UCC Contract Formation Flashcards
Offer
Merchant Firm Offer Rule
Under the UCC, if a merchant signs a written offer with firm language assuring that the offer will be held open for an agreed period not exceeding three months, then the offer is irrevocable for the stated time.
* Signature - need not be actual signature, merely authenticable
Under the UCC, if no period is specific, the offer is irrevocable for a reasonable period.
* No consideration by offeree needed
Offer
Omitted Terms - Gap Filler Provisions
Under the UCC, if the parties intended a contract, and the absent term is not the quantity of goods, then a contract may be formed despite the absence of terms and a court will supply reasonable terms for those not included.
* Intent - more terms left open, less liekly it was intended to be binding
a. Price - if the price is omitted or not set then the price shall be a reaosnable price at the time for delivery.
* Fault of Party - If price not set due to fault of a party, other party may treat contract as canceled or fix a reasonable price in good faith.
* No Intent w/o Price - if parties intend not to be bound unless price fixed and it was not fixed, then there is no k.
Acceptance
Form/Methods of Acceptance
Under the UCC, unless otherwise indicated by the agreement or circumstances, an offer may be accepted …
a. … by any reasonble manner or medium reasonable in the circumstances
b. … if the buyer requests the goods be shipped, then seller may accept by a promise to ship or by prompt shipment of conforming or nonconforming goods.
* Nonconforming - if seller ships nonconforming goods, then shipment is acceptance of the offer and breach of contract.
* Accomodation - if seller notifies buyer that nonconforming goods are tendered as accomodation, then treated as counteroffer where acceptance forms a contract or rejection prevent contract formation.
c. … if offeror invites performance as a measn of acceptance, and offeror is notified of the performance within a reasonable time, then beginning of the performance is acceptance.
Acceptance
Counteroffers
Battle of the Forms - Nonmerchant
Under the UCC, if one or both parties are nonmerchants, additional or different terms included in an acceptance do not become part of the contract unless the original offeror expressly assents to the term.
Ex: Cary, a nonmerchant, makes an offer to purchase goods from Morton, a merchant. Morton accepts the offer but includes an additional term—an arbitration clause in the acceptance. Under Article 2, the contract is formed without the additional term.
Acceptance
Counteroffers
Battle of the Forms - Merchant
Under the UCC, if both parties are merchants, additional terms included in an acceptance automatically become part of the contract unless:
(i) it materially alters the original k;
(ii) offer expressly limits accpetance to the terms of the offer; or
(iii) the offerror previously rejected or objects to the counteroffer in a reasonable time.
Ex: Mark, a merchant, makes an offer to purchase goods from Melanie, another merchant. The offer does not expressly limit acceptance to its terms. Melanie accepts the offer but includes a new term in the acceptance—that payment must be by cash or certified check. Because both parties are merchants, the additional term will be automatically included in the contract because it does not materially alter the original contract. If Mark had previously objected to the additional term, or if he objects within a reasonable time after notice of the term is received, then Mark’s original terms will control.
Under the UCC, if both parties are merchants, different terms included in an acceptance are “knocked out” and nullfied and Article 2 shall provide gap-fillers for the missing terms.
Under the UCC, if both parties are merchants, if the parties begin performance though offer and acceptance differ so much that there is no contract, then UCC holds there is a contract consisting of the of the agreed terms and UCC gap fills the rest.
Acceptance
Auction Contract
Under the UCC, if goods in an auction sale are offered in lots, then each lot represents a separate sale.
Under the UCC, an auction sale completes when auctioneer announces its end (such as fall of hammer) but auctioneer has discretion to allow contemperaneous bid to continue the bidding process
Under the UCC, an auction is with reserve unless specifically announces a no-reserve, an an acutioneer may withdraw the goods any time before she announces completion of the sale.
Under the UCC, in a no-reserve auction, the goods cannot be withdrawn by the auctioneer unless no bid is received.
* Retract - bidder may retract bid until auctioneer announcesend of bidding in either type of auction
* Seller Bids - a seller may bid at a forced sale or if seller gives notice that he reservese the right to bid, otherwise if the seller (or represerntative) bids to drive up the price of goods, then winning bidder may avoid sale or take goods at last good-faith bid.
