Formation: UCC

Question 1

Key terms

Answer 1

Under the UCC, only quantity is a required term for formation of a valid contract.

All other terms can be implied through gap-filling rules.

Question 2

Firm offer

Answer 2

A firm offer is irrevocable either a reasonable time period (not exceeding 90 days) or the time period specified in the offer.

Requirements:

(1) The offeror is a merchant—for purposes of the firm offer rule, any businessperson in a commercial transaction; and
(2) The offer is:

(a) written
(b) signed, and
(c) contains an explicit promise not to revoke.

Question 3

Acceptance: nonconforming goods

Answer 3

Shipment of nonconforming goods is considered to be an acceptance and a breach.

Question 4

UCC 2-207

Answer 4

Acceptance with additional or different terms nevertheless operates as an acceptance—unless acceptance is expressly made conditional on assent to the additional or different terms.

Question 5

UCC 2-207: additional terms

Answer 5

Under the UCC 2-207(2), additional terms control if:

(1) Both parties are merchants;
(2) The new term does not materially alter the deal;
(3) The initial offer did not expressly limit acceptance to its terms; and
(4) The offeror does not reject or object to the new term within a reasonable time.

Question 6

UCC 2-207: different terms

Answer 6

Under the majority rule, different terms “knock out.”

By contrast, under the minority rule, the initial offer controls if the different term does not satisfy 2-207(2).

Question 7

UCC 2-207: acceptance based on conduct

Answer 7

Parties can accept a contract by conduct by acting as if there were an agreement—e.g., through the act of exchanging goods for money.

If acceptance is by conduct, only the terms agreed to by both parties become part of the contract.

All other terms are gap filled.

Question 8

UCC 2-207: confirming memos

Answer 8

A written confirmation which is sent within a reasonable time operates as an acceptance.

Additional terms must satisfy UCC 2-207(2).

Question 9

Acceptance: right to inspect

Answer 9

Under the UCC, the buyer has the right to inspect the goods before deciding whether to accept or reject.

Payment does not constitute acceptance if there is no right of inspection before payment.

Question 10

Firm offer: form prepared by the offeree

Answer 10

For a firm offer in a form prepared by the offeree, the promise not to revoke must be separately authenticated by the offeror to protect against inadvertent signing.

Question 11

Revocation: notice

Answer 11

A revocation may be made in any reasonable manner and by any reasonable means, and it is not effective until communicated.

Under the UCC, a person receives notice when:

(i) it comes to that person’s attention, or
(ii) it is duly delivered in a reasonable form at the offeree’s place of business.

Question 12

Installment contracts

Answer 12

An installment contract is one in which:

• the goods are to be delivered in multiple shipments;
• each shipment is to be separately accepted by the buyer; and
• payment by the buyer is due upon each delivery, unless the price cannot be apportioned.

Parties cannot vary or contract out of this definition.

Question 13

Limitations periods

Answer 13

Although any parties to a sale of goods contract, not just merchants, can shorten the limitations period in which a lawsuit can be brought:

• there is a one-year floor below which the period cannot be reduced; and
• parties to a sale of goods contract cannot extend the limitations period beyond four years.