Formation of Sales and Lease and Internet Contracts

1
Chapter 15

• Formation of Sales and Lease and Internet
  Contracts

2
Uniform Commercial Code

• Promulgated by Commission on Uniform State Laws
• It is a suggested law
• that has been adopted, at least in part, by all
  states
• State law, though similar in all states

3
Uniform Commercial Code

• Covers contracts involving the sale of goods.
  (Article 2)
• Does not cover contracts for
• Services
• Real Property
• Why is uniformity important?
• Why more important with goods?

4
Approach to contract cases

• What is the subject matter?
• Goods?
• If no, look to common law
• If yes, the UCC takes precedence over common law
• Mixed Sales
• Part goods and part not
• How to decide which applies?

5
Mixed Sales

• Which is predominant?
• Based on this, entire contract is evaluated the
  same
• Thus, if mainly goods, the UCC applies even to
  the services portion

6
UCC General Philosophies

• Commerce is good
• Easier to form contracts than under common law
• Merchants held to a higher standard than
  nonmerchants
• Duty of good faith

7
Article 2A Leases

• When the UCC was promulgated in 1949, what could
  be leased?
• What can be leased today?
• Leases today are often an alternate form of
  purchase
• Article 2A is parallel to Article 2
• Consumer v. finance leases

8
Merchants

• Are held to a higher standard
• One who deals in the goods of the transaction
• One who holds himself out by his profession as
  having special knowledge related to the goods of
  the transaction
• One, not a merchant, who hires a broker

9
OffersOpen terms

• Open terms OK.gap-filling rules
• Pricereasonable
• Paymenttime and place buyer gets goods
• Deliverysellers place of business
• Timereasonable
• Assortmentbuyer can choose
• QuantityContract usually fails
• No contract if too much is left open

10
Open Quantity terms OK

• Requirements contract
• all we need
• Output contract
• All you produce.

11
Acceptance by Seller

• By promising to ship goods
• By shipping goods
• Conforming
• Acceptance
• Nonconforming
• Acceptance and breach
• Accommodation Shipment
• Not acceptance, but counteroffer
• Must tell buyer that it is accommodation

12
Acceptance 2 Meanings

• Acceptance of Offer
• Determines whether a contract is formed
• Acceptance of Goods
• Assumes that there is a contract, and amounts to
  whether the buyer believes they are conforming
  goods
• Conforming goods are the correct goods and are
  not defective

13
Mirror Image Rule-Different terms

• Under common law, no contract
• UCC 2 rules
• At least one nonmerchant new terms are proposed
  as additions to the contractif not agreed to,
  original terms control

14
Mirror Image Rule Both are merchants

• The new terms become part of the contract unless
• Offer limits acceptance to original terms
• Additional term materially alter
• Offeror objects within a reasonable time

15
Contract Modifications

• Under the UCC, no new consideration is needed.
• Must be in writing if, as modified, it meets the
  writing requirement

16
Statute of Frauds

• 500 or more
• Written confirmation rule
• Both are merchants
• There was an oral contract
• One confirms this in writing to the other
• Other does not object
• Writing requirement is met without the signature

17
Statute of Frauds Exceptions

• Specially manufactured Goods
• Admissions of Pleadings in Court
• Part Acceptance (of goods)

18
Parol Evidence Rule

• Evidence of earlier agreements/statements
  excluded if there is a written agreement
• Several Exceptions
• Proof of Fraud
• Gap
• Interpretation of Ambiguities

19
Parol Evidence Rule-Interpretation of Ambiguities

• UCC specifies 3 types of evidence, in priority
  order, to clear up ambiguities
• Course of performance
• These parties, in this contract
• Course of dealing
• These same parties, past contracts with each
  other
• Usage of Trade
• How used in this line of business
• Some changes in 2003 amendments

20
Contracts for International Sale of Goods

• For international contracts, much like UCC.
• Does not apply to consumer transactions
• Offers can be irrevocable without a writing
• Price (incl. how determined) must be specified
• Mirror image rule applies