M - 3 Contracts: Part 3 Flashcards
What is the difference between a merchant and someone just selling goods out of their home? Are merchants held to a higher standard under the UCC rules?
A merchant is someone who is considered an “expert” under the UCC rules and they are subject to a higher standard, compared to someone who is just selling things at a garage sale. Merchants could be stores for example.
Are merchants held to a standard of fair dealings? Is this the same for common law?
Yes they are, they have to make sure that the deal is fair under UCC rules. Under common law, the deal does not have to be fair, so it is important to note.
Under the common law, if you want the offeror to keep the offer open, you have to buy an option. Does this same rule apply to merchants?
If a merchant promises to keep an offer open for you, in writing, then they have to honor that promise (maximum three months). Exception, if you want more than three months than you have to pay for that. No consideration is needed for this. For common law and most UCC cases, you have to buy an option to keep that offer open.
For accepting an offer, how do the UCC rules differ from the common law rules?
You can accept in any way you want, unless the seller specifies in the contract, that they want you to accept a certain way.
UCC does not follow the mirror image rule, and you can minor changes to the contract and they will go through.
When making minor changes to a contract under UCC, whose minor changes will govern the contract?
Unless the sale is between two merchants, then the offeror’s original terms will govern the contract.
Now if the offer is between two merchants, then the offeree’s terms will govern the contract.
Lastly, if a major change is made to a contract, that is not okay, and that would be a counteroffer.
How does the UCC rules differ from common law when it comes to performance of a contract? For example, what happens if under UCC if they ship the wrong order? What is the exception?
Under common law, if someone order’s 17 red dresses and you ship 16 red and 1 pink, that is not a breach of contract. It was a mistake, but not a breach.
Same example above, but under UCC, that is a breach of contract. The order has to be perfect, or else we have a breach.
The exception is if you attach a letter. Let’s say, you ship the dresses but explain why you shipped pink. Maybe you ran out of red, that is not a breach, but rather a counteroffer.
NOTE: This acceptance only applies to unilateral contract’s, where someone accepts the offer by performance. For example you place an order, and they ship it with the note. That is okay.
This does not work under bilateral, where someone promises instead of performance. For example, you place the order and someone promises to get you the dresses. They send the wrong dress and attach a note. This will not work, only works for unilateral.
How do auctions work under the UCC? What does “with reserve” and “without reserve” mean?
The auctioneer is the offeree, and the people bidding are the offeror’s. The highest bid “normally” wins, and when the auctioneer hits his hammer on the table, that means acceptance.
With reserve, means that if the auctioneer does not feel like the bid is high enough, he can choose not to sell.
Without reserve, the auctioneer has to sell to the highest bidder.
How are modifications to contracts different from UCC to Common Law?
Under common law, you can ask for changes in the contract, and if the seller agrees, you have to pay them some sort of consideration. If you don’t, and the seller backs out of the modification, then it does not become enforceable.
Under UCC, you can modifications, and if the seller agrees, no consideration or payment is needed.
Under UCC, how can payments be made? What are the exceptions?
You can make a payment via check, or any way you want, unless the seller demands a certain type of payment. If they demand cash, they have to give the buyer reasonable time to obtain the cash.
Under the statue of frauds, what is the time frame you can use fraud as a defense under common law, and UCC?
Common law - 4 to 6 years.
UCC - Up to 4 years, as of the date of the breach. Not when the contract was signed.
Under the UCC, if the goods are over 500 dollars, it has to be in writing. What are the four exceptions?
S - Contracts for specially manufactured items. You had to communicate your needs and wants to the manufacturer, so they count that as some sort of writing.
W - If the merchant send the buyer a written confirmation of the order, and the buyer does not object after 10 days, no writing is needed.
A - If it has been admitted in court, no writing is needed.
P - If the performance already happened, then no writing is needed.
What type of writing will suffice under the UCC?
Does not have to be a formal contract.
Can be stated in more than one writing
Can be emails, texts, etc.
Must be signed by the defendant, and a have essential terms (quantity).
What are exceptions where quantity is not needed under UCC?
Seller agrees to supply all the buyers’ needs for the a period of time.
Output contract: Seller agrees to sell to the buyer everything it produced over a period of time.
Under common law, Impossiblity is a defense that can be used to show the contract cannot be performed. Is this the same for UCC?
Yes, but UCC takes it one step further. If it is “Impracticable”, that is also a defense to get out of the contract.
As a general rule, what is the seller’s basic duty when it comes to holding and shipping good?
Usually, all the seller needs to do is hold the item for the buyer, and give the buyer enough notice so they can come and pick up their order.
