Common Law UCC
Applications Everything except for goods Sale of goods
Was there a valid offer?
Agreement Both parties expressed words/ acts that a reasonable person would understand to
objectively formed manifest both parties intent to agree.
The law imputes on a person the reasonable meaning of their intentions (Zehmer and
Embry)
Parties intend to be Other party believes by accepting the offer Contract may be made in any manner
bound the contract will be formed (24). No further sufficient to show agreement, as long
manifestations of intent are necessary (26, as the behavior of the parties shows
Nebraska Seed Co) Ads are actionable as that a K has been formed. Moment of
offers if there is some language of making the contract may be
commitment, or an invitation to take action undetermined, and terms may be left
without further communication in the open (2-204)
advertisement (26, Lefkowitz)
Definiteness of terms Terms must give a basis for determining K does not fail as long as parties have
(33): intended to make a K and there is a
→ the existence of a breach reasonably certain basis for giving an
→ an appropriate remedy of breach appropriate remedy (2-204)
→ no material terms open for future
negotiations
No Misunderstanding Where parties attach different meanings to a term, there is no K (Peerless)
No Revocation K cannot be accepted if it has already been revoked (35). Revocation can be by
passage of time, rejection, counter-offer, or death/incapacity (36). Revocation does
not have to be expressed, it can happen when one party receives a manifestation of
intention not to enter into the K, including actions. (42, 43, Dickenson v. Dodds,
Arctic Cat, Rios v. Maryland)
Option Contracts Option contracts are formed when a party A written and signed offer by a
holds open a contract in exchange for merchant that assures it will be held
consideration, or a party to a unilateral K open is not revocable. May be
begins to tender their acceptance by revocable after the time stated, time
performance (25, 37) stated may not exceed three months.
(2-205)
Was there valid acceptance?
Valid Substance of Acceptance must conform to the mirror An acceptance which changes terms is
Acceptance image and last shot rules. (61, Ragland, valid unless it is conditional (operating
Ardente v. Horan) like a counter-offer). Between non
merchants, additional terms become
proposals in addition to the K.
Between merchants, these terms
become part of the offer unless:
acceptance is limited, the new terms
materially alter the K, a objection has
already been given or is given in a
reasonable time (2-207)
Valid Mode of Any manner reasonable (65) Any manner reasonable under the
Acceptance A manner is reasonable if it is customary circumstances. An offer to purchase
(65) goods for prompt or current shipment
If an offer invites acceptance by shall be construed as inviting
performance or promise, both are allowed acceptance either by a prompt promise
(62) to ship or by the prompt or current
Mailbox Rule shipment of conforming or
Acceptance of a unilateral K is by beginning non-conforming goods (2-206)
the performance (Carbolic Smoke, Peterson
x2)
Acceptance by silence: express waiver,
previous dealings, where offoree takes the
benefit and knows that compensation is
expected (69, Hobbs)
Teletype (64)
Complies with SOF MY LEGS (110) K price is $500 or more
K not to be performed in under a year (130) Includes a writing that:
Satisfactory Writing: → evidences a K
→ any writing → states a quantity
→ identifies the parties → signed by the party to be charged
→ Subject matter stated or reasonably Oral K allowed between two
ascertainable merchants if:
→ Essential terms stated with reasonable → party to be charged receives a
certainty confirmatory memo that is sufficient
→ Signature by the “party to be charged” under other writing requirements
(aka the party seeking to avoid enforcement → no objection to the memo
of the K on SOF grounds; initials are ok) Exceptions:
Exceptions: → Part performance (seller has
→ Promissory Estoppel received and accepted payment for
→ Full performance goods, or buyer has received and
→ Full performance by one party (over one accepted goods)
year category) → Admission by the party to be
→ Part performance (sale of land) charged
→ admission on court → Specially manufactured goods
(those not suitable for sale to others in
the ordinary course) (Seller must have
substantially begun manufacture of
goods or made commitment for
procurement of the goods)
→ common law exceptions may also
be used if not in conflict!
(2-201)
Acceptance was of Integrated agreement is a final expression of Fully integrated agreement: terms
fully integrated the agreement. If a writing reasonably intended by the parties as a final
agreement appears to be complete, it is taken to be expression of their agreement. No
complete unless evidence proves otherwise contradictory evidence, supplemental
(209) evidence allowed:
Fully integrated: complete and final → by evidence of course of
expression of agreement. Contradictory and performance, course of dealing, or
supplemental evidence not admissible. usage of trade, and
Partial Agreement: final in some parts but For a partially integrated agreement,
not complete. Supplemental evidence no contradictory evidence.
allowed, not contradictory Supplemental evidence allowed:
No Integration: Neither final nor complete. → by evidence of consistent
Both contradictory and supplemental additional terms, unless the court
evidence admissible. (210, Thompson v. determines that the writing was
Libbey, Pacific Gas, Trident Center) intended as a complete and exclusive
statement of the terms of the
agreement (2-202)
Ambiguity Is Where there is ambiguity, if the parties give different meaning to the ambiguity, there
Resolved is no contract (Peerless)
When any terms used to express an agreement are ambivalent and the parties
understand them in different ways, there cannot be a contract unless one of them
should have been aware of the others understanding (Oswald v. Allen)
The party who seeks to interpret the terms of the K in a sense narrower than their
everyday usage bears the burden of persuasion to so show (Frigaliment)
Unless the context suggests otherwise, the terms of a policy should not be given a
technical or scientific meaning (Liberty Mutual Insurance)
Maxims of Interpretation:
→ Ejudfrm Generis: of the same kind; When specific terms are followed by general
terms, the general terms should be interpreted as applying only to things of the same
kind as those expressly mentioned
→ Interpretation against the drafter: if a party introduced an ambiguity, courts may
interpret the terms against the party that caused uncertainty
Where the parties have attached different Tools of Interpretation (1-303 and 202)
meanings to a promise or agreement or a → Terms of the K (Plain meaning,
term thereof, it is interpreted in accordance technical meaning, context)
with the meaning attached by one of them, → Course of negotiation (Leading up
if at the time the agreement was made to formation of K)
→ that party did not know of any different → Course of performance (Conduct of
meaning attached by the other, and the other parties under K, after K is formed).
knew the meaning attached by the first Conduct or performance by one party
party; or that is accepted without objection or
→ that party had no reason to know of any comment is perhaps the most reliable
different meaning attached by the other, and single indicator of the actual meaning
the other had reason to know the meaning the parties wished to attach to their
attached by the first party (201) contract agreement
→ Course of dealing (Parties
interactions with each other in other
Ks)
→ Trade usage/custom (Standard
practice for that area, trade etc)
Is the agreement a binding contract?
There was sufficient A performance or return promise is bargained for if it is sought by the promisor in
consideration exchange for his promise and is given by the promisee in exchange for that promise.
The performance may consist of (a) an act other than a promise, or (b) a forbearance
(74), or the creation, modification, or destruction of a legal relation (71, Hamer v.
Sidway, Kirksey v. Kirksey).
Moral consideration, past consideration, donative intent, and pre-existing duties are
not consideration (Haris v. Watson, Newman v. Snell)
Promissory Estoppel: (1) There was a clear and unambiguous promise; (2) There was
reasonable and foreseeable reliance on the promise; and (3) Enforcement of the
promise is necessary to prevent injustice, or that a party was injured and suffered a
detriment (Rickets v. Scothorn, Goodman v. Dicker, Aldon v. Presley)
Any modification of Modification must be fair/equitable in view Modification does not need
obligations and of circumstances not anticipated by the consideration to be binding, but does
duties under the K is parties when the K was made (89, AK have to be done in good faith (2-209)
valid Packers, Stilk v. Myrick, Brian
Construction)
Enforcement is Fair Undue Influence: unfair persuasion of a party who either (1) Is under the domination
of the persuader or (2) Is justified in assuming that the persuader will not act against
that person’s welfare. “Coercive [persuasion] which overcomes the will without
convincing the judgment.” When there is undue influence, K is voidable by victim
(Odorizzi)
Unconscionability: Procedural unconscionability involves oppression or surprise due
to lack of negotiation or hidden terms, while substantive unconscionability concerns
objectively unreasonable or unexpected risk allocation. A sliding scale
applies—greater substantive unconscionability may require less procedural showing,
and vice versa, to render a contract term unenforceable (Walker-Thomas Furniture,
Empire Today)
Illegal Contracts: you cannot make an enforceable contract to commit a crime, or to
break a law. Neither party to an illegal contract may enforce it, even when only one
parties performance is illegal
Public Policy: A term/K may be unenforceable on the basis of Public Policy (178). A
public policy may be derived by the court from legislation relevant to such a policy,
or the need to protect some aspect of the public welfare (179, Hanford v. Conn Fair,
AK v. BZ)
Illusory Promise: An illusory promise is a Illusory Promise: The actual output or
statement that has the form of a promise but requirements must occur in good faith.
is not a real promise in substance. It is a This means that the seller or buyer
promise that is unenforceable due to must act honestly and in accordance
indefiniteness or lack of mutuality because with reasonable commercial standards.
only one side is bound to perform. Occurs For example, a buyer cannot arbitrarily
when one party technically binds itself to do reduce or cease its requirements unless
nothing (77) it is done in good faith, such as due to
Good Faith: Every contract imposes upon a legitimate business reason like a
each party a duty of good faith and fair drop in demand for its products
dealing in its performance and its (2-306)
enforcement (205, Goldberg, Stop and Good Faith: Every contract or duty
Shop, Food Fair, Tailored Woman) within the Uniform Commercial Code
imposes an obligation of good faith in
its performance and enforcement
(1-304). Good faith may not be
disclaimed, but its standards may be
modified (1-302)
No Mistake Where both parties make a mistake that goes to the substance of the contract, no K is
made (Woods v. Boynton, 152). Where one party makes a mistake and the other
knows/has reason to know of that mistake, there is no K (153). Where one party
makes a mistake and the other party relies on that mistake to their detriment, the K is
binding and the loss falls on the party who made the mistake (Star Paving).
Duty to Disclose was Nondisclosure: (1) Failure to disclose fact (2) known by one party and not the other
met (3) that violates a basic assumption of the other party (i.e. is material) (4) and is
violation of good faith and fair dealing
Misrepresentation: (1) D misstated a material fact (It is not necessary for the
misstatement to be intentionally made, an innocent or negligent misrepresentation is
sufficient to avoid the K if it goes to a material fact); (2) P relied on the misstatement;
(3) The reliance was justifiable; (4) Damage from the misstatement (Halpert v.
Rosenthal, Beyers v. Federal Land)
No Duress The defense of duress is available if the defendant can show that they were unfairly
coerced into entering or modifying the K. Duress creates a voidable K. Duress
consists of any wrongful act or threat which overcomes the free will of a party. If a
third party commits duress, K is voidable if the other party knew about/reasonably
should have known about the duress (175)
Two kinds of improper threats: (176)
Threats regardless of ultimate bargain: threats that are improper regardless of
whether the contract that eventuates from them are unfair or imbalanced. Includes
threatening a crime or tort, threatening criminal prosecution, threatening a bad faith
civil suit, or threatening a breach of good faith and fair dealing under the K (Ukraine,
Austin Instrument)
Threats based on unfair exchange: The threats themselves are not automatically
considered improper, but they are improper only if the resulting contract is not on fair
terms (Elkhorn Packing)
Was there a Breach?
Have Parties Met Anticipatory Repudiation: When a party Right to adequate assurances of
their Obligations? indicates that they will be unable or performance: when a party's conduct
unwilling to perform in the future. does not constitute an outright
Indicating that you will not perform an repudiation, but ambiguously indicates
obligation is treated like a breach. The other that the party may not perform, the
party may suspend or cancel their own other party may suspend their
performance. A threatened breach must be performance and demand assurances
material, threat to commit partial breach from the other party that the latter will
does not constitute anticipatory repudiation perform. If the latter fails to provide
(Hochster, Sea Colony, Lane) those assurances, the failure is
considered a repudiation, entitling the
other party to cancel the contract
(2-609, Scott v. Crown)
Perfect Tender: If the goods fail to
conform, buyer may accept, reject, or
only accept some (2-601). When a
non-conforming delivery is before the
K date, seller may cure. After the K
date, seller may cure if seller
reasonably thought (a) goods would be
conforming, or (b) buyer would accept
a money allowance (2-508, Autosport)
Partial or Material? In determining whether a failure to render or to offer performance is material, the
following circumstances are significant: Look to the “essence of the contract” -
principal reason for which the parties made the contract; Can the damages be
adequately compensated; A delay in performance will generally constitute material
breach only if it operates to significantly deprive the other party of the benefit of the
contract;If the breaching party seems likely to be able to and willing to cure the
breach, the breach is less likely to be deemed material; A willful breach is more likely
to be regarded as material (241, B & B Construction, Lane)
What Damages are Available?
Expectation Put the non-breaching party in the position A seller can cover if a buyer repudiates
they would expect to be in had the the K. The buyer may recover from the
breaching party performed. Want to put the seller as damages the difference
party in the position they would have been between the cost of cover and the
in, but for the breach (347, Hawkins v. contract price together with any
McGee) incidental or consequential damages as
If a breach results in defective or unfinished hereinafter defined, but less expenses
construction and the loss in value to the saved in consequence of the seller’s
injured party is not proved with sufficient breach. (2-712, KGM Fresh). If a
certainty, he may recover damages based on seller does not cover, The buyer may
the diminution in the market price of the recover from the seller as damages the
property caused by the breach, or the difference between the market price at
reasonable cost of completing performance the time of breach and the contract
or of remedying the defects if that cost is price together with any incidental or
not clearly disproportionate to the probable consequential damages as hereinafter
loss of value to him (348, Groves, defined, but less expenses saved in
Peevyhouse) consequence of the seller’s breach
(2-713)
Reliance Put the non-breaching party in the position they were in immediately before they
entered into the contract. Allowing plaintiff to recover out of pocket expenditures in
performing a contract (Anglia)
Restitution Make the breaching party return the value of benefits they received (as if a contract
were never made) (371, Bush v. Canfield, Attorney General v. Blake). Breaching
party may recover any benefit that he has conferred on the other party to the extent
that those benefits exceed the loss (373). In quasi K, P may recover if Plaintiff
conferred a measurable benefit to the defendant with reasonable expectation of being
compensated; and defendant would be unjustly enriched if allowed to retain the
benefit without compensating the plaintiff because defendant knew / had reason to
know of plaintiff’s expectation of being compensated; or plaintiff had a reasonable
excuse for conferring the benefit without defendant’s knowledge (Cotham, Pelletier)
Specific Performance Specific performance is the preferred Specific performance may be ordered
remedy for K’s involving the sale of land where the goods are unique or in other
and M & A (Loveless v. Diel, Tyson). proper circumstances (2-716, Sholl,
Courts will never order specific Sedmack).
performance for a K for personal services
(Mary Clark), but may grant a negative
injunction keeping a unique person from
working for anyone else (Wagner, Dallas
Cowboys)
Limitations on Foreseeability: the court will impute foreseeability to the defendant as to those
Damages: damages which any reasonable person should have foreseen, whether or not the
defendant actually foresaw them The court will award damages as to remote or
unusual consequences, but only if defendant had actual notice of the possibility of
these consequences (351, Hadley v. Baxendale, South Pac Transport).
Certainty: How clear it is, at the time of the suit, that the alleged losses in fact
occurred, and that they were caused by the defendants breach (352, Dempsey,
Security Stove). If damages are not certain, injured party may seek
reliance/restitution damages instead of expectation (349).
Mitigation: where a plaintiff might have avoided damage by reasonable effort,
without undue risk, effort, or humiliation, they may not recover if they fail to make
such an effort (Shirley, Luten Bridge). Exception for lost volume sellers (Neri,
2-708)
LDC The LDC must always meet one (sometimes both) requirements: The amount fixed
must be reasonable relative to the anticipated or actual loss from the breach. The
harm from the breach must be uncertain, or very difficult to calculate accurately. LDC
may not be a penalty. (356, 2-718, Kemble v. Ferren, Wassenaar)
