OBE 118, Section 3, Fall 2004 Professor McKinsey Sales Contracts Now we focus on the UCC, in other words Commercial Law How the UCC governs Sales contracts. OBE 118, Section 3, Fall 2004 Professor McKinsey

A standardized law document adopted in part or in full by all states The UCC A standardized law document adopted in part or in full by all states Article 2 Governs the Sales of Goods

Goods The UCC applies to the sale of goods. Goods are things that are moveable:

Merchants If a contract involves “goods” the UCC will most likely govern the making, execution and obligations of the contract. If merchants are involved the rules of contracts will be even further changed. A merchant is one who: routinely deals in the type of goods or has special knowledge or uses those that do.

Contract Formation Under the UCC Contracts can be created without key terms such as price Acceptance does not “Any Manner that shows agreement” Writing requirement for goods greater than $500: sufficient to indicate a contract, signed by defendant. But only enforceable to quantity stated

Merchants and the UCC Merchants can use a confirming memo sent to other party to satisfy the writing requirement of the UCC “Firm Offers” between merchants create an un-revocable offer for a reasonable or specified time.

Battle of the Forms When an acceptance differs from the offer a contract can still be created if the parties intended a contract to be created. Additional terms: Different terms: .

Performance under the UCC Instead of “substantial performance” the goods must be “ ”. Buyer can inspect and can reject non-conforming goods. Seller then has a right to “ ”

Breach under the UCC Buyer can “ ” when seller “ ” Cover means to reasonably obtain substitute goods. Buyer can then collect differential costs, incidental and consequential damages. Consequential damages are easier to collect (must still be caused by the breach) Seller can also sue for breach and collect differential costs and incidental costs or sue for the contract price.

UCC Problem #1 You order 5,000 tools from a supplier for your resale business. You fax an order form on your letterhead and receive a confirmation on theirs. Your form said in fine print that the seller had to provide shipping insurance. Their form said that shipping insurance was at the option of the buyer and the buyer’s responsibility. The goods are lost in shipment and not insured. What outcome?

UCC Problem #2 Same situation. Your form said $1.91 each. Their form said $1.99 each and cited the new catalog. You receive the goods and an invoice for the higher amount. You pay the lower amount. Seller sues you. What outcome?