the art collector that the painting was not a genuine Artiste work when he inspected the painting for 30 minutes. Furthermore, the art appraisal expert who worked with Grandson did not indicate that the work was not genuine. Therefore, both parties were mutually mistaken that this artwork was a genuine Artiste work. The mistake does go straight to the heart of the contract as the main reason that Buyer was buying this painting was because he believed it to be a genuine Artiste work and Artiste is prominent American artist who passed away in 1956 and therefore
there are no new paintings of his. Because there was a mutual mistake of fact as to the genuineness of the painting, the UCC provides that the parties can avail themselves of the common law remedies that are associated with the defense of mutual mistake of fact. Buyer has a right to rescind or avoid the contract on the basis of mutual mistake of fact.
