Copyright © 2022 by Sellers International, LLC dba | 2 |
I.Introduction to | 3 |
A.Scope of Articl | 3 |
B.Key Terms in UC | 3 |
C.A Brief Introdu | 3 |
D.Scope of Articl | 3 |
II.Contract Forma | 3 |
A.The Basics of O | 3 |
B.The Battle of t | 3 |
C.The Statute of | 3 |
D.The Parol-Evide | 3 |
E.Modification, R | 3 |
F.Delegation and | 3 |
III.Interpreting | 3 |
A.Parties’ Genera | 3 |
B.Unconscionabili | 3 |
C.Identifying Goo | 3 |
D.Gap Fillers | 3 |
E.Risk of Loss wi | 3 |
F.Effect of Breac | 3 |
G.Course of Perfo | 3 |
IV.Creditors and | 3 |
A.Passing of Titl | 4 |
B.Seller’s Credit | 4 |
C.Special Protect | 4 |
D.Entrusting | 4 |
V.Performance | 4 |
A.The Perfect-Ten | 4 |
B.Cure | 4 |
C.Installment Con | 4 |
D.Buyer’s Right t | 4 |
E.Acceptance and | 4 |
F.Revoking Accept | 4 |
G.Insurable Inter | 4 |
H.Seller’s Tender | 4 |
I.Payment by the | 4 |
VI.Breach, Repudi | 4 |
A.Anticipatory Re | 4 |
B.Retracting an A | 4 |
C.Right to Adequa | 4 |
D.Casualty to Ide | 4 |
E.Substituted Per | 4 |
F.Impracticabilit | 4 |
VII.Warranties in | 4 |
A.Express Warrant | 4 |
B.Warranty of Tit | 4 |
C.Implied Warrant | 4 |
D.Implied Warrant | 4 |
E.Excluding and M | 4 |
F.Conflicting War | 4 |
VIII.Remedies | 4 |
A.Special Remedie | 4 |
B.Seller’s Remedi | 4 |
C.Buyer’s Remedie | 4 |
D.Buyer’s Damages | 4 |
E.Buyer’s Inciden | 4 |
F.Deducting Damag | 4 |
G.Limitation or M | 4 |
H.Statute of Limi | 4 |
I.Introduction to UCC Article 2 | 5 |
The law addressing contracts for the sale of movab | 5 |
A.Scope of Article 2 | 5 |
Article 2 applies to transactions in goods. | 5 |
1.Transaction in Goods Defined | 5 |
The term transaction in goods normally refers to a | 5 |
2.Contract v. Agreement | 5 |
In the UCC, agreement refers to the parties’ barga | 5 |
3.Goods Defined | 5 |
Goods include all items movable when identified to | 5 |
4.Transactions Excluded from Article 2’s Scope | 5 |
Several transactions are excluded from Article 2’s | 5 |
transactions operating only as secured transaction | 5 |
leases; | 5 |
real estate transactions; | 5 |
bailments; and | 5 |
to the extent of any conflict with Article 2, tran | 5 |
5.Contracts for Services, Construction Contracts, an | 5 |
Article 2 does not apply to contracts for services | 5 |
a.Predominant-Purpose Test | 6 |
Most courts follow the predominant-purpose test. H | 6 |
contractual language; | 6 |
the nature of the seller’s business, particularly | 6 |
what a reasonable person would believe to be the b | 6 |
the amount charged for goods, relative to services | 6 |
b.Gravamen Test | 6 |
The gravamen test considers the primary focus of t | 6 |
6.Role of the Common Law in a Transaction Subject to | 6 |
Even if the UCC applies, common-law rules also ope | 6 |
B.Key Terms in UCC Article 2 | 6 |
Article 2 features many technical terms. | 6 |
1.Buyer | 6 |
A buyer is someone to whom title to goods is trans | 6 |
2.Seller | 6 |
A seller transfers title to goods or contracts to | 6 |
3.Good Faith | 6 |
Concerning a merchant, good faith means subjective | 6 |
commercial fair-dealing standards in the trade. Fo | 7 |
4.Receipt | 7 |
Receipt means taking physical possession of goods. | 7 |
5.Merchant | 7 |
A merchant (1) is in the business of selling goods | 7 |
a.Merchants Concerning the Practices Involved | 7 |
Almost any professional businessperson acting in a | 7 |
b.Merchant with Respect to Goods of the Kind | 7 |
A merchant with respect to goods of the kind has p | 7 |
6.Future Goods | 7 |
Future goods do not yet exist and are not yet iden | 7 |
7.Goods or Conduct Conforming to the Contract | 7 |
To conform to the contract, goods or conduct must | 7 |
II.Contract Formation and Modification under Article | 7 |
In Article 2, contract formation generally demands | 7 |
A.The Basics of Offer, Acceptance, and Consideration | 8 |
An offer is an offeror’s manifestation of willingn | 8 |
1.A Merchant’s Firm Offer under UCC Article 2 | 8 |
If a merchant offers, in a signed writing, to buy | 8 |
B.The Battle of the Forms | 8 |
Under UCC § 2-207, an acceptance may form a contra | 8 |
1.Significance of a Definite and Seasonable Expressi | 8 |
Generally, if the offeree sends definite, seasonab | 8 |
2.Result if the Parties’ Writings Do Not Form a Cont | 8 |
If the parties’ writings do not form a contract, y | 8 |
3.Whether Additional Terms Become Part of the Final | 9 |
An additional term is one that adds to, but does n | 9 |
a.Rules for Additional Terms in a Contract between M | 9 |
Between merchants, additional terms in the accepta | 9 |
the offer expressly limits acceptance to the offer | 9 |
the additional terms materially alter the offer, o | 9 |
notification of objection to the additional terms | 9 |
i.Whether Additional Terms Materially Alter the Offe | 9 |
An additional term materially alters the offer if | 9 |
a requirement to arbitrate disputes, | 9 |
indemnification, | 9 |
a limitation of liability or warranty disclaimer, | 9 |
a term reallocating risk of loss. | 9 |
b.Rule if One Party Is Not a Merchant | 9 |
If the parties’ writings form a contract, and one | 9 |
c.Whether Different Terms (as Opposed to Additional | 9 |
Some courts treat different terms the same as addi | 9 |
C.The Statute of Frauds | 10 |
A contract for the sale of goods with a price of $ | 10 |
1.Written Confirmation in a Contract between Merchan | 10 |
Between merchants, special rules apply if one part | 10 |
2.Exception for Specially Manufactured Goods | 10 |
A contract failing the statute of frauds is noneth | 10 |
the goods are specially manufactured for the buyer | 10 |
the goods are not suitable for sale, other than to | 10 |
the seller substantially begins to manufacture the | 10 |
3.Exception for Judicial Admissions | 10 |
A valid contract subject to the statute of frauds | 10 |
4.Exception for Part Performance | 10 |
A valid contract subject to the statute of frauds | 10 |
D.The Parol-Evidence Rule | 10 |
UCC’s parol-evidence rule covers integrated terms, | 10 |
parties’ writings agree and (2) terms in a writing | 11 |
1.Merger Clause as a Factor in Determining Whether a | 11 |
A merger clause states that the writing embodies t | 11 |
2.Things the Parol-Evidence Rule Does Not Bar | 11 |
The parol-evidence rule does not bar evidence to: | 11 |
interpret an ambiguous term; | 11 |
determine whether the agreement is fully or partia | 11 |
determine whether there is a valid, enforceable co | 11 |
show the transaction’s true nature; | 11 |
show a modification to the agreement; | 11 |
establish or disprove a defense to enforcement; | 11 |
prove fraud or mistake; | 11 |
prove that the contract does not reflect the parti | 11 |
show evidence of collateral undertakings. | 11 |
E.Contract Modification under Article 2 Generally | 11 |
In Article 2, a good-faith contract modification r | 11 |
F.Delegation and Assignment | 11 |
Under Article 2, the parties may delegate their co | 11 |
1.Delegation | 12 |
Generally, a party may delegate her contractual du | 12 |
the parties agreed to limit or bar delegation; | 12 |
delegation would violate public policy or statute; | 12 |
the counterparty has a substantial interest in hav | 12 |
2.Assignment | 12 |
Unless otherwise agreed (and except as provided in | 12 |
change the other party’s duty, | 12 |
increase the other party’s burden or risk stemming | 12 |
impair the other party’s chance to obtain return p | 12 |
a.Validity of Contractual Prohibitions on Assignment | 12 |
Article 2 generally honors contractual prohibition | 12 |
b.Effect of Assignment on Assignor | 12 |
A mere assignment does not absolve the assignor of | 12 |
c.Effect of Assignment on Assignee | 12 |
As to any rights assigned, the assignee becomes en | 12 |
performance and may sue, in her own name, to enfor | 13 |
III.Interpreting the Contract | 13 |
Article 2 boasts many rules governing contract int | 13 |
A.Parties’ General Obligations | 13 |
The seller’s general duty is to deliver goods (1) | 13 |
B.Unconscionability | 13 |
Unconscionability applies if the court finds that, | 13 |
1.Basic Test for Unconscionability | 13 |
There are two types of unconscionability: procedur | 13 |
a.Procedural Unconscionability | 13 |
Procedural unconscionability speaks to the fundame | 13 |
the phrasing, clarity, and placement of the assert | 13 |
whether the terms were available to the party asse | 13 |
the parties’ relative sophistication; | 13 |
whether the contract was one of adhesion; | 13 |
whether one would reasonably expect the challenged | 13 |
the parties’ relative bargaining power and ability | 14 |
whether the party asserting unconscionability had | 14 |
b.Substantive Unconscionability | 14 |
Substantive unconscionability means that the contr | 14 |
C.Identifying Goods to the Contract | 14 |
Identification occurs when particular goods, wheth | 14 |
D.Risk of Loss without a Breach of Contract under § | 14 |
Section 2-509 sets forth the rules (absent contrar | 14 |
1.Risk of Loss in a Shipment Contract | 14 |
In a shipment contract, the seller must or may shi | 14 |
2.Risk of Loss in a Destination Contract | 14 |
In a destination contract, the seller is authorize | 14 |
3.Rule in Cases Not Involving Shipment Contracts, De | 15 |
In cases that do not involve shipment contracts, d | 15 |
E.Effect of Breach on Risk of Loss under § 2-510 | 15 |
If either the buyer or the seller has breached the | 15 |
1.Risk of Loss if Seller’s Tender or Delivery Does N | 15 |
If the seller breaches by tendering or delivering | 15 |
2.Risk of Loss if Buyer Breaches the Contract | 15 |
Special rules apply if the buyer breaches the cont | 15 |
F.Course of Performance, Course of Dealing, and Usag | 15 |
Apart from express language, perhaps the most impo | 15 |
1.Course of Performance and Course of Dealing | 15 |
Course of performance references the parties’ sequ | 15 |
transaction. A course of performance exists only i | 16 |
a.Relevance of Course of Performance and Course of D | 16 |
A course of performance or course of dealing betwe | 16 |
2.Usage of Trade | 16 |
A usage of trade is a practice or a method of deal | 16 |
a.Relevance of Usage of Trade in Interpreting a Cont | 16 |
Usage of trade is relevant to contract interpretat | 16 |
3.Hierarchy of Interpretation: Express Terms, Course | 16 |
As a general rule, the agreement’s express terms a | 16 |
express terms control course of performance, cours | 16 |
course of performance controls course of dealing a | 16 |
course of dealing controls usage of trade. | 17 |
IV.Performance | 17 |
Part 5 of Article 2 sets forth detailed provisions | 17 |
A.The Perfect-Tender Rule | 17 |
Under the perfect-tender rule, both the goods and | 17 |
B.Cure | 17 |
Generally, the seller’s right to cure under § 2-50 | 17 |
1.Giving the Seller a Further Reasonable Time beyond | 17 |
Sometimes, the buyer will reject a nonconforming t | 17 |
C.Buyer’s Right to Inspect the Goods | 17 |
Unless otherwise agreed, the buyer has a right to | 17 |
D.Acceptance and Rejection of Goods | 17 |
Whether and when the buyer accepts or rejects good | 17 |
1.How the Buyer Accepts the Goods | 18 |
Normally, the buyer accepts the goods by: | 18 |
signifying to the seller, by words or conduct and | 18 |
after a reasonable opportunity for inspection, fai | 18 |
undertaking any action inconsistent with the selle | 18 |
2.Effects of Acceptance | 18 |
Article 2 lists several effects of the buyer’s acc | 18 |
3.Manner of Rejection | 18 |
To be effective, any rejection must occur within a | 18 |
E.Revoking Acceptance | 18 |
Even if a buyer accepts goods, Article 2 sometimes | 18 |
1.Basic Requirements for Buyer to Revoke Acceptance | 19 |
The buyer may revoke acceptance of a lot or commer | 19 |
2.Time to Revoke Acceptance | 19 |
The buyer must revoke acceptance (1) within a reas | 19 |
F.Seller’s Tender of Delivery and Shipment of Goods | 19 |
From the seller’s perspective, tender means to pla | 19 |
1.Seller’s Tender Obligations in a Shipment Contract | 19 |
In a shipment contract, the seller must (unless ot | 19 |
2.Tender of Delivery in a Destination Contract | 19 |
In a destination contract, tender occurs once the | 19 |
V.Breach, Repudiation, and Excuse | 20 |
Part 6 of Article 2 sets forth many rules to help | 20 |
A.Anticipatory Repudiation | 20 |
A breach by anticipatory repudiation occurs if: | 20 |
either party repudiates the contract, | 20 |
the repudiation concerns a performance not yet due | 20 |
the loss of that performance will substantially im | 20 |
1.Repudiation Defined | 20 |
A repudiation is an overt, clear communication tha | 20 |
2.Whether Lack of Repudiated Performance Will Substa | 20 |
Substantial impairment means that the nonrepudiati | 20 |
3.Nonrepudiating Party’s Remedies for Anticipatory R | 20 |
Upon an anticipatory repudiation, the nonrepudiati | 20 |
await the repudiating party’s performance for a co | 20 |
invoke any remedy for breach; or | 20 |
in either case, suspend performance, proceed under | 20 |
B.Retracting an Anticipatory Repudiation | 20 |
A repudiating party may cut off the nonrepudiating | 20 |
cancelled the contract, | 21 |
materially changed position in reliance on the rep | 21 |
otherwise indicated that she considers the repudia | 21 |
C.Right to Adequate Assurance of Performance | 21 |
Special rules apply if reasonable grounds for inse | 21 |
1.Reasonable Grounds for Insecurity | 21 |
Reasonable grounds for insecurity as to one party’ | 21 |
the nature of the contract, | 21 |
the parties’ relationship, | 21 |
information gleaned from apparently trustworthy so | 21 |
the counterparty’s performance on the current cont | 21 |
2.Demand for Assurances without Reasonable Grounds f | 21 |
If a party demands adequate assurance of due perfo | 21 |
D.Impracticability of Performance | 21 |
The impracticability doctrine may excuse the selle | 21 |
1.Impracticability Only Partially Affecting Seller’s | 22 |
Special rules apply if the impracticability only p | 22 |
VI.Warranties in UCC Article 2 | 22 |
Article 2 both acknowledges express warranties and | 22 |
A.Express Warranties | 22 |
Article 2 articulates three distinct ways for the | 22 |
an affirmation of fact or promise, | 22 |
a description of the goods, or | 22 |
a sample or model. | 22 |
1.Express Warranty by Affirmation of Fact or Promise | 22 |
An affirmation of fact or promise from the seller | 22 |
2.Express Warranty by Description of the Goods | 22 |
A description of the goods creates an express warr | 22 |
3.Express Warranty by Sample or Model | 23 |
If a sample or model becomes part of the basis of | 23 |
4.Affirmation of the Goods’ Value or the Seller’s Op | 23 |
Two types of statements cannot create an express w | 23 |
5.Whether an Affirmation, Promise, Description, Mode | 23 |
In deciding whether a representation becomes part | 23 |
B.Implied Warranty of Merchantability | 23 |
Absent valid disclaimer, a seller who is a merchan | 23 |
1.Requirements for Merchantability | 23 |
Generally, merchantable means of at least average | 23 |
under the contract description, pass without objec | 23 |
if the goods are fungible, be of average, fair qua | 23 |
be fit for the ordinary purposes for which goods o | 23 |
run of even kind, quantity, and quality among all | 23 |
be adequately labeled, packaged, and contained as | 23 |
conform to any promises or affirmations of fact on | 23 |
2.Fitness for the Ordinary Purpose for Which the Goo | 23 |
The most important and litigated requirement for m | 23 |
are as safe as the ordinary user would reasonably | 24 |
conform to industry or government standards; | 24 |
are marketable or usable; and | 24 |
are of average quality. | 24 |
3.Time of Breach of Implied Warranty of Merchantabil | 24 |
The implied warranty of merchantability is breache | 24 |
4.Plaintiff’s Conduct as a Limitation on Recovery | 24 |
The plaintiff’s conduct can lead to a finding that | 24 |
misuse of the goods, at least if unforeseeable; | 24 |
failure to follow suitably conspicuous and clear i | 24 |
substantially altering the goods; or | 24 |
continuing to use the goods, even after the buyer | 24 |
C.Implied Warranty of Fitness for a Particular Purpo | 24 |
The implied warranty of fitness for a particular p | 24 |
D.Excluding and Modifying Warranties | 25 |
Within limits, Article 2 permits parties to exclud | 25 |
1.Excluding or Modifying Express Warranties | 25 |
To the extent reasonable, any words or conduct ten | 25 |
2.Excluding or Modifying the Implied Warranty of Mer | 25 |
There are two general ways to exclude or modify th | 25 |
3.Excluding or Modifying the Implied Warranty of Fit | 25 |
There are two general ways to exclude or modify th | 25 |
4.Conspicuous Defined | 25 |
Conspicuous means that a term is written, presente | 25 |
E.Conflicting Warranties | 25 |
Article 2 sets forth rules to reconcile cumulative | 25 |
Generally, unless unreasonable in a given case, wa | 26 |
1.Rules to Determine the Parties’ Intent Concerning | 26 |
If the parties’ intent determines which warranty p | 26 |
exact or technical specifications prevail over bot | 26 |
a sample taken from a bulk in existence prevails o | 26 |
an express warranty displaces the implied warranty | 26 |
the implied warranty of fitness for a particular p | 26 |
VII.Remedies | 26 |
Part 7 of Article 2 sets forth most of the seller’ | 26 |
A.Seller’s Remedies on the Buyer’s Insolvency | 26 |
If the seller discovers that the buyer is insolven | 26 |
B.Liquidated Damages | 26 |
Generally, a liquidated-damages provision sets the | 26 |
C.Seller’s Remedies | 27 |
The seller’s remedies for the buyer’s breach inclu | 27 |
withholding delivery of the goods; | 27 |
cancelling the contract; | 27 |
identifying goods to the contract despite the brea | 27 |
stopping delivery by a bailee under § 2-705; | 27 |
reselling the goods and recovering damages from th | 27 |
recovering damages for nonacceptance under § 2-708 | 27 |
bringing an action for the price under § 2-709. | 27 |
1.Seller’s Options Regarding Unfinished Goods | 27 |
If the goods are unfinished when the buyer breache | 27 |
finish the goods and identify them to the contract | 27 |
stop manufacturing the goods and resell them for t | 27 |
take any other reasonable action. | 27 |
2.Resale by Seller | 27 |
Perhaps the seller’s principal remedy in Article 2 | 27 |
a.Seller’s Damages on Proper Resale | 27 |
Assuming the seller implements the resale in good | 27 |
b.Implementing the Resale | 28 |
Generally, the resale may be by public or private | 28 |
i.Rules for Resale by Private Sale | 28 |
In a private resale, the seller must, within a rea | 28 |
ii.Resale by Public Sale | 28 |
Special rules apply to public resales, including: | 28 |
only identified goods can be resold, unless there | 28 |
the resale must occur at a usual place or market f | 28 |
the seller must give the buyer reasonable notice o | 28 |
if the sale occurs somewhere other than the goods’ | 28 |
the seller may bid. | 28 |
c.Rule That All Aspects of the Resale Must Be Commer | 28 |
Generally, the resale is commercially reasonable i | 28 |
3.Seller’s Damages for Buyer’s Nonacceptance or Repu | 28 |
The general damages formula of § 2-708 applies if | 28 |
4.Seller’s Lost Profits | 29 |
The seller can recover lost profits plus incidenta | 29 |
a.Calculating Damages Based on Lost Profits | 29 |
Damages for lost profits equal (1) the contract pr | 29 |
b.The Lost-Volume Seller | 29 |
A lost-volume seller may recover lost profits if: | 29 |
the seller had the capacity to make a sale in addi | 29 |
both the sale to the breaching buyer and the other | 29 |
but for the buyer’s breach, the seller likely woul | 29 |
i.Due Allowance for Resale Proceeds and the Lost-Vol | 29 |
Ordinarily, resale proceeds are not deducted from | 29 |
5.Seller’s Action for the Price | 29 |
The seller may recover the price if the buyer has | 29 |
the buyer has accepted the goods and not justifiab | 29 |
conforming goods are lost or damaged within a comm | 29 |
the seller could not resell identified goods at a | 30 |
6.Seller’s Incidental Damages | 30 |
The seller’s incidental damages include commercial | 30 |
D.Buyer’s Remedies for Goods Not Accepted | 30 |
The buyer has specific remedies, in addition to ca | 30 |
1.Cover | 30 |
Cover means that the buyer can make a reasonable p | 30 |
a.Commercially Reasonable Cover | 30 |
Commercially reasonable cover does not require ter | 30 |
b.Cover Damages | 30 |
Assuming proper cover, the buyer can recover (1) t | 30 |
2.Buyer’s Rights on Seller’s Nondelivery or Repudiat | 30 |
Section 2-713 sets forth the general damages formu | 30 |
a.General Damages Formula under § 2-713 | 31 |
The general damages formula under § 2-713 is (1) t | 31 |
3.Buyer’s Right to Specific Performance | 31 |
The buyer may obtain specific performance, but onl | 31 |
a.Discretionary Nature of Specific Performance | 31 |
Courts may deny specific performance even if the r | 31 |
the difficulty of proving damages with reasonable | 31 |
the difficulty of obtaining substitute goods with | 31 |
the likelihood that a damages award could not be c | 31 |
E.Buyer’s Damages for Breach Regarding Accepted Good | 31 |
If the buyer has accepted goods and not revoked ac | 31 |
1.General Measure of Direct Damages | 32 |
Generally, direct damages equal the difference bet | 32 |
F.Buyer’s Incidental Damages | 32 |
Generally speaking, the buyer’s incidental damages | 32 |
expenses reasonably incurred in handling nonconfor | 32 |
expenses of implementing cover, that is, locating | 32 |
other expenses incident to the breach. | 32 |
G.Buyer’s Consequential Damages | 32 |
Only the buyer may recover consequential damages. | 32 |
H.Limitation or Modification of Remedies in the Agre | 32 |
As a general rule, and subject to the rules on liq | 32 |
1.Exclusive or Limited Remedy That Fails of Its Esse | 33 |
An exclusive or limited remedy will not apply if i | 33 |
2.Limiting or Excluding Consequential Damages | 33 |
The agreement may generally limit or exclude conse | 33 |
I.Introduction to UCC Article 2 | 34 |
Whether in times of war, peace, prosperity, or eco | 34 |
A.Scope of Article 2 | 34 |
UCC Article 2 applies to transactions in goods. Ar | 34 |
1.Transaction in Goods Defined | 34 |
The UCC does not define the term transaction in go | 34 |
a.Sale Defined | 34 |
In Article 2, a sale is (1) the passing of title t | 34 |
b.Contracts and Agreements for the Sale of Goods | 34 |
Unless the context requires otherwise, the terms c | 34 |
i.Distinguishing Transactions Merely Related to a Sa | 35 |
Some transactions relate to a sale of goods, or ar | 35 |
ii.Contract v. Agreement | 35 |
Though the terms contract and agreement are often | 35 |
c.Goods Defined | 35 |
The talismanic definition of goods in Article 2 is | 35 |
i.Size of Goods as Irrelevant | 35 |
In Article 2, a thing’s size is irrelevant to whet | 35 |
ii.Movable Things | 36 |
A good, under UCC Article 2, is a movable thing. T | 36 |
iii.Things Movable at the Time of Their Identification | 36 |
To be a good under Article 2, not only must a thin | 36 |
iv.Exception for Things to Be Severed from Realty | 36 |
There is one notable exception to the requirement | 36 |
1)Minerals, Including Oil and Gas, and Structures to | 36 |
A contract for the sale of minerals and similar su | 36 |
Note: Before the minerals, structure, or the struc | 37 |
Example: | 37 |
A buyer and seller contracted for the seller to pr | 37 |
2)Growing Crops and Other Things Attached to Land an | 37 |
Contracts for the sale of goods include contracts | 37 |
Example: | 38 |
A contractor built a house. To that end, the contr | 38 |
3)Protection of Third Parties’ Rights in Things to B | 38 |
Before minerals, crops, structures, and so on are | 38 |
2.Transactions Excluded from Article 2’s Scope | 38 |
Several types of transactions are excluded from Ar | 38 |
transactions operating only as secured transaction | 38 |
leases; | 38 |
transactions in real property; | 38 |
bailments; and | 38 |
to the extent of any conflict, transactions subjec | 38 |
[U.C.C. § 2-102 (1951).] | 38 |
a.Secured Transactions | 38 |
Article 2 does not apply to a transaction intended | 38 |
b.Leases | 39 |
A lease of goods falls under UCC Article 2A, not A | 39 |
c.Transactions in Real Property | 39 |
Real property is not a good. Accordingly, Article | 39 |
d.Bailments | 39 |
Article 2 does not apply to bailments of goods. As | 39 |
Example: | 39 |
A teacher purchased a bedroom set and dresser from | 39 |
Note: Before the adoption of UCC Article 2A, many | 40 |
e.Laws Regulating Sales to Specified Classes of Buye | 40 |
Article 2, by its terms, does not “impair or repea | 40 |
Example: | 40 |
A homeowner unplugged a television from an electri | 40 |
3.Contracts for Services, Construction Contracts, an | 40 |
Article 2 does not apply to contracts for services | 40 |
a.Predominant-Purpose Test | 41 |
To determine whether UCC Article 2 applies to a hy | 41 |
b.Factors in Applying Predominant-Purpose Test | 41 |
Courts consider several factors in applying the pr | 41 |
the contractual language, | 41 |
the nature of the seller’s business, | 41 |
the final product the purchaser entered the bargai | 41 |
the amount charged for goods v. the amount charged | 41 |
[Audio Visual Artistry v. Tanzer, | 41 |
i.Contractual Language as a Factor in the Predominan | 41 |
In applying the predominant-purpose test, courts g | 41 |
ii.Nature of the Seller’s Business as a Factor in the | 41 |
In the predominant-purpose test, the nature of the | 41 |
iii.What the Purchaser Bargained to Receive as a Facto | 42 |
A key factor in the predominant-purpose test is th | 42 |
iv.The Amount Charged for Goods v. the Amount Charged | 42 |
Many hybrid contracts will itemize the amount char | 42 |
Examples: | 42 |
(1) A homeowner and retailer contracted for the re | 42 |
(2) A dentist and retailer contracted for the reta | 43 |
Compare: | 43 |
Two spouses owned a private plane. Preparing for a | 43 |
c.Gravamen Test | 43 |
The gravamen test oftentimes produces quite differ | 43 |
Examples: | 43 |
(1) A man underwent surgery at a hospital to repai | 43 |
(2) A woman went to a beauty salon for a permanent | 44 |
4.Role of the Common Law in a Transaction Subject to | 44 |
Even if the UCC governs a transaction, the common | 44 |
B.Key Terms in UCC Article 2 | 44 |
UCC Article 2 features many technical terms of art | 44 |
1.Buyer | 45 |
In Article 2, a buyer is someone who buys goods or | 45 |
a.Agents as Buyers, or Not | 45 |
Insofar as an employee or agent deals on the princ | 45 |
b.Financiers and Buyers | 45 |
The mere fact that a party finances a purchase of | 45 |
c.Middlemen as Buyers and Sellers | 45 |
A middleman is one who buys goods from a supplier | 45 |
d.Secured Creditor Repossessing Goods | 45 |
Once a secured creditor repossesses goods, the sec | 45 |
2.Seller | 46 |
In Article 2, a seller is one who either (1) sells | 46 |
a.Agents as Sellers, or Not | 46 |
Ordinarily, one acting as agent or employee for th | 46 |
b.Remote Sellers Dealing through Middlemen | 46 |
Generally, if a manufacturer or other remote selle | 46 |
c.Mere Performer of Services | 46 |
In UCC Article 2, one who merely performs services | 46 |
Example: | 46 |
A developer took some equipment to a mechanic for | 46 |
Compare: | 46 |
A developer took some equipment to a mechanic for | 46 |
equipment, furnishing several parts in so doing. I | 47 |
d.Financiers and Sellers | 47 |
Ordinarily, one who merely finances a sale is not | 47 |
3.Good Faith | 47 |
As to a merchant, good faith means “honesty in fac | 47 |
a.The General Obligation of Good Faith | 47 |
In general, good faith requires honoring the spiri | 47 |
b.Reasonable Commercial Standards of Fair Dealing | 47 |
The objective prong of good faith requires observi | 47 |
c.Good Faith and Discretion to Set Contractual Terms | 48 |
Issues of good faith often arise if the contract a | 48 |
Example: | 48 |
An oil supplier asked its dealers to implement a t | 48 |
4.Receipt | 48 |
In UCC Article 2, receipt of goods means taking ph | 48 |
5.Merchant | 48 |
In UCC Article 2, a merchant is one who deals in t | 48 |
a.Merchants Concerning the Practices Involved | 49 |
Virtually any professional businessperson acting i | 49 |
b.Merchant with Respect to Goods of the Kind | 49 |
Merchants with respect to goods of the kind repres | 49 |
Examples: | 49 |
(1) An auctioneer operated a livestock auction. Fa | 49 |
(2) A dealer purchased and sold Christmas trees fr | 50 |
c.Relevance of the Distinction between Merchants Con | 50 |
It is oftentimes important to distinguish between | 50 |
d.Providing a Platform for the Sale of Goods | 50 |
Courts have generally held that one does not becom | 50 |
Example: | 50 |
A consumer bought cell-phone batteries from a manu | 50 |
e.Merchant as Including Sellers or Buyers | 51 |
There is a tendency to think of merchants as being | 51 |
f.Farmers as Merchants, or Not | 51 |
Some courts have refused to find that farmers sell | 51 |
how long the farmer has been selling the product t | 51 |
the farmer’s demonstrated business acumen in deali | 51 |
the farmer’s knowledge of the farm markets, | 51 |
the farmer’s experience or knowledge of the releva | 51 |
[2 Anderson U.C.C. § 2-104:68 (3d. ed.), Westlaw ( | 51 |
6.Between Merchants | 51 |
The term between merchants refers to any transacti | 51 |
7.Future Goods | 51 |
Goods must both exist and be identified before any | 52 |
Example: | 52 |
A printer contracted with a publisher to print two | 52 |
8.Lot | 52 |
Article 2 defines a lot as “a parcel or a single a | 52 |
9.Commercial Unit | 52 |
Initially, the terms lot and commercial unit seem | 52 |
a.Price and Commercial Units | 52 |
In deciding just what constitutes a commercial uni | 53 |
b.Market Practices and Commercial Units | 53 |
If items are normally packaged and sold or used as | 53 |
c.Examples of Items Deemed to Be Commercial Units | 53 |
Examples of items deemed to be commercial units in | 53 |
a pound of goods, when the parties priced the good | 53 |
a truckload of potatoes, when potatoes were custom | 53 |
a truck consisting of a cab, body, and chassis; | 53 |
a carton of chickens; and | 53 |
each cattle, in a contract for the sale of multipl | 53 |
[See 2 Anderson U.C.C. § 2-105:18 (3d. ed.), Westl | 53 |
10. Goods and Conduct Conforming to the Contract | 53 |
Goods conform to the contract if they accord with | 53 |
11.Termination | 53 |
In Article 2, termination occurs if one party ends | 53 |
12. Cancellation | 54 |
Though conceptually similar to termination, the te | 54 |
C.A Brief Introduction to International Sales of Goo | 54 |
In 1988, the United States ratified a treaty calle | 54 |
D.Scope of Article 2A on Leases of Goods | 54 |
For a long time, the law governing leases of goods | 54 |
1.Applicability of Article 2A to True Leases | 55 |
UCC Article 2A applies to “any transaction, regard | 55 |
2.Distinguishing between True Leases and Disguised S | 55 |
The UCC articulates rules to distinguish between a | 55 |
the lease’s original term equals or exceeds the go | 55 |
the lessee is bound to either renew the lease for | 55 |
the lessee may, for no or nominal additional consi | 55 |
the lessee may, for no or nominal additional consi | 55 |
[U.C.C. § 1-203(b) (2001).] | 55 |
II.Contract Formation and Modification under Article | 55 |
In virtually any breach-of-contract case, includin | 55 |
A.The Basics of Offer, Acceptance, and Consideration | 56 |
There are three essential ingredients to contract | 56 |
Note: This outline covers the basics of offer, acc | 56 |
1.Reasonably Certain Offer | 56 |
Generally, an offer is reasonably certain if a rea | 56 |
2.Termination of an Offer | 56 |
Once an offer terminates, so too does the offeree’ | 56 |
rejection or counteroffer, | 56 |
lapse of time, | 56 |
revocation, | 56 |
death or incapacity, or | 56 |
destruction of the contract’s subject matter. | 56 |
[Restatement (Second) of Contracts § 36.] | 56 |
a.Rejection or Counteroffer | 57 |
Normally, an offer terminates if the offeree rejec | 57 |
b.Lapse of Time | 57 |
An offer terminates by lapse if the offeree does n | 57 |
c.Revocation | 57 |
With very few exceptions, the offeror may revoke t | 57 |
i.Options | 57 |
An option is a distinct contract unto itself. In a | 57 |
ii.A Merchant’s Firm Offer under UCC Article 2 | 57 |
UCC Article 2 introduced the doctrine of a merchan | 57 |
d.Death or Incapacity | 58 |
Normally, an offer terminates immediately once the | 58 |
e.Destruction of the Subject Matter | 58 |
An offer immediately terminates when its subject m | 58 |
3.Acceptance | 58 |
Generally, an acceptance is the offeree’s uncondit | 58 |
4.Consideration | 58 |
The third and final ingredient to contract formati | 58 |
B.The Battle of the Forms | 58 |
As mentioned, at common law, an acceptance must pr | 58 |
1.Scenario in Which § 2-207 Often Applies | 59 |
Section 2-207 generally applies if the parties beh | 59 |
2.Significance of a Definite and Seasonable Expressi | 59 |
Under § 2-207, the general rule is that if the off | 59 |
3.Rule if Acceptance Is Expressly Conditioned on Ass | 59 |
If the offeree expressly conditions acceptance on | 59 |
4.Result if the Parties’ Writings Do Not Form a Cont | 60 |
Even if the parties’ writings do not form a contra | 60 |
Example: | 60 |
An automobile manufacturer ordered several engines | 60 |
5.Whether Additional Terms Become Part of the Final | 60 |
An additional term is one that supplements, or add | 60 |
a.Rules for Additional Terms in a Transaction betwee | 61 |
Between merchants, additional terms in the accepta | 61 |
the offer expressly limits acceptance to the offer | 61 |
the additional terms materially alter the offer, o | 61 |
notification of objection to the additional terms | 61 |
[U.C.C. § 2-207(2) (1951).] | 61 |
b.Whether Additional Terms Materially Alter the Offe | 61 |
In general, an additional term materially alters t | 61 |
i.Examples of Alterations Often Found to Be Material | 61 |
Some types of alterations are commonly (though not | 61 |
a requirement to arbitrate any disputes, | 61 |
a forum-selection clause providing that any lawsui | 61 |
a choice-of-law clause providing that one state’s | 61 |
an indemnification requirement, | 61 |
a clause limiting liability, | 61 |
a disclaimer of any warranty, | 61 |
a term limiting the duration of any warranty, | 61 |
a requirement that one party pay attorney’s fees a | 61 |
a provision giving one party power to change the d | 62 |
a term substituting goods, | 62 |
a term substantially increasing the price or chang | 62 |
most any term relating to performance, and | 62 |
a term reallocating the risk of loss. | 62 |
[See 2 Anderson U.C.C. §§ 2-207:74-2-207:91 (3d. e | 62 |
c.Rule if One Party Is Not a Merchant | 62 |
If the parties’ writings form a contract, and one | 62 |
6.Whether Different Terms (as Opposed to Additional | 62 |
As mentioned, the UCC does not specify the treatme | 62 |
a.Treating Different Terms the Same as Additional Te | 62 |
Some courts treat different terms in the same mann | 62 |
b.Applying the Knock-Out Rule | 62 |
Some courts apply the so-called knock-out rule to | 62 |
c.Treating Acceptance with Contradictory Terms as a | 63 |
If a purported acceptance contains terms that flat | 63 |
7.Pinpointing the Offer: Additional Terms Shipped al | 63 |
Sometimes, a consumer orders a product by phone or | 63 |
Note: Even if one views the purchaser’s order as t | 63 |
C.The Statute of Frauds | 63 |
UCC Article 2 has its own statute of frauds. Gener | 63 |
1.Writing Satisfying Statute of Frauds | 64 |
To satisfy the statute of frauds, a writing need o | 64 |
a handwritten, signed contract; | 64 |
a signed offer accepted in writing; | 64 |
a signed purchase invoice or bill of sale; | 64 |
a writing scrawled in crayon on paper; | 64 |
a letter confirming an oral contract and stating, | 64 |
an email. | 64 |
[U.C.C. § 2-207, cmt. 1 (1951); 2 Anderson U.C.C. | 64 |
Example: | 64 |
A car dealer and a buyer orally agreed that the de | 64 |
a.Signature Requirement for the Statute of Frauds | 65 |
To suffice under the statute of frauds, a writing | 65 |
b.Separate, Integrated Writings as Satisfying the St | 65 |
A writing, for statute-of-frauds purposes, may con | 65 |
Example: | 65 |
A builder and manufacturer, through their agents, | 65 |
2.Requirement of a Quantity Term | 66 |
To satisfy the statute of frauds, a writing must s | 66 |
3.Computing Price in Transactions Involving Multiple | 66 |
Controversies may arise if the case involves multi | 66 |
4.Effect of Noncompliance with Statute of Frauds | 66 |
If a contract subject to the statute of frauds fai | 66 |
5.Contract Modification and the Statute of Frauds | 66 |
Article 2 permits parties to modify a contract for | 66 |
6.Significance of Omitted Material Terms | 66 |
A contract may be enforceable under the statute of | 66 |
7.Dispute over Contractual Terms Distinguished | 67 |
The statute of frauds is simply inapplicable if th | 67 |
8.Written Confirmation in a Contract between Merchan | 67 |
Special rules apply to contracts between merchants | 67 |
9.Exception for Specially Manufactured Goods | 67 |
Even if a valid contract subject to the statute of | 67 |
a.Manufacturing the Goods | 67 |
For purposes of the exception for specially manufa | 67 |
b.Whether Goods Are Specially Manufactured | 68 |
The term specially manufactured generally means th | 68 |
Note: Of course, the seller need not directly manu | 68 |
c.Goods Not Resellable in the Ordinary Course of the | 68 |
To say that goods are not resellable, to a party o | 68 |
Examples: | 68 |
(1) A manufacturer’s business was to produce and s | 68 |
(2) A manufacturer of high-end clothing orally agr | 69 |
d.Whether the Seller Has Made a Substantial Beginnin | 69 |
Ordinarily, the seller has substantially begun to | 69 |
Example: | 69 |
A jewelry manufacturer orally contracted with a pr | 69 |
10. | 69 |
11.Exception for Judicial Admissions | 70 |
If a valid contract is subject to the statute of f | 70 |
a.What Constitutes a Judicial Admission | 70 |
For there to be a judicial admission, it suffices, | 70 |
b.Voluntariness of Admission | 70 |
For a judicial admission to bring an oral contract | 70 |
c.Unconditional and Unqualified Admission | 70 |
For a judicial admission to remove an entire oral | 70 |
d.Nonjudicial Admissions | 71 |
The UCC is silent on whether nonjudicial admission | 71 |
12.Exception for Part Performance | 71 |
A valid contract subject to the statute of frauds | 71 |
D.The Parol-Evidence Rule | 71 |
UCC Article 2 sets forth its own version of the pa | 71 |
1.General Treatment of Integrated Terms | 71 |
Under § 2-202, integrated terms cannot be contradi | 71 |
2.Relevance of Ambiguity to Article 2’s Parol-Eviden | 71 |
Of course, a term is ambiguous if it is susceptibl | 71 |
In Article 2, evidence of course of performance, | 72 |
Note: Some courts permit extrinsic evidence to int | 72 |
3.Significance of a Fully Integrated Agreement | 72 |
In applying the parol-evidence rule, it is crucial | 72 |
a.Determining Whether an Agreement Is Fully Integrat | 72 |
The parol-evidence rule does not preclude extrinsi | 72 |
b.Merger Clause as a Factor in Determining Whether a | 73 |
The presence of a merger (or integration) clause i | 73 |
i.Effect if Merger Clause Is Separately Entered in t | 73 |
A merger clause tends to carry more weight if sepa | 73 |
Example: | 73 |
A car dealer entered a written contract with a dis | 73 |
4.Requirement of a Writing for the Parol-Evidence Ru | 73 |
The parol-evidence rule applies only if there is s | 73 |
5.Other Things the Parol-Evidence Rule Does Not Bar | 74 |
The parol-evidence rule does not bar extrinsic evi | 74 |
interpret an ambiguous term, regardless of whether | 74 |
determine whether the agreement is fully or partia | 74 |
determine whether there is a valid, enforceable co | 74 |
show the transaction’s true nature, for instance, | 74 |
show a subsequent modification to the agreement; | 74 |
establish or disprove a defense to enforcement of | 74 |
prove fraud affecting the contract; | 74 |
prove a mistake in the contract and seek reformati | 74 |
prove that the contract does not reflect the parti | 74 |
[See U.C.C. § 2-202 (1951); Hessler v. Crystal Lak | 74 |
6.Consistent Additional Terms | 74 |
Consistent additional terms are terms that do not | 74 |
Example: | 74 |
On April 20, a buyer entered a written agreement w | 74 |
Compare: | 75 |
A winery entered a written agreement with a distri | 75 |
7.Collateral Undertakings | 75 |
Article 2’s parol-evidence rule does not bar extri | 75 |
Example: | 75 |
A developer entered two separate agreements with a | 75 |
E.Modification, Rescission, and Waiver | 76 |
As mentioned, at common law, any modification to a | 76 |
1.Distinguishing Modification, Rescission, and Waive | 76 |
It is important to distinguish among the distinct | 76 |
Note: Article 2 itself contains very few rules reg | 76 |
2.Retraction of a Waiver | 76 |
If a party makes a waiver affecting a material, un | 76 |
3.Contract Modification under Article 2 Generally | 77 |
A modification to a contract falling within Articl | 77 |
a.Good-Faith Requirement for Contract Modification | 77 |
Though a contract modification under Article 2 req | 77 |
Note: If a party obtains a contract modification b | 77 |
Example: | 77 |
A developer contracted with a lumberjack to purcha | 77 |
Compare: | 78 |
A developer contracted with a steel plant to purch | 78 |
b.Form of Modification | 78 |
Generally, Article 2 prescribes no particular form | 78 |
i.Modification Falling within the Statute of Frauds | 78 |
If the contract as modified falls within the statu | 78 |
ii.Signed Agreement Requiring Any Modification or Res | 79 |
Under Article 2, the parties may, in a signed agre | 79 |
F.Delegation and Assignment | 79 |
As at common law, under Article 2, the parties may | 79 |
1.Delegation | 79 |
Under Article 2, a party may generally perform her | 79 |
a.Prohibition on Delegation if the Counterparty Has | 79 |
The nondelegating counterparty has a substantial i | 79 |
Example: | 80 |
A painter was renowned the world over for her skil | 80 |
Compare: | 80 |
A clothier contracted to buy specified quantities | 80 |
b.Delegating a Duty to Pay the Purchase Price | 80 |
Oftentimes, the seller may have an interest in the | 80 |
c.Prohibition on Delegation if It Would Contravene S | 80 |
A party cannot delegate her contractual duties if | 80 |
2.Assignment | 81 |
Unless otherwise agreed (and except as provided in | 81 |
change the other party’s duty, | 81 |
increase the other party’s burden or risk stemming | 81 |
impair the other party’s chance to obtain return p | 81 |
[U.C.C. § 2-210(2) (1951); 2A Anderson U.C.C. §§ 2 | 81 |
a.Consideration and Assignment | 81 |
A buyer or seller may generally assign its contrac | 81 |
b.Material Increase in Burden on Counterparty | 81 |
As mentioned, a buyer’s or seller’s rights general | 81 |
i.Determining Whether Counterparty’s Burden Is Mater | 81 |
Ordinarily, if the assignee merely exercises its a | 81 |
Example: | 82 |
An oil company entered a contract with a dealer, u | 82 |
ii.Assigning Right to Receive Payment | 82 |
A mere assignment of a right to receive payment wi | 82 |
iii.Sale on Credit | 82 |
A buyer on credit may have a difficult time validl | 82 |
iv.Security Interest in the Seller’s Contractual Inte | 82 |
As a general rule, the creation, attachment, perfe | 82 |
c.Validity of Contractual Prohibitions on Assignment | 83 |
As a general rule, Article 2 honors contractual pr | 83 |
i.Relevance of § 9-406 | 83 |
Under Article 9 of the UCC, in a secured transacti | 83 |
ii.Assignment of a Right to Damages for Breach of the | 83 |
A party may have (1) a right to damages for breach | 83 |
d.Construction of Contractual Prohibitions on Assign | 83 |
Unless the circumstances indicate otherwise, any p | 83 |
e.Construction of Assignment Language: Assignment as | 83 |
A party may draft an assignment with language purp | 83 |
i.Assignment for Security | 83 |
A general assignment, such as an assignment of “th | 84 |
ii.Assignment with Delegation as Reasonable Grounds f | 84 |
If an assignment of rights also operates as a dele | 84 |
f.Effect of Assignment on Assignor | 84 |
As with delegation, a mere assignment does not abs | 84 |
g.Effect of Assignment on Assignee | 84 |
As to any rights assigned, the assignee steps into | 84 |
III.Interpreting the Contract | 84 |
Contract interpretation lies at the heart of many | 84 |
A.Parties’ General Obligations | 84 |
Broadly speaking, the seller’s obligation is to tr | 85 |
1.Seller’s Obligation Generally | 85 |
The seller’s basic obligation is to deliver goods | 85 |
2.Seller’s Obligation to Apply Payments as the Buyer | 85 |
Absent contrary agreement, the seller must general | 85 |
3.Irrelevance of Buyer’s Inability to Pay or Insolve | 85 |
Generally, the buyer’s inability to pay has no bea | 85 |
B.Unconscionability | 85 |
Article 2 affords a mechanism for courts to declin | 85 |
enforcement would produce unjust results. Without | 86 |
Note: Most of the time, unconscionability is an is | 86 |
1.Unconscionability v. a Simple Bad Bargain | 86 |
The unconscionability defense does not apply just | 86 |
a.Contract of Adhesion | 86 |
A contract of adhesion is a standard, form contrac | 86 |
b.Boilerplate Terms | 87 |
Conceptually, boilerplate terms are quite similar | 87 |
2.Unconscionability as Dependent on Context | 87 |
The unconscionability defense depends very much on | 87 |
3.Basic Test for Unconscionability | 87 |
The essential question in unconscionability cases | 87 |
a.Relationship between Unconscionability and Other C | 87 |
Unconscionability is a distinct contract defense f | 87 |
b.Procedural Unconscionability | 88 |
Procedural unconscionability speaks to the fundame | 88 |
i.Factors Considered in Evaluating Procedural Uncons | 88 |
Courts consider various factors in evaluating proc | 88 |
the phrasing, clarity, and placement of the assert | 88 |
whether the terms were available to the party asse | 88 |
the parties’ relative sophistication; | 88 |
whether one would reasonably expect the challenged | 88 |
the parties’ relative bargaining power and ability | 88 |
whether the party asserting unconscionability had | 88 |
[2 Hawkland UCC Series § 2-302:3, Westlaw (databas | 88 |
ii.Facts Tending to Show Procedural Unconscionability | 88 |
Common facts tending to show procedural unconscion | 88 |
Note: Many parties, especially consumers, ordinari | 88 |
Example: | 89 |
A municipal worker inquired about purchasing some | 89 |
iii.Role of Contracts of Adhesion in Finding Procedura | 89 |
The mere fact that the contract is one of adhesion | 89 |
Example: | 89 |
A consumer contracted to buy a car from an auto de | 89 |
c.Substantive Unconscionability | 90 |
Substantive unconscionability generally means that | 90 |
i.Terms Often Found Substantively Unconscionable | 90 |
Examples of terms commonly (but not always) found | 90 |
ii.Price and Unconscionability | 90 |
Courts will virtually never find substantive uncon | 90 |
Examples: | 91 |
(1) A municipal worker inquired about purchasing s | 91 |
(2) A consumer purchased a car from a dealer. The | 91 |
4.Time to Determine Unconscionability | 91 |
As mentioned, the court must generally determine w | 91 |
5.Process to Find Unconscionability | 91 |
If a party claims unconscionability, or if it appe | 91 |
C.Identifying Goods to the Contract | 92 |
Identification occurs once specific goods are asso | 92 |
1.Contracts for the Sale of Existing and Identified | 92 |
If the contract is for the sale of goods that alre | 92 |
2.Contracts for the Sale of Most Types of Future Goo | 92 |
If the contract is for the sale of nearly any type | 92 |
a.Certain Contracts for the Sale of Crops | 92 |
Special rules apply to contracts for the sale of c | 92 |
b.Certain Contracts for the Sale of the Unborn Young | 92 |
Special rules apply to contracts for the sale of t | 92 |
3.Conformity to Contract as Irrelevant to Identifica | 93 |
Goods can be identified to a contract regardless o | 93 |
4.Rules in § 2-501 as Mere Default Rules Subject to | 93 |
The rules in § 2-501, like many provisions of Arti | 93 |
5.Seller’s Limited Right to Substitute Identified Go | 93 |
Special rules apply if the seller alone identifies | 93 |
D.Gap Fillers | 93 |
Article 2 contains a great many provisions colloqu | 93 |
1.Open Price Term | 93 |
Parties can form a contract for the sale of goods | 93 |
the contract says nothing as to price; | 93 |
the contract leaves the parties to agree on a pric | 93 |
the contract fixes the price with reference to som | 93 |
[U.C.C. § 2-305(1) (1951).] | 93 |
a.Intent to Form a Contract Even Though Price Is Lef | 94 |
For § 2-305 to apply, the parties must intend to f | 94 |
i.Rule if Parties Intend Not to Be Bound Unless Pric | 94 |
Again, if the parties intend that there be no cont | 94 |
b.Price for One Party to Fix | 94 |
The contract may leave either party to fix the pri | 94 |
c.Special Rule for Price to Be Fixed Other Than by A | 94 |
Special rules apply if (1) the contract calls for | 94 |
d.Fixing a Reasonable Price | 95 |
Article 2 offers no elaboration on what constitute | 95 |
2.Output, Requirements, and Exclusive Dealings | 95 |
Oftentimes, the contractual quantity is measured b | 95 |
a.Requirements Contracts Generally | 95 |
In a requirements contract, the buyer promises to | 95 |
b.Output Contracts Generally | 95 |
In a typical output contract, the buyer agrees to | 95 |
c.Determining Quantity in Requirements and Output Co | 96 |
A promise to buy all requirements or all output fr | 96 |
i.Good Faith in Requirements and Output Contracts | 96 |
In requirements and output contracts, the general | 96 |
Note: Courts seem especially inclined to find bad | 96 |
Example: | 96 |
An oil company contracted to supply an electric co | 96 |
ii.Whether Requirements or Output Is Unreasonably Dis | 97 |
If there is a stated estimate, or if there are nor | 97 |
the difference between the requirements or output | 97 |
whether there was reason to anticipate or foresee | 97 |
any difference between the market price and the co | 97 |
whether any change in market price was fortuitous, | 97 |
the reason for the departure from the estimate or | 97 |
[U.C.C. § 2-306(1) (1951); Orange & Rockland Utili | 97 |
Note: It is important to distinguish an estimated | 97 |
Example: | 97 |
An oil company contracted to supply an electric co | 97 |
d.Exclusive Dealings | 98 |
The parties may enter a lawful agreement for exclu | 98 |
Example: | 98 |
A natural-gas producer contracted with a pipeline | 98 |
3.Delivery in Lots | 98 |
Unless otherwise agreed, the seller must tender al | 98 |
a.Buyer’s Rights if Delivery in a Single Lot Is Requ | 98 |
If delivery in a single lot is required, but the s | 98 |
b.When the Circumstances Give a Party the Right to M | 99 |
Generally, either party will have the right to mak | 99 |
4.Determining the Place for Delivery | 99 |
The parties may, by agreement, specify a place for | 99 |
a.Special Rule for Certain Contracts for the Sale of | 99 |
Special rules apply to a contract for the sale of | 99 |
b.Special Rule for Documents of Title | 99 |
Absent contrary agreement, “documents of title may | 99 |
c.Special Rules if Seller Is to Ship the Goods | 100 |
The rules in § 2-504 apply if the seller is requir | 100 |
5.Absence of Specific Time Provisions | 100 |
In most cases, either Article 2 or the agreement w | 100 |
a.Determining What Is a Reasonable Time | 100 |
Just what is a reasonable time to take some action | 100 |
Example: | 100 |
In December of year one, an industrial firm contra | 100 |
b.Contract of Indefinite Duration Calling for Succes | 101 |
A contract may call for successive performances (e | 101 |
6.Notice of Termination | 101 |
Special rules apply if one party terminates the co | 101 |
Example: | 101 |
A manufacturer of faucets and related products con | 101 |
7.Open Time for Payment and Shipping under Reservati | 102 |
Unless otherwise agreed, payment is due at the tim | 102 |
a.Seller’s Right to Ship the Goods under Reservation | 102 |
Unless otherwise agreed, if authorized to send the | 102 |
b.Rule if Delivery Is through Documents of Title | 102 |
Unless otherwise agreed, if delivery is authorized | 102 |
c.Rule if Seller Is Required or Authorized to Ship t | 102 |
Unless otherwise agreed, if the seller is required | 102 |
8.Options and Cooperation Regarding Performance | 103 |
If an agreement for the sale of goods is otherwise | 103 |
Example: | 103 |
An onion farmer contracted to sell onions to a dis | 103 |
a.Buyer’s Rights as to the Assortment of Goods and t | 103 |
Unless otherwise agreed, the buyer may make specif | 103 |
b.Special Rules Regarding Unseasonable Delay in Maki | 103 |
The UCC affords special remedies if (1) one party | 104 |
that materially affects the other party’s performa | 104 |
Example: | 104 |
An inventor contracted to build, for a manufacture | 104 |
E.Risk of Loss without a Breach of Contract under § | 104 |
Section 2-509 sets forth the rules to determine ri | 104 |
Note: The rules in § 2-509 go hand in hand with th | 104 |
1.Risk of Loss under § 2-509 Generally | 104 |
Section 2-509 sets forth the general rules governi | 104 |
2.Rules if Seller Is Authorized or Required to Ship | 105 |
If the contract requires or authorizes the seller | 105 |
a.Risk of Loss in a Shipment Contract | 105 |
In a shipment contract, the risk of loss passes to | 105 |
i.Whether Goods Are Properly Delivered to a Carrier | 105 |
Section 2-504 controls whether goods are properly | 105 |
put the goods in a carrier’s possession, | 105 |
make a reasonable contract for the goods’ transpor | 105 |
obtain and properly deliver or tender in the prope | 105 |
promptly notify the buyer that the shipment has oc | 105 |
[U.S.C. § 2-504, cmt. 3 (1951).] | 105 |
Note: Unless otherwise agreed, if the seller fails | 105 |
ii.Rule if Goods Are Identified to the Contract While | 106 |
In a shipment contract, and unless otherwise agree | 106 |
b.Risk of Loss in a Destination Contract | 106 |
In a destination contract, the risk of loss passes | 106 |
c.Shipping Contract v. Destination Contract | 106 |
If the contract requires or authorizes the seller | 106 |
3.Rule if a Bailee Holds the Goods for Delivery with | 106 |
Special rules apply if the goods are held by a bai | 106 |
when the buyer receives a negotiable document of t | 106 |
when the bailee acknowledges the buyer’s right to | 107 |
after the buyer receives a nonnegotiable document | 107 |
[U.C.C. §§ 2-503(4)(b), 2-509(2) (1951); 2 Hawklan | 107 |
4.Rule in Cases Not Involving Shipment Contracts, De | 107 |
In cases that do not involve shipment contracts, d | 107 |
5.Risk of Loss in a Sale on Approval | 107 |
Unless otherwise agreed, in a sale on approval: (1 | 107 |
Note: Ordinary retail sales to consumers, such as | 107 |
Example: | 107 |
A farmer contracted to buy a tractor from a dealer | 107 |
possess and use the tractor before paying. Should | 108 |
F.Effect of Breach on Risk of Loss under § 2-510 | 108 |
If either the buyer or the seller has breached the | 108 |
1.Risk of Loss if Seller’s Tender or Delivery Does N | 108 |
Generally, the seller breaches the contract by ten | 108 |
2.Risk of Loss if Buyer Rightfully Revokes Acceptanc | 108 |
If the buyer accepts the goods and then rightfully | 108 |
3.Risk of Loss if Buyer Breaches the Contract | 108 |
A special risk-of-loss allocation applies if (1) t | 108 |
G.Course of Performance, Course of Dealing, and Usag | 109 |
Apart from the agreement’s express language, perha | 109 |
1.Course of Performance and Course of Dealing | 109 |
Course of performance references the parties’ sequ | 109 |
a.Sequence of Conduct | 109 |
A course of performance is a sequence of conduct p | 109 |
b.Common Basis for Understanding | 109 |
A course of dealing requires a prior sequence of c | 109 |
Examples: | 110 |
(1) A developer contracted with a brickmaker to pu | 110 |
(2) A developer contracted with a brickmaker to pu | 110 |
Compare: | 110 |
A developer contracted with a brickmaker to purcha | 110 |
c.Relevance of Course of Performance and Course of D | 110 |
A course of performance or course of dealing betwe | 111 |
2.Usage of Trade | 111 |
In a loose, general sense, a usage of trade is an | 111 |
a.Regularity of Observance | 111 |
The requirement for regularity of observance does | 111 |
b.Policing Unconscionable and Dishonest Practices | 111 |
Implicit in the UCC’s rules on trade usages is the | 111 |
c.Relevance of Usage of Trade in Interpreting a Cont | 111 |
Usage of trade is relevant to contractual interpre | 111 |
Note: If part of the contractual performance is to | 112 |
Example: | 112 |
A buyer contracted to purchase a specified quantit | 112 |
d.Notice Requirement for Usage of Trade | 112 |
If one party offers evidence of a relevant usage o | 112 |
e.Well-Established Usage Varying from UCC without a | 112 |
Sometimes, there will be a well-established usage | 112 |
3.Hierarchy of Interpretation: Express Terms, Course | 113 |
As a general rule, the agreement’s express terms a | 113 |
express terms control course of performance, cours | 113 |
course of performance controls course of dealing a | 113 |
course of dealing controls usage of trade. | 113 |
[U.C.C. § 1-303(e) (2001); but see Special Rule Re | 113 |
a.Special Rule Regarding Course of Performance | 113 |
Subject to the rules in § 2-209 (dealing with modi | 113 |
IV.Creditors and Good-Faith Purchasers | 113 |
Article 2 rightly focuses much of its text on the | 113 |
A.Passing of Title and Reservation of Security | 113 |
One of Article 2’s prime policy goals was to deemp | 113 |
1.General Rule That Goods Must Be Identified for Tit | 114 |
Under any contract for the sale of goods, title to | 114 |
2.Seller’s Retention or Reservation of Title in Good | 114 |
The seller may purport to retain or reserve title | 114 |
3.Default Rules on Passage of Title | 114 |
Subject to UCC Article 9, which governs security i | 114 |
a.Passage of Title if Goods Are to Be Moved to Effec | 114 |
Unless otherwise agreed explicitly, if the goods a | 114 |
i.Relevance of Buyer’s Failure to Pay, Conformity, a | 115 |
Generally, the buyer’s failure to pay has no beari | 115 |
ii.Passage of Title in a Shipment Contract | 115 |
In a shipment contract, title generally passes to | 115 |
iii.Passage of Title in a Destination Contract | 115 |
In a destination contract, title generally passes | 115 |
b.Passage of Title if Goods Are to Be Delivered with | 115 |
Section 2-401 articulates specific rules that appl | 115 |
i.Delivery of Documents Generally | 115 |
Broadly speaking, a physical document is delivered | 115 |
c.Status of Title if the Buyer Rejects the Goods or | 115 |
Even if title has passed under the rules discussed | 115 |
buyer either (1) with or without justification, re | 116 |
B.Seller’s Creditors’ Rights as to Sold Goods | 116 |
Section 2-402 is the main provision in Article 2 a | 116 |
1.Background to § 2-402 | 116 |
In understanding the operation of § 2-402, it may | 116 |
2.Creditors to Whom § 2-402 Applies | 116 |
UCC Article 9 articulates the rights of a secured | 116 |
3.Circumstances in Which a Seller’s Creditors May Tr | 117 |
Per § 2-402(2), a creditor of the seller may treat | 117 |
a.Whether a Transfer Is Fraudulent as to a Creditor | 117 |
In some ways, the rule in § 2-402(2) is seen as co | 117 |
b.Commercially Reasonable Time for the Seller to Ret | 117 |
Just what is a commercially reasonable time for th | 117 |
Example: | 117 |
A manufacturer of oil-field pump jacks contracted | 117 |
4.Section 2-402, Fraudulent Transfers, and Voidable | 118 |
The buyer’s rights under §§ 2-502 and 2-716 are no | 118 |
C.Special Protections for Good-Faith Purchasers and | 118 |
Generally, if one purchases goods, she acquires al | 118 |
1.Power to Transfer if One Has Voidable Title to Goo | 118 |
Per § 2-403, one with voidable title to goods has | 118 |
the transferor was deceived as to the purchaser’s | 118 |
the delivery was made in exchange for a check, and | 118 |
the transaction was agreed to be a cash sale; or | 118 |
the delivery came about through fraud, and under t | 118 |
[U.C.C. § 2-403(1) (1951).] | 118 |
a.Voidable Title v. Void Title v. Good Title | 118 |
Title is voidable if it remains valid unless and u | 118 |
it aside. Title is void, by contrast, if the law t | 119 |
i.Deceit as to the Purchaser’s Identity | 119 |
Generally, a purchaser acquires voidable title if | 119 |
Example: | 119 |
An impostor, falsely representing himself to be a | 119 |
ii.Payment by Dishonored Check | 119 |
Generally, if someone pays for goods by check, and | 119 |
iii.Cash Sale | 119 |
In a cash sale, the transferor intends that the pu | 119 |
until the purchaser pays for the goods in cash. Ev | 120 |
iv.Goods Procured through Criminal Fraud | 120 |
If one obtains goods through criminal fraud, as op | 120 |
Example: | 120 |
An impostor, falsely representing himself to be a | 120 |
b.Transaction of Purchase | 120 |
In the UCC, the term purchase refers to “taking by | 120 |
Example: | 121 |
The owner of an antique convertible had the conver | 121 |
c.Purchaser for Value | 121 |
The UCC spells out several specific instances in w | 121 |
in exchange for a binding commitment to extend cre | 121 |
as security for a preexisting claim; | 121 |
in total or partial satisfaction of a preexisting | 121 |
by accepting delivery under a prior purchase contr | 121 |
for any consideration that suffices to support a s | 121 |
[U.C.C. § 1-204 (1951).] | 121 |
Note: From the preceding definition of value, it b | 121 |
d.Good-Faith Purchaser | 121 |
In determining whether one is a good-faith purchas | 121 |
e.The Shelter Rule and Good-Faith Purchasers for Val | 122 |
As mentioned, a purchaser generally takes whatever | 122 |
D.Entrusting | 122 |
A person may entrust possession of goods to a merc | 122 |
1.Entrusting Defined | 122 |
Entrusting embraces not only delivering goods, but | 122 |
Note: Even though a merchant lacks direct possessi | 122 |
2.Entrusting: Common Fact Patterns | 122 |
Typically, entrusting arises in one of four fact p | 122 |
the goods’ owner delivers them to a dealer to rese | 122 |
a wholesaler delivers goods into a dealer’s invent | 123 |
the goods’ owner leaves them with a merchant for r | 123 |
a buyer purchases goods from a seller but nonethel | 123 |
[Lakes Gas Co. v. Clark Oil Trading Co., 875 F.Sup | 123 |
Examples: | 123 |
(1) A home-improvement store purchased around 4,10 | 123 |
(2) A married couple purchased a truck from a deal | 123 |
3.Buyer in the Ordinary Course of Business | 123 |
The UCC’s definition of buyer in the ordinary cour | 123 |
Note: The term buyer in the ordinary course is not | 123 |
a.Exclusion of One Acquiring Goods in a Bulk Transfe | 124 |
A person cannot be a buyer in the ordinary course | 124 |
Example: | 124 |
A wealthy socialite owned a rare and valuable blue | 124 |
i.Bulk Sale | 124 |
A bulk sale, as defined in Article 6 (which most s | 124 |
b.Requirement of Possession or Having the Right to R | 124 |
To be a buyer in the ordinary course of business, | 124 |
c.Special Rule for One Selling Oil, Gas, or Other Mi | 124 |
Oftentimes, one will sell oil, gas, or other miner | 125 |
d.Buying Goods in the Ordinary Course | 125 |
One buys goods in the ordinary course if the sale | 125 |
Example: | 125 |
A wealthy socialite owned a valuable painting, whi | 125 |
e.Buying in Good Faith | 125 |
In determining whether one buys goods in good fait | 125 |
Example: | 125 |
A car dealer sold a car to his close friend at cos | 125 |
f.Manner in Which a Buyer in the Ordinary Course of | 126 |
A buyer in the ordinary course may buy the goods f | 126 |
g.The Shelter Rule and Buyers in the Ordinary Course | 126 |
If a buyer in the ordinary course acquires an entr | 126 |
V.Performance | 126 |
This outline has already discussed many provisions | 126 |
A.The Perfect-Tender Rule | 126 |
In general, for the seller to avoid liability for | 126 |
1.The Perfect-Tender Rule v. Material Breach and Sub | 127 |
Most law students will be familiar with the doctri | 127 |
Example: | 127 |
A contractor agreed to build a house for an invest | 127 |
2.Buyer’s Remedies for Imperfect Tender | 127 |
If the tender of delivery or the goods themselves | 127 |
reject the entire delivery, | 127 |
accept the entire delivery, or | 127 |
accept any commercial units within the delivery an | 127 |
[U.C.C. § 2-601 (1951); Acceptance and Rejection o | 127 |
a.Buyer’s Partial Acceptance as Not Limited to Confo | 127 |
If the seller violates the perfect-tender rule, th | 128 |
b.Buyer’s Acceptance as Not Limiting General Remedie | 128 |
If the buyer accepts any goods despite imperfect t | 128 |
3.Limitations on Buyer’s Remedies for Imperfect Tend | 128 |
There are limits and qualifications to a buyer’s r | 128 |
B.Cure | 128 |
Generally, the seller’s right to cure under § 2-50 | 128 |
Note: Most of the rules on the seller’s right to c | 128 |
1.Seller’s Right to Cure as a Limitation on Buyer’s | 129 |
If the seller seasonably notifies the buyer of the | 129 |
2.Right to Cure as Belonging to Seller, Not to Buyer | 129 |
Cure is the seller’s privilege, not the buyer’s en | 129 |
3.Rejection Requirement for Seller to Cure | 129 |
As mentioned, for the seller to have any right to | 129 |
4.Seasonably Notifying the Buyer | 129 |
The seller seasonably notifies the buyer of the in | 129 |
5.Manner of Cure | 129 |
The ideal method of cure is to provide conforming, | 129 |
Examples: | 130 |
(1) A married couple contracted to buy a recreatio | 130 |
(2) A cattle broker contracted to deliver to a cat | 130 |
6.Giving the Seller a Further Reasonable Time beyond | 130 |
Sometimes, the buyer will reject a nonconforming t | 130 |
a.Whether Seller Has Reasonable Grounds to Believe G | 130 |
Of course, whether the seller has reasonable groun | 130 |
Note: If time is of the essence under the contract | 131 |
Example: | 131 |
An oil company contracted to deliver a stated quan | 131 |
C.Installment Contracts | 131 |
The perfect-tender rule, discussed above, generall | 131 |
1.Installment Contract Defined | 132 |
An installment contract “requires or authorizes th | 132 |
Examples: | 132 |
(1) A contract called for a coal mine to deliver 1 | 132 |
(2) Over time, a coal-powered electric plant enter | 132 |
Compare: | 132 |
A contract called for a coal mine to deliver 1.2 m | 132 |
2.Rejecting a Nonconforming Installment | 132 |
In an installment contract, the buyer may reject a | 132 |
a.Nonconformity of Goods in an Installment: Substant | 133 |
In the context of installment contracts, as mentio | 133 |
Example: | 133 |
A pipe distributor contracted to deliver one milli | 133 |
Compare: | 133 |
A farmer contracted to deliver 16,000 potatoes to | 133 |
i.Parties’ Agreement on What Constitutes a Substanti | 134 |
In an installment contract, the parties may agree | 134 |
b.Nonconformity in Required Documents | 134 |
Even in an installment contract, the perfect-tende | 134 |
c.Curing a Nonconformity in the Goods in an Installm | 134 |
Whether a nonconformity in the goods is curable is | 134 |
d.Adequate Assurance of Cure | 134 |
Whether the seller provides adequate assurance of | 134 |
3.Cancelling an Installment Contract Altogether | 135 |
There is a breach of the entire installment contra | 135 |
accepts a nonconforming installment, having not se | 135 |
sues on the contract, but only concerning past ins | 135 |
demands performance on future installments. | 135 |
[U.C.C. § 2-612 (1951); 2 Hawkland UCC Series § 2- | 135 |
Note: These rules govern not only the buyer’s righ | 135 |
a.Substantially Impairing the Value of the Whole Con | 135 |
Whether any nonconformities substantially impair t | 135 |
Example: | 135 |
A furniture manufacturer contracted to deliver nin | 135 |
D.Buyer’s Right to Inspect the Goods | 136 |
Unless otherwise agreed, the buyer has a right to | 136 |
1.Inspection Defined | 136 |
Inspection means that the buyer examines the goods | 136 |
2.Who Bears Expenses of Inspection | 136 |
Absent contrary agreement, the buyer normally bear | 136 |
3.Effect of Seller’s Interference with Buyer’s Right | 136 |
If the buyer has a right to inspect the goods, and | 136 |
4.Inspection and Risk of Loss | 136 |
The rules on the buyer’s right to inspect the good | 136 |
5.Circumstances in Which Buyer Is Not Entitled to In | 137 |
Unless otherwise agreed, and subject to § 2-321(3) | 137 |
6.Place or Method of Inspection That the Parties Hav | 137 |
If the parties fix a place or method of inspection | 137 |
E.Acceptance and Rejection of Goods | 137 |
Whether and when the buyer accepts or rejects good | 137 |
1.How the Buyer Accepts the Goods | 137 |
Article 2 sets forth specific rules to determine p | 137 |
a.Signifying Acceptance to the Seller | 137 |
The buyer accepts the goods if, having had a reaso | 137 |
Examples: | 138 |
(1) A distributor of bearings contracted to buy a | 138 |
(2) A buyer contracted to buy timber from a seller | 138 |
Compare: | 138 |
A church ordered a shipment of choir robes from a | 138 |
b.Failure to Make an Effective Rejection | 139 |
The buyer accepts the goods if, after a reasonable | 139 |
Example: | 139 |
A wealthy socialite contracted to buy a yacht from | 139 |
c.Act Inconsistent with the Seller’s Ownership | 139 |
The buyer accepts the goods by undertaking any act | 139 |
Example: | 139 |
A restaurant owner contracted to buy tables from a | 139 |
i.Resale, Use, and Possession as Inconsistent with t | 140 |
In general, courts seem to hold that reselling the | 140 |
ii.Acts Required or Authorized by Article 2 as Not In | 140 |
In connection with a rejection of goods, or else t | 140 |
2.Effects of Acceptance | 140 |
Section 2-607 lists a few of the effects of the bu | 140 |
a.Acceptance as Triggering the Buyer’s Obligation to | 140 |
The buyer must pay the contract rate for any goods | 140 |
Example: | 141 |
A retailer contracted to buy 20 cases of Christmas | 141 |
b.Acceptance as Precluding Rejection of Goods Accept | 141 |
Once the buyer accepts any goods, the buyer can no | 141 |
Example: | 141 |
An industrialist contracted with a manufacturer to | 141 |
i.Acceptance and Installment Contracts | 141 |
In an installment contract, acceptance of one inst | 141 |
c.Buyer’s Burden to Establish Breach as to Any Goods | 142 |
As to any goods accepted, the buyer bears the burd | 142 |
d.Notice of Breach to Preserve Remedy | 142 |
If the buyer has accepted a tender of goods, then | 142 |
i.Reasonable Time to Notify Seller of Breach | 142 |
There are no bright-line rules on whether the buye | 142 |
Note: Some courts have excused a buyer’s failure t | 142 |
Example: | 142 |
In September of year one, a card collector contrac | 142 |
Compare: | 143 |
A manufacturer produced and sold airplane cables c | 143 |
ii.Agreed Time for Notice | 143 |
The parties may agree upon a time frame for the bu | 143 |
iii.Manner of Notifying Seller | 143 |
Under the UCC, one generally notifies or gives not | 143 |
iv.Content of Notice of Breach | 143 |
The notice of breach should particularize the alle | 143 |
3.Manner of Rejection | 144 |
To be effective, any rejection must occur within a | 144 |
a.Reasonable Time for Rejection | 144 |
At a minimum, a reasonable time for rejection must | 144 |
b.Seasonably Notifying the Seller of a Rejection | 144 |
To be seasonable, any notification must occur with | 144 |
c.Factors Relevant in Assessing Reasonable Time for | 144 |
In determining whether rejection occurred within a | 144 |
permitting the seller to determine whether the buy | 144 |
enabling the seller to exercise its right to cure, | 144 |
letting the seller attempt to mitigate damages by | 144 |
facilitating the seller’s ability to preserve the | 144 |
[2 Hawkland UCC Series § 2-602:1, Westlaw (databas | 145 |
Example: | 145 |
A manufacturer contracted to sell a stated quantit | 145 |
4.Buyer’s Exercise of Ownership as to Rightfully Rej | 145 |
Once the buyer rightfully rejects the goods, it is | 145 |
a.Evaluating Whether Buyer Has Exercised Ownership o | 145 |
In determining whether the buyer has exercised own | 145 |
Example: | 145 |
A farmer purchased a combine from a dealer. After | 145 |
b.Effect of Buyer’s Exercise of Ownership of Rightfu | 146 |
Again, if the buyer exercises ownership over right | 146 |
5.Obligations of Buyer in Physical Possession of Rig | 146 |
A buyer has a special obligation if (1) before rej | 146 |
Example: | 146 |
A faucet manufacturer contracted to buy a stated n | 146 |
Compare: | 146 |
A retailer contracted to buy a shipment of firewor | 146 |
6.Merchant Buyer’s Duties as to Rightfully Rejected | 147 |
Generally, a merchant buyer has special obligation | 147 |
Example: | 147 |
A retailer contracted to buy a shipment of firewor | 147 |
a.Merchant Buyer Selling the Goods for the Seller’s | 147 |
If a merchant buyer rightly sells goods for the se | 147 |
b.Merchant Buyer’s Good-Faith Compliance | 147 |
A merchant buyer, in complying with its abovementi | 147 |
Example: | 148 |
A food distributor contracted to buy a shipment of | 148 |
7.Buyer’s Option to Salvage Rightfully Rejected Good | 148 |
If the buyer (whether a merchant or not) receives | 148 |
8.Buyer’s Waiver of Objections by Failure to Particu | 148 |
Special rules apply if the buyer rejects goods but | 148 |
9.Buyer’s Waiver of Objections to Documents | 149 |
If a buyer agrees to pay against documents but mak | 149 |
cannot recover the payment for any defects that we | 149 |
F.Revoking Acceptance | 149 |
Even if a buyer accepts goods, Article 2 sometimes | 149 |
1.Basic Requirements for Buyer to Revoke Acceptance | 149 |
The buyer may revoke acceptance of a lot or commer | 149 |
a.Whether a Nonconformity Substantially Impairs the | 149 |
The requirement that the nonconformity substantial | 149 |
the buyer’s needs, overall circumstances, and reac | 149 |
the goods’ market value, reliability, and safety; | 149 |
the goods’ utility for the purposes to which simil | 150 |
the cost to repair the nonconformities; and | 150 |
the seller’s willingness to cure the nonconformity | 150 |
[See Allen v. Rouse Toyota Jeep, Inc., 398 S.E.2d | 150 |
Examples: | 150 |
(1) A consumer bought a car from a dealer and acce | 150 |
(2) An industrialist contracted to buy an industri | 150 |
b.Buyer’s Reasonable Assumption of Cure and Lack of | 150 |
A buyer’s reasonable assumption of a cure may, of | 150 |
Example: | 151 |
A developer contracted to buy a portable batch pla | 151 |
distributor. Shortly after the developer took deli | 151 |
c.Acceptance with or without Knowledge of Nonconform | 151 |
For a buyer to revoke acceptance, having accepted | 151 |
Examples: | 151 |
(1) An aviation company contracted to purchase an | 151 |
(2) To satisfy federal standards, a headlight manu | 151 |
Compare: | 152 |
A food distributor contracted to buy organic soybe | 152 |
2.Time Limit to Revoke Acceptance | 152 |
To effectively revoke acceptance, the buyer must d | 152 |
a.Reasonable Time to Revoke Acceptance | 152 |
Precisely what is a reasonable time to revoke acce | 152 |
Example: | 153 |
A food distributor contracted to buy powdered milk | 153 |
Compare: | 153 |
A pasta distributor contracted to buy a packaging | 153 |
b.Revocation before Substantial Change in the Goods | 153 |
For a buyer to revoke acceptance, she must do so b | 153 |
Example: | 154 |
A distributor of vitamin products contracted to bu | 154 |
Compare: | 154 |
A prospector contracted to buy, from a manufacture | 154 |
G.Insurable Interest in Goods | 154 |
Once existing goods are identified to the contract | 154 |
H.Seller’s Tender of Delivery and Shipment of Goods | 155 |
In the broadest sense, tender, from the seller’s p | 155 |
1.Effect of Buyer’s and Seller’s Tender | 155 |
Absent contrary agreement, the buyer’s tender of p | 155 |
a.Conditional Delivery and Reclamation | 155 |
If payment is due on delivery of the goods or docu | 155 |
2.Time of Tender and Safekeeping of Goods | 155 |
The seller must tender delivery at a reasonable ho | 155 |
3.Seller’s Tender Obligations in a Shipment Contract | 155 |
In a shipment contract, the seller must (unless ot | 156 |
4.Seller’s Obligations if Goods Are in a Bailee’s Po | 156 |
Special rules apply if a bailee (such as a warehou | 156 |
a.Tender of Nonnegotiable Document of Title or Writt | 156 |
Notwithstanding the abovementioned rules, absent t | 156 |
5.Tender of Delivery in a Destination Contract | 156 |
In a destination contract, tender occurs once the | 156 |
6.Rules if Contract Requires Seller to Deliver Docum | 157 |
Special rules apply if the contract expressly requ | 157 |
I.Payment by the Buyer | 157 |
The parties may, of course, agree on how the buyer | 157 |
1.Payment by Check | 157 |
Subject to § 3-310 (covered more thoroughly in Qui | 157 |
VI.Breach, Repudiation, and Excuse | 158 |
Obviously, no body of contract law would be comple | 158 |
A.Anticipatory Repudiation | 158 |
The rules on anticipatory repudiation are quite si | 158 |
either party repudiates the contract, | 158 |
the repudiation concerns a performance not yet due | 158 |
the loss of that performance will substantially im | 158 |
[U.C.C. § 2-610 (1951).] | 158 |
1.Repudiation Defined | 158 |
A repudiation is “an overt communication of intent | 158 |
Examples: | 158 |
(1) A buyer contracted to purchase 875 metric tons | 158 |
(2) A grain distributor contracted with a farmer t | 159 |
Compare: | 159 |
A fisherman contracted to buy a boat from a manufa | 159 |
2.Whether Lack of Repudiated Performance Will Substa | 159 |
One element of anticipatory repudiation in Article | 159 |
Note: Substantial impairment is not often an issue | 160 |
Example: | 160 |
A farmer contracted to buy 17 loads of cottonseed | 160 |
3.Nonrepudiating Party’s Remedies for Anticipatory R | 160 |
Upon an anticipatory repudiation, the nonrepudiati | 160 |
await the repudiating party’s performance for a co | 160 |
invoke any remedy for breach, even if the nonrepud | 160 |
in either case, suspend performance or proceed und | 160 |
[U.C.C. § 2-601 (1951); Seller’s Right to Identify | 160 |
a.Awaiting Repudiating Party’s Performance for a Com | 160 |
If one party repudiates the contract, the nonrepud | 160 |
b.Invoking Remedies for Breach upon a Repudiation | 160 |
Upon a repudiation, the nonrepudiating party may g | 160 |
c.Suspending Performance or Cancelling the Contract | 161 |
Regardless of whether the nonrepudiating party ele | 161 |
B.Retracting an Anticipatory Repudiation | 161 |
Within specified constraints, a repudiating party | 161 |
1.Retraction Defined | 161 |
Article 2 does not specify any particular method f | 161 |
Examples: | 161 |
(1) An oil producer entered a long-term petroleum | 161 |
(2) A buyer contracted to purchase natural gas fro | 162 |
2.Time to Retract Repudiation | 162 |
For a retraction to be effective, the repudiating | 162 |
3.Result of Effective Retraction | 162 |
An effective retraction reinstates the repudiating | 162 |
C.Right to Adequate Assurance of Performance | 163 |
In every contract for the sale of goods, each part | 163 |
1.Reasonable Grounds for Insecurity | 163 |
Generally speaking, reasonable grounds for insecur | 163 |
the nature of the contract, | 163 |
the parties’ relationship, | 163 |
information gleaned from apparently trustworthy so | 163 |
the counterparty’s performance on the current cont | 163 |
the counterparty’s performance on other contracts. | 163 |
[U.C.C. § 2-609(2), cmt. 3 (1951); 2 Hawkland UCC | 163 |
a.Reasonable Grounds for Insecurity and the Obligati | 163 |
In deciding whether there are reasonable grounds f | 163 |
b.The Nature of the Contract and Reasonable Grounds | 163 |
The nature of the contract can be a weighty factor | 164 |
c.The Parties’ Relationship and Reasonable Grounds f | 164 |
The parties’ relationship obviously plays a major | 164 |
d.Information from Apparently Trustworthy Sources | 164 |
In determining whether there are reasonable ground | 164 |
Example: | 164 |
A buyer contracted to buy oil from a seller on 30 | 164 |
e.Performance on the Current Contract and Other Cont | 164 |
Obviously, a party’s performance on the current co | 164 |
f.Examples of Reasonable Grounds for Insecurity | 166 |
The official comments to § 2-609 and the cases hav | 166 |
one party’s shaky or unreliable credit, | 166 |
one party’s significant breach of other contracts, | 166 |
delegation of contractual duties per § 2-210, | 166 |
one party demanding a kickback, | 166 |
the seller’s failure to deliver quantities for whi | 166 |
market conditions surrounding the current contract | 166 |
one party’s nonresponsiveness to inquiries about p | 166 |
the seller’s loss of a supply source, | 166 |
a party’s request for concessions or accommodation | 166 |
one party’s insolvency. | 166 |
[2 Hawkland UCC Series § 2-609:2, Westlaw (databas | 166 |
2.Adequate Assurances of Due Performance | 166 |
Generally, the factors relevant to reasonable grou | 166 |
Note: Between merchants, the adequacy of any assur | 166 |
Example: | 166 |
A buyer contracted to buy oil from a seller on 30 | 166 |
a.Good Faith and Adequate Assurance of Due Performan | 167 |
In demanding adequate assurance, not to mention in | 167 |
3.Demand for Assurances without Reasonable Grounds f | 167 |
If a party demands adequate assurance of due perfo | 167 |
4.Content of Demand for Adequate Assurance | 167 |
A proper demand for adequate assurance should clea | 167 |
5.Commercial Reasonableness of Suspending Performanc | 167 |
An insecure party should exercise some thought bef | 167 |
Note: As a general observation, if there are indee | 168 |
6.Acceptance of Improper Delivery or Payment and Ade | 168 |
If a party accepts an improper delivery or payment | 168 |
D.Casualty to Identified Goods | 168 |
Under § 2-613, special rules apply if (1) the cont | 168 |
1.Casualty to Identified Goods Producing Total Loss | 168 |
If the casualty to identified goods produces a tot | 168 |
2.Casualty to Identified Goods Producing Partial Los | 168 |
If the casualty to identified goods produces a mer | 168 |
3.Casualty Defined | 169 |
Casualty means physical damage or destruction to t | 169 |
4.Whether the Contract Requires Identified Goods for | 169 |
To say that the contract requires identified goods | 169 |
Example: | 169 |
A buyer contracted to purchase a 1978 Chevrolet Pa | 169 |
Compare: | 169 |
A farmer contracted to deliver 25,000 tons of grai | 169 |
5.Casualty to Identified Goods without Either Party’ | 170 |
In § 2-613, fault includes not only willful or int | 170 |
E.Substituted Performance by Way of Transport, Deliv | 170 |
Section 2-614 articulates special rules that apply | 170 |
1.Substituted Performance and the Agreed Transportat | 170 |
Special rules apply if, without either party’s fau | 170 |
a.Commercial Impracticability of Manner of Delivery | 170 |
Whether the agreed manner of delivery has become c | 170 |
b.Commercial Reasonableness of Available Substitute | 170 |
The mere fact that an available substitute is subs | 170 |
Example: | 171 |
A grain elevator contracted to sell a specified to | 171 |
2.Failure of Agreed Method of Payment Due to Governm | 171 |
Special rules apply if the agreed method or means | 171 |
F.Impracticability of Performance | 171 |
Section 2-615 sometimes totally or partially excus | 171 |
1.Contingency’s Nonoccurrence as a Basic Assumption | 172 |
In determining whether the contingency’s nonoccurr | 172 |
a.Cost Increases | 172 |
In general, garden-variety cost increases are fore | 172 |
Examples: | 172 |
(1) A uranium supplier contracted to sell a stated | 172 |
(2) A manufacturer contracted to sell electrical t | 172 |
Compare: | 173 |
An oil producer contracted to sell fuel to a power | 173 |
b.Failure of Seller’s Supply Source | 173 |
Generally, a partial failure of the seller’s sourc | 173 |
c.Crop Failure | 174 |
Crop failure is often invoked to apply § 2-615. Co | 174 |
Note: Oftentimes, cases involving crop failures co | 174 |
Example: | 174 |
A farmer contracted to deliver 25,000 tons of grai | 174 |
2.Significance of Seller’s Assuming a Greater Obliga | 174 |
The excuse/defense of § 2-615 applies except to th | 174 |
3.Whether a Contingency Has Rendered the Seller’s Pe | 175 |
Impracticability, as used in § 2-615, does not req | 175 |
Note: In a given case, it can be extremely difficu | 175 |
a.Objective v. Subjective Impracticability | 175 |
Section 2-615 is concerned with objective impracti | 175 |
Example: | 176 |
An oil producer contracted to sell fuel to a power | 176 |
b.Sole-Source Supply Contracts and Objective Impract | 176 |
As discussed above, to excuse a seller under § 2-6 | 176 |
Example: | 176 |
A bottle distributor contracted to sell a specifie | 176 |
Compare: | 177 |
A coal distributor contracted to sell specified qu | 177 |
4.Force-Majeure Clauses | 177 |
Perhaps owing somewhat to § 2-615’s relative uncer | 177 |
5.Impracticability Only Partially Affecting Seller’s | 177 |
Special rules apply if the impracticability only p | 177 |
a.Reasonably and Fairly Allocating Production and De | 177 |
In allocating production and delivery, the seller | 177 |
6.Seasonably Notifying the Buyer of Delay or Nondeli | 178 |
If § 2-615 applies, the seller must notify the buy | 178 |
VII.Warranties in UCC Article 2 | 178 |
Broadly speaking, a warranty is both a representat | 178 |
A.Express Warranties | 178 |
Section 2-313 governs express warranties in Articl | 178 |
an affirmation of fact or promise, | 178 |
a description of the goods, or | 178 |
a sample or model. | 178 |
[See U.C.C. § 2-313(1), with comments (1951); 2 Ha | 178 |
1.Express Warranty by Affirmation of Fact or Promise | 179 |
An affirmation of fact or promise from the seller | 179 |
a.Whether an Affirmation of Fact or Promise Relates | 179 |
Broadly speaking, a statement relates to the goods | 179 |
Examples: | 179 |
(1) A buyer contracted to purchase two emus (large | 179 |
(2) A pig farmer contracted to buy feed from a dis | 179 |
Compare: | 180 |
A consumer purchased a can of olives. The label in | 180 |
2.Express Warranty by Description of the Goods | 180 |
A description of the goods creates an express warr | 180 |
Examples: | 180 |
(1) A buyer purchased a backhoe from a dealer. Cri | 180 |
(2) A phone company purchased cables from a manufa | 181 |
3.Express Warranty by Sample or Model | 181 |
If a sample or model becomes part of the basis of | 181 |
Example: | 181 |
A homeowner contracted with a builder to install r | 181 |
Compare: | 181 |
A homeowner contracted to purchase windows from a | 181 |
4.Affirmation of the Goods’ Value or the Seller’s Op | 182 |
Two types of statements cannot create an express w | 182 |
Note: Statements that a good is the best, the fine | 182 |
Examples: | 182 |
(1) A consumer purchased a motorcycle from a deale | 182 |
(2) A manufacturer produced, marketed, and sold en | 182 |
Compare: | 183 |
A manufacturer produced and sold infant-care produ | 183 |
5.Advertisements as Creating Express Warranties | 183 |
An advertisement, like any other representation by | 183 |
6.Whether an Affirmation, Promise, Description, Mode | 183 |
Generally, to create an express warranty, a repres | 183 |
7.Express Warranties and Formal Words of Warranty or | 184 |
For an express warranty to arise, the seller need | 184 |
8.Seller’s Intent to Create an Express Warranty | 184 |
For an express warranty to arise, the seller need | 184 |
B.Warranty of Title and Warranties against Infringem | 184 |
In a contract for the sale of goods, § 2-312 impos | 184 |
1.Warranty of Title: Majority Approach | 184 |
In a sales contract, the seller warrants that (1) | 184 |
2.Warranty of Title: Minority Approach | 184 |
A minority of courts seem to hold that the warrant | 184 |
Examples: | 184 |
(1) A thief stole a valuable diamond ring from a w | 184 |
(2) An airplane dealer leased a plane from a manuf | 185 |
Note: Under the minority approach, the dealer did | 185 |
a.Time of Breach of Warranty of Title | 185 |
The warranty of title is breached, if at all, when | 185 |
b.The Warranty of Title and Encumbrances | 185 |
Again, the warranty of title assures the buyer tha | 185 |
c.Excluding or Modifying the Warranty of Title | 186 |
The parties may exclude or modify the warranty of | 186 |
i.Language Excluding or Modifying the Warranty of Ti | 186 |
Merely selling the goods “as is” is not sufficient | 186 |
ii.Circumstances Excluding or Modifying the Warranty | 186 |
Examples of circumstances that might exclude or mo | 186 |
3.Warranties against Infringement | 186 |
Article 2 contemplates two distinct warranties aga | 186 |
a.Seller’s Warranty against Infringement | 186 |
The seller’s warranty against infringement applies | 186 |
b.Buyer’s Warranty against Infringement | 187 |
Oftentimes, a buyer will supply the seller with ma | 187 |
c.Excluding or Modifying the Warranties against Infr | 187 |
The warranties against infringement are far easier | 187 |
C.Implied Warranty of Merchantability | 187 |
Perhaps the most consequential warranty in all of | 187 |
1.Nonspecialized Sellers and Sealed Containers | 187 |
Some cases hold that the implied warranty of merch | 187 |
2.Serving Food or Drink to Be Consumed Either on or | 188 |
For purposes of the implied warranty of merchantab | 188 |
3.Requirements for Merchantability | 188 |
Merchantable does not mean perfect. Indeed, the es | 188 |
under the contract description, pass without objec | 188 |
if the goods are fungible, be of average, fair qua | 188 |
be fit for the ordinary purposes for which goods o | 188 |
run of even kind, quantity, and quality among all | 188 |
be adequately labeled, packaged, and contained as | 188 |
conform to any promises or affirmations of fact on | 188 |
[U.C.C. § 2-314(2) (1951); Federal Signal Corp. v. | 188 |
a.Passing without Objection in the Trade under the C | 188 |
The requirement that goods pass without objection | 188 |
Examples: | 189 |
(1) A farmer contracted to buy thousands of walnut | 189 |
(2) A service-station operator contracted to purch | 189 |
b.Fitness for the Ordinary Purposes for Which the Go | 189 |
Perhaps the most important and heavily litigated r | 189 |
i.Factors in Determining Whether Goods Are Fit for T | 190 |
Courts consider many factors in determining whethe | 190 |
are as safe as the ordinary user would reasonably | 190 |
conform to industry or government standards; | 190 |
are marketable or usable; and | 190 |
are of average quality. | 190 |
[See 2 Hawkland UCC Series § 2-314:3, Westlaw (dat | 190 |
ii.Whether the Goods Are Safe for Their Ordinary Purp | 190 |
In general, for a product to be fit for its ordina | 190 |
Example: | 190 |
A corporation manufactured and sold various luxury | 190 |
iii.Whether the Goods Conform to Government or Industr | 191 |
Whether the goods conform to industry or governmen | 191 |
iv.Whether the Goods Are Marketable or Usable | 191 |
Of course, a crucial factor in evaluating whether | 191 |
v.Whether the Goods Are of Average Quality | 191 |
In evaluating whether the goods are fit for their | 191 |
vi.Ordinary Purpose v. Particular Purpose | 192 |
In applying the implied warranty of merchantabilit | 192 |
Example: | 192 |
A Little League baseball promoter purchased a ship | 192 |
c.Running of Even Kind, Quantity, and Quality among | 192 |
Again, for goods to be merchantable, they must run | 192 |
d.Adequate Labeling, Packaging, and Containers | 192 |
For goods to be merchantable, they must feature an | 192 |
e.Conforming to Any Affirmations of Fact or Promises | 193 |
Regardless of whether the contract requires any la | 193 |
Note: In rare cases, an affirmation of fact or pro | 193 |
f.Other Implied Warranties Arising from Course of De | 193 |
Unless excluded or modified under § 2-316, course | 193 |
4.Tort Law and the Implied Warranty of Merchantabili | 193 |
As alluded to above, the implied warranty of merch | 193 |
privity, | 194 |
the statute of limitations, | 194 |
damages, and | 194 |
precisely what the plaintiff must prove. | 194 |
[See 2 Hawkland UCC Series § 2-314:6, Westlaw (dat | 194 |
a.Privity and Products Liability | 194 |
There is controversy over whether, to prevail on a | 194 |
Note: Privity is irrelevant under a theory of negl | 194 |
b.Statute of Limitations in Products-Liability Cases | 194 |
Article 2’s statute of limitations is typically fo | 194 |
c.Damages Recoverable in Products Liability | 195 |
In tort, a products-liability plaintiff may typica | 195 |
d.What the Plaintiff Must Prove to Recover in Produc | 195 |
The intricacies of negligence and strict products | 195 |
5.Time of Breach of Implied Warranty of Merchantabil | 195 |
The implied warranty of merchantability is breache | 195 |
6.Proving the Existence of a Defect and the Implied | 195 |
In some courts, for the plaintiff to prove a breac | 195 |
7.Knowledge of Defect at the Time of Sale as a Limit | 196 |
Some courts hold that a plaintiff cannot recover f | 196 |
8.Plaintiff’s Conduct as a Limitation on Recovery | 196 |
Ordinarily, the plaintiff’s conduct, such as contr | 196 |
misuse of the goods, at least if unforeseeable; | 196 |
failure to follow suitably conspicuous and clear i | 196 |
substantially altering the goods; or | 196 |
continued use of the goods, even after she knows t | 196 |
[2 Hawkland UCC Series § 2-314:5, Westlaw (databas | 196 |
9.Buyer’s Specifications as a Limitation on Recovery | 196 |
The buyer may be unable to recover for breach of t | 196 |
D.Implied Warranty of Fitness for a Particular Purpo | 197 |
Section 2-315 sets forth yet another implied warra | 197 |
1.Seller’s Merchant Status as Irrelevant to the Impl | 197 |
As mentioned, the implied warranty of merchantabil | 197 |
2.Buyer’s Particular Purpose for the Goods | 197 |
The implied warranty of fitness for a particular p | 197 |
Example: | 197 |
A mountain climber went to a shoe store, where she | 197 |
3.Seller’s Reason to Know of the Buyer’s Particular | 198 |
For the implied warranty of fitness for a particul | 198 |
Example: | 198 |
A small manufacturer of electrical components cont | 198 |
4.Requirement That the Buyer Actually Rely on the Se | 198 |
For the implied warranty of fitness for a particul | 198 |
Example: | 198 |
A contractor sought to purchase several tractors, | 198 |
5.Determining Whether the Goods Are Fit for the Buye | 199 |
In determining whether the goods are fit for the b | 199 |
6.Limitations on Recovery for Breach of Warranty of | 199 |
The implied warranty of fitness for a particular p | 199 |
disclaimer, | 199 |
the privity requirement (in some jurisdictions), a | 199 |
the plaintiff’s conduct. | 199 |
[See 2 Hawkland UCC Series § 2-315:4, Westlaw (dat | 199 |
E.Excluding and Modifying Warranties | 199 |
Section 2-316 sets forth the rules by which partie | 199 |
Note: Overriding federal law, such as the Magnuson | 199 |
1.Excluding or Modifying Express Warranties | 200 |
To the extent reasonable, any words or conduct rel | 200 |
Note: In actual practice, many cases have held tha | 200 |
a.Common Language Tending to Negate or Limit Warrant | 200 |
Examples of common language tending to negate or l | 200 |
language excluding “all warranties, express or imp | 200 |
language indicating that the goods are sold “as is | 200 |
language indicating that “no person has authority | 200 |
language stating that the contract contains “no ex | 200 |
a statement that “There are no warranties which ex | 200 |
[See U.C.C. § 2-316(2)-(3)(a) (1951); 2 Hawkland U | 200 |
Example: | 201 |
A motorcyclist wore a helmet while riding his moto | 201 |
2.Excluding or Modifying the Implied Warranty of Mer | 201 |
In general, there are two ways to exclude or modif | 201 |
a.Excluding or Modifying the Implied Warranty of Mer | 201 |
One way to disclaim the implied warranty of mercha | 201 |
Example: | 201 |
A buyer contracted to purchase a highway grinder f | 201 |
Compare: | 202 |
A buyer contracted to purchase large quantities of | 202 |
b.Excluding or Modifying the Implied Warranty of Mer | 202 |
The second way to exclude or modify the implied wa | 202 |
Note: Technically, “as is” or similar language nee | 202 |
3.Excluding or Modifying the Implied Warranty of Fit | 202 |
As with the implied warranty of merchantability, t | 203 |
a.Excluding or Modifying the Implied Warranty of Fit | 203 |
One way for the seller to exclude or modify the im | 203 |
b.Excluding or Modifying the Implied Warranty of Fit | 203 |
As with the implied warranty of merchantability, t | 203 |
4.Conspicuous Defined | 203 |
In the UCC, a term is conspicuous if it is “so wri | 203 |
a.Examples of Conspicuous Text | 204 |
Terms are generally conspicuous if, for instance, | 204 |
5.Buyer’s Examination as Excluding Implied Warrantie | 204 |
Special rules apply if the buyer, before entering | 204 |
Note: As the cases cited in the following two exam | 204 |
Example: | 204 |
A buyer contracted to purchase a puppy from a sell | 204 |
Compare: | 205 |
A buyer sought to purchase an airplane from a sell | 205 |
a.Buyer’s Refusal to Examine the Goods | 205 |
For the buyer to refuse to examine the goods, it i | 205 |
6.Excluding or Modifying Implied Warranties by Cours | 205 |
Notwithstanding the rules discussed above, the imp | 205 |
F.Conflicting Warranties | 206 |
A given contract may bear multiple warranties. For | 206 |
1.Rules to Determine the Parties’ Intent Concerning | 206 |
If it is unreasonable to construe multiple warrant | 206 |
exact or technical specifications prevail over bot | 206 |
a sample taken from a bulk in existence prevails o | 206 |
an express warranty displaces the implied warranty | 206 |
the implied warranty of fitness for a particular p | 206 |
[U.C.C. § 2-317, cmt. 3 (1951).] | 206 |
2.Estoppel as Against the Seller | 206 |
The abovementioned rules do not apply if the selle | 206 |
Example: | 206 |
A metropolitan transportation authority contracted | 206 |
contract expressly warranted that the manufacturer | 207 |
VIII.Remedies | 207 |
Part 7 of Article 2 sets forth most of the seller’ | 207 |
A.Special Remedies for Particular Contexts | 207 |
Some of Article 2’s remedial provisions apply in s | 207 |
1.Seller’s Remedies on the Buyer’s Insolvency | 207 |
Section 2-702 affords the seller various remedies | 207 |
a.Insolvency | 207 |
In the UCC, a party is insolvent if the party (1) | 207 |
b.Seller’s Right to Refuse to Deliver Except for Cas | 208 |
As mentioned, upon discovering the buyer’s insolve | 208 |
Example: | 208 |
A manufacturer contracted to produce and package n | 208 |
c.Seller’s Right to Reclaim the Goods if the Buyer H | 208 |
If the buyer receives goods on credit while insolv | 208 |
i.Requirement of Buyer’s Possession and Identificati | 209 |
For the seller to reclaim the goods, the goods gen | 209 |
ii.Misrepresentation of Solvency | 209 |
For a misrepresentation of solvency to obviate the | 209 |
iii.Seller’s Right of Reclamation if Buyer Is in Bankr | 209 |
If the buyer is in bankruptcy, it is federal bankr | 209 |
iv.Exclusivity of Reclamation | 209 |
If the seller successfully reclaims the goods, the | 209 |
v.Priority of Seller’s Right of Reclamation | 209 |
The seller’s right of reclamation is subject to th | 209 |
2.Liquidated Damages | 210 |
Broadly speaking, a liquidated-damages provision s | 210 |
a.Contractual Language Addressing the Reasonableness | 210 |
Contracts often include language addressing the fa | 210 |
b.Anticipated or Actual Harm Flowing from the Breach | 210 |
A liquidated-damages provision must be reasonable | 210 |
Example: | 211 |
A software developer licensed a software product t | 211 |
Compare: | 211 |
A buyer placed successful bids for two mobile home | 211 |
c.Difficulty of Proving Loss | 211 |
A liquidated-damages amount must be reasonable in | 211 |
Example: | 211 |
A software developer licensed a software product t | 211 |
d.Inconvenience or Infeasibility of Otherwise Procur | 212 |
A liquidated-damages amount must be reasonable in | 212 |
e.Result if Liquidated-Damages Provision Is Unenforc | 212 |
If a liquidated-damages provision is unenforceable | 212 |
3.Breaching Buyer’s Restitution | 212 |
If the seller justifiably refuses to deliver the g | 212 |
a.Seller’s Right to Offset Damages against Breaching | 212 |
Even if the breaching buyer is entitled to restitu | 212 |
Example: | 213 |
A consumer contracted to buy a pair of eyeglasses | 213 |
b.Breaching Buyer’s Restitution if Seller Has Receiv | 213 |
Sometimes, the seller receives payment in goods, n | 213 |
B.Seller’s Remedies | 213 |
Section 2-703 affords the seller various remedies | 213 |
1.Seller’s General Remedies | 214 |
The seller’s remedies for the buyer’s breach inclu | 214 |
withholding delivery of the goods, | 214 |
cancelling the contract, | 214 |
identifying goods to the contract despite the brea | 214 |
stopping delivery by a bailee under § 2-705, | 214 |
reselling the goods and recovering damages from th | 214 |
recovering damages for nonacceptance under § 2-708 | 214 |
bringing an action for the price in a proper case | 214 |
[U.C.C. § 2-703 (1951); 2 Hawkland UCC Series § 2- | 214 |
a.Seller’s Right to Withhold Delivery of the Goods | 214 |
If the buyer breaches the contract as to goods not | 214 |
Note: Section 2-612 controls the seller’s entitlem | 214 |
b.Seller’s Right to Cancel the Contract | 215 |
Generally, if the buyer breaches the contract, the | 215 |
2.Seller’s Right to Identify Conforming Goods | 215 |
Certain of the seller’s remedies require that the | 215 |
3.Seller’s Options Regarding Unfinished Goods | 215 |
Exercising reasonable commercial judgment, and to | 215 |
a.Requirement That Seller’s Actions Regarding Unfini | 215 |
As mentioned, § 2-704 affords the seller various o | 215 |
Regardless of what the seller elects to do here, h | 216 |
b.Deciding Whether to Complete Manufacture if Goods | 216 |
Oftentimes, it is commercially reasonable for the | 216 |
Example: | 216 |
A cruise line placed orders for custom leather gif | 216 |
4.Seller’s Right to Stop Delivery of Goods in a Bail | 216 |
If the buyer breaches the contract, the seller may | 216 |
a.Seller with a Right to Stop Delivery v. Transferee | 217 |
Generally, the seller’s right to stop delivery wil | 217 |
b.Duration of Seller’s Right to Stop Delivery | 217 |
The seller may typically stop delivery until the g | 217 |
the buyer receives the goods; | 217 |
a bailee, other than a carrier, acknowledges to th | 217 |
a carrier acknowledges to the buyer that the carri | 217 |
a negotiable document of title covering the goods | 217 |
[U.C.C. § 2-705(2) (1951); 2 Hawkland UCC Series § | 217 |
i.A Carrier Acknowledging Goods by Acting as a Wareh | 217 |
As mentioned, the seller’s right to stop delivery | 217 |
ii.Shipment to the Buyer’s Designated Subpurchaser | 218 |
If the seller ships the goods to the buyer’s desig | 218 |
c.Notification Requirement to Stop Delivery | 218 |
To stop delivery, the seller must furnish notifica | 218 |
d.Bailee’s Obligation to Obey Stop Order | 218 |
Generally, once the seller properly notifies the b | 218 |
e.Result of Seller’s Effective Stoppage of Delivery | 218 |
If the seller effectively stops delivery under § 2 | 218 |
5.Resale by Seller | 218 |
One of the seller’s principal remedies, if not the | 218 |
a.Seller’s Damages on Proper Resale | 218 |
The seller must implement the resale in good faith | 218 |
manner. Having done so, the seller may recover res | 219 |
Examples: | 219 |
(1) A retailer ordered a shipment of widgets from | 219 |
(2) A retailer ordered a shipment of widgets from | 219 |
i.Result if Seller Resells the Goods for More Than t | 219 |
The seller is not accountable to the buyer for any | 219 |
Example: | 220 |
A retailer ordered a shipment of widgets from a ma | 220 |
1)Rule if a Buyer or a Person in the Position of a S | 220 |
As discussed below, if a buyer rightfully rejects | 220 |
ii.Resale Damages and the Breaching Buyer’s Right to | 220 |
As discussed above, the breaching buyer may have a | 220 |
Example: | 221 |
A retailer ordered widgets from a manufacturer. Th | 221 |
b.Implementing the Resale | 221 |
Except as otherwise provided in § 2-706, and unles | 221 |
i.Resale of Future Goods | 221 |
Resale does not require that, at the time of breac | 221 |
ii.Public Sale v. Private Sale | 221 |
For purposes of resale, a public sale is one by au | 221 |
iii.Rules for Resale by Private Sale | 221 |
If the resale is by private sale, the seller must | 221 |
iv.Resale by Public Sale | 222 |
In the case of resale by public sale, special rule | 222 |
1)Requirement of Identified Goods in a Resale by Pub | 222 |
In a resale by public sale, the general rule is th | 222 |
2)Place of Resale by Public Sale | 222 |
If reasonably available, a resale by public sale m | 222 |
3)Notice Requirement for Resale by Public Sale | 222 |
As a general rule, the seller must give the buyer | 222 |
4)Rules if Public Resale Is to Occur at a Place Othe | 222 |
If the public sale is to occur somewhere other tha | 222 |
5)Seller’s Right to Buy at a Public Resale | 223 |
At a resale by public sale, the seller may bid on | 223 |
c.Rights of a Good-Faith Purchaser at a Resale | 223 |
If a purchaser at a resale buys the goods in good | 223 |
d.Rule That All Aspects of the Resale Must Be Commer | 223 |
As mentioned, all aspects of the resale must be co | 223 |
Example: | 223 |
A popcorn manufacturer contracted to buy corn from | 223 |
Compare: | 224 |
A Minnesota retailer contracted to purchase heatin | 224 |
i.Commercial Reasonableness and the Timing of the Re | 224 |
Perhaps the most important aspect of commercial re | 224 |
6.Person in the Position of a Seller | 224 |
Person in the position of a seller is a term of ar | 224 |
a.Remedies Available to a Person in the Position of | 225 |
Under § 2-707(2), a person in the position of a se | 225 |
7.Seller’s Damages for Buyer’s Nonacceptance or Repu | 225 |
Section 2-708 sets forth what is generally the def | 225 |
a.General Damages Formula under § 2-708 | 225 |
The damages formula under § 2-708 operates virtual | 225 |
Note: The express language of § 2-708 refers to th | 226 |
b.Determining Market Price | 226 |
Section 2-723 affords guidance in determining the | 226 |
i.Market Price in the Case of Anticipatory Repudiati | 226 |
If the basis for the breach is anticipatory repudi | 226 |
ii.Rule if Evidence of Price Prevailing at the Design | 226 |
Article 2 refers to market price in multiple provi | 226 |
1)Rule if Evidence of Market Price at Designated Pla | 226 |
If evidence of the market price at the designated | 226 |
2)Rule if Evidence of Market Price at Designated Tim | 227 |
If evidence of the market price at the designated | 227 |
iii.Using Other Reasonable Methods to Determine Market | 227 |
The rules in § 2-723 are not intended to preclude | 227 |
8.Seller’s Lost Profits | 227 |
In appropriate cases, the seller may recover the p | 227 |
a.Calculating Damages Based on Lost Profits | 227 |
There is something of a formula to calculate damag | 227 |
Examples: | 228 |
(1) A manufacturer contracted to sell an x-ray mac | 228 |
(2) A manufacturer contracted to sell an x-ray mac | 228 |
b.The Lost-Volume Seller | 228 |
In the so-called lost-volume-seller scenario, the | 228 |
i.Requirements to Recover Lost Profits as a Lost-Vol | 229 |
To recover lost profits as a lost-volume seller, t | 229 |
1)Capacity to Make an Additional Sale | 229 |
To recover lost profits as a lost-volume seller, t | 229 |
2)Profitability of Making Both Sales | 229 |
For a seller to recover lost profits as a lost-vol | 229 |
3)Probability of Making Additional Sale but for Buye | 229 |
To recover lost profits as a lost-volume seller, t | 229 |
Example: | 229 |
A carpet manufacturer had 2,000 identical carpets | 229 |
ii.Due Allowance for Resale Proceeds and the Lost-Vol | 230 |
As mentioned, the damages formula for lost profits | 230 |
Note: The breaching buyer’s entitlement to credit | 230 |
Example: | 230 |
A manufacturer contracted to sell a completed x-ra | 230 |
Compare: | 230 |
A manufacturer contracted to sell an x-ray machine | 230 |
c.Lost Profits for the Middleman or Jobber | 231 |
Another common scenario in which courts award lost | 231 |
Example: | 231 |
A petroleum wholesaler contracted to sell petroleu | 231 |
d.Lost Profits and Specially Manufactured Goods | 231 |
Yet another situation in which courts commonly awa | 231 |
e.Lost Profits and the Sale of Components | 231 |
Courts may award lost profits in the case of a sel | 231 |
9.Seller’s Action for the Price | 232 |
In limited circumstances, § 2-709 permits a seller | 232 |
a.Requirements for Seller to Recover the Price | 232 |
The seller’s recovering the price entails two step | 232 |
i.Recovering the Price if the Buyer Has Accepted the | 232 |
The seller may recover the price if (1) the buyer | 232 |
ii.Recovering the Price if Conforming Goods Are Lost | 232 |
Assuming the buyer has failed to pay at least part | 232 |
Example: | 233 |
A diamond distributor contracted to sell diamonds | 233 |
iii.Recovering the Price as to Identified Goods That t | 233 |
Assuming the buyer has failed to pay all or some o | 233 |
Example: | 233 |
A manufacturer produced display gondolas for a lar | 233 |
b.Seller’s Responsibility for the Goods upon Suing f | 233 |
Once the seller sues for the price, the seller mus | 233 |
(1) identified to the contract and (2) still in th | 234 |
c.Result if Seller Is Not Entitled to the Price | 234 |
If the seller’s action for the price fails (i.e., | 234 |
10. Seller’s Incidental Damages | 234 |
Section 2-710 lets the seller recover incidental d | 234 |
a.Seller’s Entitlement to Incidental v. Consequentia | 234 |
As opposed to incidental damages, most courts hold | 234 |
C.Buyer’s Remedies for Goods Not Accepted | 234 |
Section 2-711 lists the buyer’s remedies as to goo | 235 |
1.Buyer’s Right to Cancel the Contract | 235 |
As mentioned, the buyer may generally cancel the c | 235 |
2.Cover | 235 |
In Article 2, the term cover refers to the buyer’s | 235 |
a.Cover without Unreasonable Delay | 235 |
The requirement that the buyer implement cover wit | 235 |
b.Commercially Reasonable Cover | 236 |
For cover to be commercially reasonable, the cover | 236 |
Examples: | 236 |
(1) A church contracted with a distributor to purc | 236 |
(2) A farmer contracted to sell sunflower seeds to | 236 |
Compare: | 237 |
An agricultural company contracted to buy a certai | 237 |
c.Cover Damages | 237 |
If the buyer properly covers, she may recover from | 237 |
Examples: | 237 |
(1) A buyer contracted to purchase widgets from a | 237 |
(2) A buyer contracted to purchase widgets from a | 237 |
Compare: | 238 |
A buyer contracted to purchase widgets from a sell | 238 |
3.Buyer’s Security Interest in the Goods | 238 |
If the buyer rightfully rejects the goods or right | 238 |
a.Scope of Buyer’s Security Interest in the Goods | 238 |
The buyer’s security interest in the goods does no | 238 |
Example: | 239 |
A concrete supplier contracted to buy a concrete b | 239 |
b.Buyer’s Security Interest and Its Relationship to | 239 |
The buyer will not be deemed to accept the goods j | 239 |
c.Priority of Buyer’s Security Interest | 239 |
Under UCC Article 9, the buyer’s security interest | 239 |
4.Buyer’s Rights on Seller’s Nondelivery or Repudiat | 239 |
Section 2-713 sets forth the general damages formu | 239 |
a.General Damages Formula under § 2-713 | 240 |
The general damages formula under § 2-713 is (1) t | 240 |
Examples: | 240 |
(1) A buyer contracted to buy widgets from a selle | 240 |
(2) A buyer contracted to buy widgets from a sell | 240 |
Compare: | 241 |
A buyer contracted to buy widgets from a seller fo | 241 |
b.Market Price in § 2-713 | 241 |
In § 2-713, the relevant market price is that for | 241 |
5.Buyer’s Right to Specific Performance | 241 |
In Article 2, only the buyer can receive specific | 241 |
a.Unique Goods | 241 |
Literally speaking, unique means one of a kind. Ho | 241 |
Example: | 242 |
A chemical manufacturer contracted to sell calcine | 242 |
b.Other Proper Circumstances | 242 |
Neither § 2-716 nor its official comments articula | 242 |
c.Discretionary Nature of Specific Performance | 242 |
Even if the requirements for specific performance | 242 |
i.Difficulty of Proving Damages with Reasonable Cert | 243 |
One factor in assessing the adequacy of money dama | 243 |
Example: | 243 |
A steel manufacturer contracted to sell, to a dist | 243 |
ii.Difficulty of Obtaining Substitute Performance via | 243 |
Another factor in assessing the adequacy of money | 243 |
Example: | 243 |
A farmer contracted to sell 10,000 bales of cotton | 243 |
iii.Likelihood That a Damages Award Could Not Be Colle | 243 |
Still another factor in assessing the adequacy of | 243 |
d.Imposing Terms and Conditions on Specific Performa | 244 |
If the court grants specific performance, the cour | 244 |
6.Buyer’s Right to Replevin | 244 |
Broadly speaking, replevin refers to a lawsuit to | 244 |
a.Unavailability or Futility of Cover | 244 |
The buyer has a right of replevin against the sell | 244 |
Example: | 244 |
A private aviator contracted to purchase an identi | 244 |
b.Replevin as to Goods Shipped under Reservation | 245 |
The buyer has a right of replevin as to identified | 245 |
c.Nonexclusive Nature of Replevin as a Remedy | 245 |
The remedy of replevin applies in addition to both | 245 |
7.Buyer’s Right to Recover the Goods under § 2-502 | 245 |
Under § 2-502, the buyer may acquire the goods fro | 245 |
a.Result if Buyer Identified the Goods to the Contra | 245 |
If the buyer is the one who identified the goods t | 245 |
b.Requirement That Seller Become Insolvent within 10 | 245 |
If the basis for the buyer’s right to recover the | 245 |
c.Vesting of Buyer’s Right to Recover Consumer Goods | 246 |
In the case of consumer goods, the buyer’s right t | 246 |
D.Buyer’s Damages for Breach Regarding Accepted Good | 246 |
Section 2-714 governs the buyer’s damages if the b | 246 |
1.General Measure of Direct Damages | 246 |
Broadly speaking, direct damages equal the differe | 246 |
Note: Crucially, direct, incidental, and consequen | 246 |
Example: | 247 |
A general contractor purchased steel casings from | 247 |
2.Direct Damages for Breach of Warranty | 247 |
Section 2-714 furnishes a nonexclusive measure of | 247 |
a.Special Circumstances Indicating Proximate Damages | 247 |
In breach-of-warranty cases, special circumstances | 247 |
E.Buyer’s Incidental and Consequential Damages | 248 |
In appropriate cases, Article 2 permits the buyer | 248 |
1.Buyer’s Incidental Damages | 248 |
The definition of the buyer’s incidental damages i | 248 |
a.Expenses of Handling Nonconforming Goods | 248 |
The buyer’s incidental damages include expenses th | 248 |
Example: | 248 |
A landscaper contracted to purchase trees from a f | 248 |
b.Expenses of Implementing Cover | 249 |
Incidental damages include expenses of implementin | 249 |
Example: | 249 |
Corporation A sold carpeting mats. Corporation A g | 249 |
c.Catchall Category of Incidental Damages | 249 |
Apart from expenses of handling nonconforming good | 249 |
Example: | 249 |
A broker contracted to buy coal from a mining comp | 249 |
2.Buyer’s Consequential Damages | 250 |
In Article 2, only the buyer may recover consequen | 250 |
a.Consequential Damages Arising from the Buyer’s Gen | 250 |
Per § 2-715(2)(a), consequential damages include l | 250 |
Note: If the buyer is in the business of reselling | 250 |
Examples: | 250 |
(1) A broker of industrial machines entered a cont | 250 |
(2) A miller owned a mill that could not operate w | 250 |
i.Litigation Expenses and Liability Arising from the | 251 |
A third party may bring claims against the buyer d | 251 |
Example: | 251 |
A broker of industrial machines entered a contract | 251 |
ii.Loss Not Reasonably Preventable by Cover or Otherw | 251 |
Consequential damages arising from the buyer’s for | 251 |
Examples: | 252 |
(1) A manufacturer contracted to buy, from a deale | 252 |
(2) A broker contracted to purchase, from a manufa | 252 |
1)Time for Buyer to Mitigate Damages | 252 |
The buyer must generally make reasonable efforts t | 252 |
Example: | 253 |
A physician contracted to purchase an x-ray machin | 253 |
2)Reasonable Efforts to Mitigate Losses | 253 |
The buyer need only make reasonable efforts to mit | 253 |
Example: | 253 |
A collector contracted to purchase a collection of | 253 |
b.Consequential Damages as Including Personal Injury | 254 |
The buyer’s consequential damages include personal | 254 |
c.Distinguishing among Direct, Incidental, and Conse | 254 |
It is vital to distinguish among direct, incidenta | 254 |
Example: | 254 |
A restauranteur contracted to buy a commercial-gra | 254 |
d.Proving Consequential Damages with Reasonable Cert | 255 |
To recover consequential damages, the buyer must p | 255 |
i.Proof of Lost Profits | 255 |
In the seller’s case, proving lost profits is typi | 255 |
Example: | 255 |
An entrepreneur engaged a consultant to help him e | 255 |
F.Deducting Damages from the Price | 256 |
As discussed above, as to any goods accepted, the | 256 |
1.Deducting Damages from the Price under § 2-717 v. | 256 |
The self-help remedy of deducting damages from the | 256 |
2.Notice Requirement to Deduct Damages from the Pric | 256 |
To exercise the self-help remedy of deducting the | 256 |
G.Limitation or Modification of Remedies in the Agre | 256 |
As a general rule, and subject to the rules on liq | 256 |
(1) set forth remedies instead of or in addition t | 257 |
1.Limitation or Modification of Remedies v. Disclaim | 257 |
It is crucial not to confuse (1) a limitation or m | 257 |
2.Limitation or Modification of Remedies in the Agre | 257 |
Unlike warranty disclaimers, Article 2 imposes no | 257 |
3.General Rule That Resort to a Limited, Modified, o | 257 |
Typically, if the agreement contemplates a limited | 257 |
4.Exclusive or Limited Remedy That Fails of Its Esse | 257 |
Sometimes, if the agreement provides for an exclus | 257 |
Note: In determining whether a limited or exclusiv | 258 |
a.Limitation to Repair or Replacement of Defective G | 258 |
A quite common remedy limitation is (1) excluding | 258 |
b.Failure of Essential Purpose and Unforeseen Circum | 258 |
Generally, the circumstances leading to failure of | 258 |
Example: | 258 |
A yacht manufacturer contracted to buy gel coating | 258 |
5.Limiting or Excluding Consequential Damages | 259 |
The agreement may generally limit or exclude conse | 259 |
Note: Section 2-719(3) expressly states that limit | 259 |
Example: | 259 |
A manufacturer sold spinal cord implants to assist | 259 |
6.Rule if the Agreement Both Limits Remedies and Exc | 260 |
Oftentimes, an agreement will purport to both limi | 260 |
H.Statute of Limitations in Article 2 | 260 |
In general, a cause of action for breach of any co | 260 |
1.When a Cause of Action Accrues in Article 2 | 260 |
Generally, the cause of action accrues when the br | 260 |
a.Whether Warranty Expressly Extends to the Goods’ F | 260 |
Generally, the warranty expressly extends to the g | 260 |
Example: | 261 |
A retailer contracted to buy widgets from a manufa | 261 |
i.Implied Warranties as Not Extending to Future Perf | 261 |
Courts generally hold that implied warranties (e.g | 261 |
b.Special Rules for Goods Sold through Distributive | 261 |
In determining when a cause of action accrues, spe | 261 |
c.Accrual in Cases of Anticipatory Repudiation | 261 |
If the breach consists of an anticipatory repudiat | 261 |
2.Applicability of Different Statutes of Limitation | 262 |
If the contract is one for the sale of goods, Arti | 262 |
3.Extension of Time if Case Is Dismissed Other Than | 262 |
Article 2’s statute of limitations is generally ex | 262 |
4.Tolling of the Statute of Limitations | 262 |
Article 2 does not alter the law on tolling of the | 262 |
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