Rules Flashcards
§ 1-103(b) Applicability of Supplemental Principles of Law
(b) Unless displaced by the particular provisions of the UCC, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions.
§ 1-201(b)(20) “good faith”
(b)(20) except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing.
§ 1-303(a) Course Performance
(a) A “course of performance” is a sequence of conduct between the parties to a particular transaction that exists if
(1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and
(2) the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.
§ 1-303(b) Course of Dealing
(b) A “course of dealing” is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
§ 1-303(c) Usage of Trade
(c) A “usage of trade” is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. Existence and scope must be proved as facts. If established usage is in a trade code (or like), the interpretation of the record is a question of law.
§ 1-303(e) how much weight to give CoP, CoD, UoT
(e) Express Terms > CoP > CoD > UoT
§ 2-201(1) SoF
(1) A K for the sale of goods valued > $500 must be in writing and signed by the party against whom enforcement is sought. A writing that omits or incorrectly states a term is sufficient. But the K is not enforceable beyond the quantity of goods in the writing.
§ 2-201(2) SoF
(2) Between merchants, a writing in confirmation of the K received in a reasonable time, satisfies (1). Written objection must be made within 10 days of receipt.
§ 2-201(3) SoF
(3) A K that does not satisfy (1), is enforceable if
(a) the goods are specially made for buyer and not suitable for sale in the ordinary course of the seller’s business. And the seller is well on their way to make the unique good.
(b) if accused breacher admits there is a K, but K is not enforceable beyond quantity of goods, or
(c) with respect to goods for which payment has been made and accepted or which have been received and accepted (K by conduct)
§ 2-202 Parol Evidence
Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreements or of a contemporaneous oral agreement but may be explained or supplemented
(a) by CoP, CoD, or UoT
(b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
§ 2-205 Firm Offers
An offer by a merchant to buy or sell goods in a signed writing to be held open is NOT REVOCABLE, for lack of consideration, during the time stated. If no time stated, then for a reasonable time, but not to exceed three (3) months. Term of assurance by offeree must be separately signed by offeror.
§ 2-207(1) Battle of Forms
(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
§ 2-207(2) Battle of Forms
(2) The additional terms are to be construed as proposals for addition to the K. Between merchants such terms become part of the K unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
§ 2-207(3) Battle of Forms
(3) Conduct by both parties which recognizes the existence of a K is sufficient to establish a K for sale although the writings of the parties do not otherwise establish a K. In such case, the terms of the particular K consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.
§ 2-209 Modification
(1) an agreement modifying a K needs no consideration to be binding.
(2) A signed agreement which excludes modification except by signed writing must do so.
§ 2-305 Open Price Term
(1) Price does not have to be on a K for the K to be valid; price is the reasonable price on delivery if
(a) nothing is said to price
(b) price will be agreed on later and it never happens
(c) price is to be determined by special market or otherwise and it never happens.
(2) A price to be fixed by one party or the other must be made in good faith
(3) If price isn’t fixed as agreed upon by one party, the other party gets to cancel the K or fix a reasonable price.
(4) If parties don’t want a K if price can’t be fixed, the K is not. Parties must return goods and monies accordingly.
§ 2-306 Requirements and Output Ks
(1) A term which measures the output of the seller or requirements of buyer must be in good faith and normal and reasonable.
(2) Exclusive Dealings - requires best efforts of both parties.
§ 2-313 Express Warranties
(1) (a) Affirmative by seller to fact or promise which becomes part of the bargain
(b) Description of goods which becomes part of the bargain
(c) sample or model which becomes part of the bargain
(2) “warranty” and “guarantee” are not necessary words; nor is the intention to make a warranty necessary to create one. Stating price or seller’s opinion does not create a warranty.
§ 2-314(1) Implied Warranty of Merchantability
(1) If seller works in goods of that kind, the goods sold must be merchantable. Serving food or drink to be consumed on the premises is a sale.
§ 2-314(2) Goods to be merchantable must be at least
(a) match the K description
(b) of fungible goods, are fair quality within the description
(c) are fit for ordinary use of good
(d) are similar to other goods ordered, if supposed to be
(e) are adequately contained, packaged and labeled
(f) are what the label says they are
§ 2-314(3) Implied warranty of Merchantability
(3) other implied warranties from CoD or UoT
§ 2-315 Implied Warranty of Fitness
When the seller knows the purpose of the goods being sold and the buyer is relying on the seller’s skill or judgment, there is an implied warranty that the goods will be fit for the purpose.
§ 2-316 Exclusion or Modification of Warranties
If K is going to exclude the warranty of merchantability, it must mention that conspicuously.
Warranties are excluded with language like:
- “as is”, “with all faults” etc.
- if the buyer has a chance to inspect the good
- or CoD, CoP or UoT
§ 2-716 Buyer’s Right to Specific Performance
(1) Where goods are unique
(2) Payment of price, damages or other
NY Law Written Promise Expressing Past Consideration
A promise in writing and signed by the promisor or an agent shall not be denied effect as valid contractual obligation on the ground that consideration for the promise is past or executed…
NY Case law arbitration per se
Arbitration is a per se (auto) material alteration under UCC 2-207(1)(b) ex. if offer has no arbitration clause and the acceptance does, it is not included in K, assuming battle of forms, parties are merchants and all acts take place in NY.
What is a K?
A promise, which if breached, the law gives remedy. (promise enforceable by consideration; bargained-for exchange)
What is a promise?
An intentional commitment to act, or refrain from acting. If the promise is enforceable, it is a K.
Not all promises are enforceable:
generally, families (exception Hamer v. Sidway); no promise, just hoped-for desires; no consideration, generally; no intention for legal bind (2R § 21)
What is a bargain?
an agreement to exchange promises or a promise for performance.
Compensatory remedy of breach
compensate promisee for loss, usually with money (K law does not usually require specific performance unless where damages award is inadequate)
Expectation interest
Breach remedy to put promisee in position they would have been if the K had been performed.
Reliance Interest
Breach remedy to put promisee in position had the promise not been made.
Restitution Interest
Breach remedy to put PROMISOR in position they had before the promise was made. (subset of reliance interest)
Consideration - court’s opinion
Courts don’t care what consideration is as long as parties REALLY want what the other is giving.
Bilateral K
Consideration is bargained-for return promise (or promise to perform); each promise is consideration for the other
Unilateral K
Consideration is bargained-for performance (ex. Sheriff reward for robber caught)
Motive as consideration
if what is bargained-for doesn’t induce a K, still a K; if a promise doesn’t induce a performance or return promise, still a K (ex. actress promises to be in a movie for $50K, but what she really wants is the exposure in the movie).
Hamer v. Sidway
Uncle promised to pay nephew if nephew abstained from “bad” behavior. Nephew abstained. Forbearance from legal right is sufficient consideration, under the circumstances.
Bargained-for exceptions
If you already have a duty to perform, that duty is not consideration for another promise (Alaska Packers v. Domenico); Modification of a K without more consideration (even if bargained-for); public official has duty to reject bribery; promise to refrain from asserting an invalid claim; illusory promise;
General Rule: Forbearance to assert an invalid claim is not consideration: but, EXCEPTION
If you believe, in good faith, that you have a valid claim (even if it is invalid); example: Dyer v. National By-Products –> Leg lost on job, is laid off, though promised life-long employment. Even though his claim ended up being insufficient, it was made in good faith and he prevailed.
Consideration is what the promisor wants
Even if the promisee gives something else of value
Satisfaction clause
Courts say a satisfaction clause does not make a promise illusory and will be consideration for a promise (Mattei v. Hopper); satisfaction determined by reasonable person standard or good faith or other objective standard.
Requirements K
Buyer promises to buy all the goods he needs from seller
Output K
Seller promises to sell all her output to buyer.
Gratuitous promises
NOT part of a bargained-for exchange (but promissory estoppel can work here sometimes)
Past consideration
is NOT consideration; NY state exception for written and signed statement of past consideration.
Exceptions to gratuitous promises
Moral obligation (VERY rare; Webb v. Mcgowin) and promissory estoppel
Promissory estoppel/detrimental reliance
2R § 90: gratuitous promise that induced reasonable reliance; the reliance is detrimental (and reasonably expected by promisor) –> promise is binding if injustice can be avoided only by enforcement of promise.
