UCC Outline

I. The UCC
a. Applies to every state except for LA.

II. Offer & Acceptance

a. When looking for language and specific terms to describe an offer, 2-204
of the UCC says that specific price terms are not required by the UCC.
You can enter into a K even without the terms being ironed out.

b. UCC 2-206: a purchase order can be coupled by any reasonable medium

including performance.
i. Any reasonable manner of acceptance is intended to be regarded
as available unless the offeror has made quite clear that it will not
be acceptable.
ii. The beginning of performance by an offeree can be effective as
acceptance so as to bind the offeror only if followed within a
reasonable time by notice to the offeror. Such a beginning of
performance must unambiguously express the offeree's intention to
engage himself. For the protection of both parties it is essential that
notice follow in due course to constitute acceptance. Nothing in this
section however bars the possibility that under the common law
performance begun may have an intermediate effect of temporarily
barring revocation of the offer, or at the offeror's option, final effect
in constituting acceptance.

III. Consideration
a. Firm Offers
i. 2-204(1) Says that a firm offer must be made by a merchant
ii. Oral offers won’t be accepted. It must be a written offer and be
signed.
iii. It must give assurance to the offeree that it will be held open.
iv. If the assurance is contained on a form supplied by the offeree, the
offeror must sign the assurance separately. The purpose of this is
to ensure that the offeror was aware of the term and is not bound
by an assurance of irrevocability hidden in the offeree’s boilerplate.
v. Firm offers are valid without consideration and irrevocable for
time stated (or up to 3 months) and must be signed (company
letterhead will do) or any other symbol. If there is
consideration then the time limits can vary but under the UCC,
consideration is not needed.
IV. Battle of the Forms
a. Must be for the sale of goods, not services…
1. Princess Cruises
If the contract is primarily for goods, then UCC applies. If it
is primarily for services, then the common law applies.
Three factors significant is determining the nature of
contract:
1) Language of the contract
2) Nature and business of the supplier and
3) The intrinsic worth of the materials

b. Merchandise transactions occur on standard forms that may have

conflicting or different information.

c. UCC 2-207 (1): Giving the merchant the last shot is unfair…. This
overturns the mirror image & last shot rules…
1. Supplier’s acknowledgement of purchaser’s offer is an acceptance
rather than counteroffer even though it includes additional or different
terms from purchaser’s order form, unless supplier expressly conditions
acceptance on purchasers assent to those terms, and thus there is a
contract under the terms of purchaser’s offer.
2. If no agreement was reached that could constitute a contract, but
goods were ordered, shipped and paid for before dispute arose, a contract
is presumed w/ terms being those in common on both forms. Neither time
dominates.

d. UCC 2-207 (2): if supplier’s form contains additional terms (not

conflicting), these are treated as proposals. Such proposals are
considered adopted by purchaser unless:
i. ( a) the offer expressly limits acceptance to the terms of the offer;
ii. (b) they materially alter it; or --to meet this test, look for surprise or
hardship

1. Examples that materially alter the contract surprise or

hardship, if incorporated: waranties, guaranteeing deliveries,
usage of trade allows greater quantity leeways, etc.

iii. (c) notification of objection to them has already been given or is

given within a reasonable time after notice of them is received.
 --doesn't mean can't have any writings at all. Must find acceptance
to be different than counter offer.

e. Different terms: may be resolved in favor of purchaser or be dropped

under the knock-out rule, with terms supplied from the UCC.

i. Brown Machines v. Hercules

ii. P sold a machine to D. Seller's forms included indemnification, but
buyer’s forms did not. Court held that buyer made the offer and
seller's response was an acceptance. The new terms, thus, were
merely proposals that D never explicitly accepted. Since buyer
didn't expressly consent to indemnification, it's not part of the
contract.

iii. Agreements to Agree

1. There is an intent to be bound but parties haven’t
determined the material issues.
2. Courts cannot impose material terms, they must simply
enforce terms that are intended by the parties certainly.
There needs to be a workable formula for the future even
though there does not have to be specific terms.

a. Walter v. Keith
P and D were parties to a lease. Lease had an option to
extend for an additional 10 years under same terms
except for rent, which would be set to price agreed upon
by parties based on comparison with rental values and
comparative business conditions. Court held that an
agreement to agree must be sufficiently definite to enable
a court to give it exact meaning or it won't be binding.
Here, this agreement gave no indication of a meeting of
the minds and no way to determine a rental price.

3. Usually, negotiations are not binding, but when details are

very specific and are being worked out with one party, then
the language can be ambiguous. Determination to be
bound…intent is very important here.

a. Quake Construction v. United Airlines

American hired Quake to make bid specifications
accept bids and award contracts for construction of
 the expansion at O’Hare. Quake got the bid for the
project. They asked Jones to give subcontractor’s
numbers and he said he couldn’t because they
wouldn’t give them unless he knew for certain that he
signed the bid. Jones said it would prepare this bid.
However, it was not made possible. The parties
never signed and after work put into preparing for
work, Jones revokes hirement of Quake. The fact that
the parties contemplate that a formal agreement will
eventually be executed does not necessarily render
prior agreements mere negotiations where it is clear
that the ultimate contract will be substantially based
upon the same terms as the previous document.
However, parties may specifically provide that
negotiations are not binding until a formal agreement
as a condition precedent then no contract arises
unless and until that formal agreement is executed.
f. Electronic Age
i. Popular kinds of Ks:

1. Adhesion K—there is no choice to decide; take it or leave it.

2. Shrinkwrap K—when purchaser orders something and the

K is essentially in the box. The terms are seen when you get
it.
a. Brower v. Gateway
The plaintiff bought a PC from Gateway through direct
sales. The PC box contained a “shrinkwrap
agreement” which included an arbitration clause. The
plaintiff sued, claiming breach of warranty among
other things because they didn’t get the service and
support they were promised. Gateway moved to
dismiss the suit based on the arbitration clause. The
plaintiffs countered that the arbitration clause was
unconscionable. The Plaintiff’s first argument was
that the clause is invalid under §2-207.
The court explains that the clause was not material
alteration of an oral agreement but one provision of
the sole contract that existed between the parties.
 **The plaintiffs argue that the contract is
unenforceable on the grounds that the clause is
unconscionable, §2-302.

o The court explains that in NY §2-302 has two components:

1) Procedural Element, which is not satisfied here.

With this element, you look to the formation to see if one party lacked a meaningful
choice to enter into the contract,

2) Substantive element, which is satisfied here.

The prohibitive cost of arbitration costs more than the computer or what the buyer could
hope to recover. This prohibits the buyer from having any venue for adjudication, and
awkwardly favors the defendant

Court remanded for arbitration with a more affordable system.

3. Clickwrap K—the purchaser scrolls though the terms and

must click before accept.

4. Browswrap—information make available on the website.

a. Register.com v. Verio
Register the P, holds many domain names which it
doles out to companies and people wanting to
establish a website. It was given a registrar of
domain names by ICANN. They require WHOIS
information to register. They require to preserve it,
update it daily, and provide it free to the public. They
agree to the terms and conditions that state: they will
use this data only for lawful purposes and under no
circumstances will you use this data to support
transmission of unsolicited, commercial advertising or
solicitation via email. Verios developed a way to
gather the new users and spam them. Register
asked Verio to stop. Register fixed its terms to define
exactly what mass solicitation is…email, phone, and
direct mail. Verio stopped emailing but refised to
 comply with telephone and direct mail. Register was
in violation of ICANN agreement saying only email is
bad. At the time you see rules/regulations—that is the
time to reject the conditions. 3rd party beneficiary
argument is not applicable. Verio accepted before
conditons of the terms. Verio regularly submitted
inquiries. The first time Verio did this there may have
been an argument, but not after the 1,000th time.
They were not protected but not from the agreement
of Register because it got updates from it
continuously and daily. Should have known terms and
understood them. Ruling for Register.

Seller Advocate Policy Issues:

Court's reasoning from a practical view is right.
 Not hiding the rules…you're covering your bases…it's efficient and convenient for
consumers.
 There are costs to efficient distribution of computers.
 Practical considerations to not hear droning voices on phone
 Buyers still don't review contracts and terms of offers anyway, so why put the
burden on us??
 It is much more efficient than having a drafting and negotiating process. They
pass this cost saving measures to consumers.
 
Buyer advocates:
 This gives sellers the ability to make its terms whatever they want it to be.
 Can't protect themselves when there are all these terms and conditions. Sellers
may take advantage of these delayed disclosure that are one sided.

V. Statute of Frauds—2-201
a. In the UCC, this applies to the sale of goods over $500. The new version
of the UCC says that it is $5,000.
b. A signature can be anything.
c. The terms do not have to be definite in the writing.
d. Between merchants, 2-201(2) says that it is valid when one party receives
the notification of the sale and does not object within the 10 day time limit.
e. However, if parties are acting like there is a K, lack of SOF will not
invalidate this.

VI. Parole Evidence Rule

a. The UCC is more lax and says that parole rule will not bar evidence of
trade usage or prior course of dealings. Both may be used to explain or
 supplement written contract, but may not contradict express written
conditions.
i. A course of dealing—A course of dealing prior to the dealings of the
parties. 1-205(1) this deal with behavior before the contract
ii. Course of performance –Repeated actions by the parties during
which the parties are involved. This deals with parties during
contract.
VII. Warranties

a. 2-313--express warranties

b. Running shoes say they are good for running marathons..in ads etc.

c. You need to show that there is

i. 1. an affirmation of a fact of promise

ii. 2. About the goods

iii. 3. it is made by the seller to the buyer

iv. 4. it is the basis of the bargain.

d. 2-314--implied warranty of merchantability

e. Something implied by law that says they are fit for running.

f. Merchant??

i. a. Goods must be as would pass without objection in the trade.

ii. b. Fit for the purposes that you would ordinarily choose.

iii. c. No particular language or action is necessary

g. 2-315--implied warranty of fitness for a particular purpose….this

arises when the seller happens to know when seller has notice of the
particular use of the item.

h. If you tell the seller you NEED a shoe for running and someone
recommends a shoe.
 i. 1. Must take place at the time of contracting

ii. 2. Seller has reason to know of a particular purpose.

iii. 3. Buyer is relying on his or her skill

i. 2-316 covers disclaimers… very specific. Warranties can be

disclaimed…but express warranties are difficult o disclaim bc courts
want to hold advertisers liable and not promote false advertising.

Bayline Marine Co.

In the summer of 1989, John R. Crow bought a boat. When Crow
took delivery of the boat, he noticed that the boat's speed
measuring equipment, indicated that the boat's maximum speed
was 13 mph. Crow immediately returned to Tidewater to report the
problem. In 1992, Crow filed a motion for judgment alleging breach
of express warranties and implied warranties of merchantability and
fitness for a particular purpose. The court held that here was not
enough evidence sufficient for the breaches. There was no breach
of express warranty. The statements in the "prop matrixes"
provided by Bayliner did not relate to the particular boat purchased
by Crow, or to one having substantially similar characteristics. By
their plain terms, the figures stated in the "prop matrixes" referred
to a boat with different sized propellers that carried equipment
weighing substantially less than the equipment on Crow's boat. A
statement purporting to be merely the seller's opinion or
commendation of the goods does not create a warranty. Also, there
was no breach of implied warranty of merchantability. There was no
evidence addressing the standard of merchantability in the trade or
whether Crow's boat failed to meet that standard. There was no
breach of an implied warranty for a particular purpose. Crow did not
prove that he made known to the seller the particular purpose for
which the boat was required.

Caceci v. Di Canio Construction Corp.

Plaintiff Cacecis entered into a contract with defendant Di Canio
Construction Corp. for the sale and conveyance of a parcel of land
in Suffolk County on which a one-family ranch home was to be
constructed by the defendant builder for $55,000. Di Canio
guaranteed "for one year from title closing, the plumbing, heating,
and electrical work, roof and basement walls against seepage and
defective workmanship," but added that "[liability] under this
guarantee shall be limited to replacement or repair of any defects or
defective parts." Four years later in December 1981, Mary Caceci
noticed a dip in the kitchen floor. The condition was brought to
defendant's attention and he attempted to repair the house. These
 repairs did not solve the problem and the floor soon began to dip
again. It turns out the cause of the sinking foundation was its
placement on top of soil composed of deteriorating tree trunks,
wood and other biodegradable materials. The repair work to cure
the problem, which took seven months, included digging up the
entire slab foundation, removing the wood and tree trunks, and
pouring a new foundation. The judgment was affirmed. The court
applied the common law "Housing Merchant" doctrine, and held
that defendant's contract with plaintiffs contained an implied
warranty that the house would be constructed in a skillful manner
free from material defects, and that defendant had breached this
warranty by building the house upon poor soil.

VIII. Unconscionability
a. It is not defined, but is used case to case.
b. A party must make the best efforts to promote sales.
c. 2-302 says that general sales practices will be considered in determining
unconscionability.

IX. Modification
a. The UCC does not require new consideration in modifying a K. However,
the UCC still has a check….it imposes the statute of frauds and must meet
the duty of good faith.

X. Breach
a. Under UCC 2-602(1):
i. Buyer may reject any goods that do not in any respect conform to
the contract.
ii. Must, however, seasonably notify seller of his/her intent
b. UCC 2-508(1) allows seller opportunity to make a timely cure.
i. Failure to reject after reasonable opportunity for inspection is
considered acceptance.
c. UCC 2-608(1), however, allows a buyer to revoke such acceptance if:
i. Non-conformity substantially impairs its value to him, and
ii. Either he had reason to believe non-conformity would be cured by
seller or defect could not be discovered on initial inspection.
iii. Such rejection must occur a reasonable time after the defect is or
should be discovered and must occur prior to any alteration to the
goods other than that resulting from their own defect.
d. Despite losing right to reject after these remedies are expired, still can sue
for damages under express warranty for difference in value of goods in
contract and goods received. UCC 2-715.