Sales: Stephens 2014 Fall Exam Number 033

Contents2-105: Goods: All things moveable; tangible personable property1 Hybrid Transaction - BMC Industries v. Barth Industries1 Computer Software or idea: placed on tangible mediumGood2Offer & Acceptance: requires intent to form K. Very low threshold22-204: Formation22-207: battle of the forms2Threshold for forming K under A22 2-206. O and ACC in Formation of K3 2-201. Formal Requirements. SOF.32-204 Southwest Engineering v. Martin Tractor:41-201(A)37 signature can be any symbol to mark the ACC of writing42-204 allows for formation of K even if all terms are not agreed42-201(2) Decatur Cooperative Assoc42-207 (ADD Terms) Belden5K modifications6Waiver62-202. AGRs/Ks and Parol EVD Rule71-303. COP, COD, AND UOT8Statutory Terms9Price9Quantity10Risk of Loss112-509.RoLin the Absence of BR122-510.Effect ofBRon RoL.12Warranties14Disclaimer of WR17Privity: Kual relationship between parties18IKs19Sellers remedies when Buyer Breaches20Buyers remedies when Seller Breaches.22

2-105: Goods: All things moveable; tangible personable property

1. GF: 1-201 (20): Honesty and observance of fair dealing

2. MC: 2-104: Someone who has skill and knowledge in the area in transaction; or deals with goods of the kind in the transaction; Dealer who frequently sells inventory

3. Scope A2: 2-102: Does not specifically apply to MCs

4. Does A2 apply to hybrid (both goods/services)

Hybrid Transaction - BMC Industries v. Barth Industries

1. TC: UCC not govern service K (FL CL: no waiver unless DR)

2. Predominant Character Test

a. Language of K (refer to purchase, B, S, equipment)

b. Manner transaction billed (K not include cost for servicesgoods)

c. K for movable goods (more likely a sale of goods)

d. Court: predominantly a sale of goods or sale of a service?

3. Held: Goods for the following predominant Factors: a) K titled PO; b) Parties refer to themselves as B and S; c) K: for fabrication/installation of equipment; d) allocation of $$ between good & service K parts; K movable goods

4. Gravamen Testessence a serviceA2 does not control

5. Component Test:goods, A2 applies; services, A2 does not apply

6. Importance of whether or not A2 applies: WRs; SOL

7. Q 5, pg 19

a. PC: Language: Patient, not B; Billing $11k goods; Movable $11k G; $9k S

b. Gravamen: concerned doctors skill (service)

c. Component: Medical (professional) services exempt from A2

d. Therefore, use component test to analyze hybrid K with professionals

Computer Software or idea: placed on tangible mediumGood

1. Advent Systems v. Unisys Corp

a. P Kd with D to supply computer items + software

b. TC: not a sale of goods under UCC

c. P: software is IP outside of UCC

d. Held: software is a good. Program is IP, but once transferred/distributed, good

2. Q 2, pg 24. prototype a good? Depends on test. Paying for idea or prototype?

3. Q 7, pg 27. BR of WR due for purchase of equipment ; sale for the land

a. Does A2 apply? Depends on test: PFT; GT: maybe; look at whether land outweighs goods; CT: wrt land, no; wrt equipment, yes

4. Architectronics, Inc. v. Control Systems, Inc.

a. P entered into a K with D in which D had the right to use P software which D would develop and P would market. P royalty to D for system sold

b. 2 provisions in K: 2nd dealing with right to manufacture and distribute

c. Since predominant feature of AGR was IP, K for services. (Analogous to a Book distributor hiring a writer to develop a novel for them to sell)

O & ACC: requires intent to form K. Very low threshold

5. 2-204: Formation in General

a. A K for sale of goods may be made in any manner sufficient to show AGR, including conduct by both parties which recognizes existence of such a K

b. An AGR sufficient to constitute a K for sale may be found even though the moment of its making is undetermined.

c. Even though one or more terms are left open a K for sale does not fail for indefiniteness if the parties have intended to make a K and there is a reasonably certain basis for giving an appropriate remedy

6. 2-207: battle of the forms. Mirror Image Rule - Terms of ACC must mirror

a. 2-207(1): definite and seasonable ACC acts as an ACC even if it Os terms that differ or ADD to the O: Negates Mirror Image Rule

b. Expression of ACC contain terms different than O, look to 2-207(2)

c. 2-207(2): ADD terms

i. Different/Add terms construed as proposals to terms of K (O); K = O

ii. MCs: ACC = O; Different terms part of K unless:

1. O expressly limits terms of the O (ACC cant have add terms)

2. ACC materially alters the O

3. Oor expressly rejects add terms of the ACC/K

iii. Fall-out Rule: K btwn MCs: ADD terms conflictnot part of K

iv. Knock-out Rule: conflicting terms fall-out (of both O and ACC)

d. 2-207(3): Conduct of both partiesK even if no written K (e.g. Sale of car. S says reject O, then gives car and says pay when you can)

Threshold for forming K under A2

1. Jannusch v. Noffziger: food truck route, truck & equipment for $15k; Dispute over whether the essential terms of the K were agreed upon

2. Bacou v. Continental Polymers: 2-204 K not fail for indefiniteness

a. P made O to purchase company from D with several conditions favorable to D.

b. 1/12 letter: P would purchase raw materials from D for a set period at a set $$

c. Letter was not incorporated into K (orally agreed that it would stand on its own)

d. D got a lower $$ from its supplier (Dow) for $1.56 per pound, which P wanted the 1/12 letter $$ set at. P wanted D to sign a confidentiality AGR. D refused.

e. K: HEI would sell all prepolymer Bacou requires; $$ & QL = 3rd partys product

f. Bacou: no enforceable K: not agree to QL; Indefinite QT; Indefinite $$

g. Court: enough EVD to make the $$ discernible at the time of the K

h. K silent on delivery, payment terms, time of delivery

i. Court: 2-204: K does not fail for indefiniteness even if terms are left open

j. Parties under A2 form a K if they intend to form a K

k. ISSUE: P claims no obligations 1/12 letter. D counterclaimed asserting that P BRed 1/12 AGR; BRed duty of GF and fair dealing for 1/12 AGR; falsely misrepresented its intention to enter into a supply AGR with D

l. HELD: for P, stating they negotiated in GF, but D had thwarted negotiations; Reverse TCs decision and grant summary judgment for P

m. Notes:

i. Sale of business can be A2; depends on test used & VL moveable assets

ii. PFT, maybe; GT, probably not

iii. Why court not use A2? Not raised by P. Court not raise issues sua sponte

2-206. O and ACC in Formation of K

1. Unless otherwise unambiguously indicated by the language or circumstances an O to make a K shall be construed as inviting ACC in any manner & by any medium rbl in the circumstances;

2. an order or other O to buy goods for prompt or current shipment shall be construed as inviting ACC either by a prompt promise to ship or by the prompt or current shipment of conforming or NC goods, but such a shipment of NC goods does not constitute an ACC if S seasonably notifies B that Shipment is Oed only as an accommodation to the B.

3. Where the beginning of a requested perf is a rbl mode of ACC an Oor who is not notified of ACC within a rbl time may treat the O as having lapsed before ACC.

4. P.2, pg 44: 2-204 K formed? 2-204(3) Even if terms left open, K formed if intent; Look to 2-310 to set K terms: payment due at time and place B receives goods

5. P.4a, pg 45: 2-206(2): ACC made if S promised to ship conforming/NC goods

a. When you O goods to be shipped, then you are forming an intent to form a K

b. Even if $$ term is open, 2-305: $$ valid if rbl $$ (rbl interpreted by court)

c. O to buy good for prompt shipment, you invite ACC by shipment (even early)

d. Is an O a K? Yes, if there is mutual intent to create a K

6. P.4b, pg 45. K unilateral? ACC through perf. But, can ACC by a promise to perf.

a. 2-305 is gap filler for omitted $$

b. 2-206 (1b): still a K if you send NC goods iff NC goods an accommodation

i. S must state sending NC goods as an accommodation (not ACC)

ii. If B keeps NC goods then he is showing intent to be bound by K

iii. If cannot agree on a rbl $$, no K (2-305 (4))

2-201. Formal Requirements. SOF.

1. 2-201(1) Except as otherwise provided in this section a K for Sale of goods for the $$ of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a K for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient bc it omits or incorrectly states a term agreed upon but the K is not enforceable under this paragraph beyond the QT of goods shown in such writing.

2. 2-201(2) Between MCs if within a rbl time a writing in confirmation of the K and sufficient against Sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received.

3. 2-201(3) A K which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable

(a) if goods are to be specially manufactured for B and are not suitable for sale to others in the ordinary course of Ss business and S, before notice of repudiation is received and under circumstances which reasonably indicate that goods are for the B, has made either a substantial beginning of their manufacture or commitments for their procurement; or

(b) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a K for sale was made, but the K is not enforceable under this provision beyond the QT of goods admitted; or

(c) with respect to goods for which payment has been made and accepted or which have been received and accepted (Sec. 2-606). Partial perf in general K law. Here, only the part that is performed is under SOF.

4. 2-204 Southwest Engineering v. Martin Tractor:

a. P was bidding on runway lighting project and asked D for quote for a standby generator; D provided quote - $18,500. P selected as low bidder (Ds quote)

b. D provided a memo to P detailing cost to provide generator w/ 10% discount and accessories at cost: cost $21,500

c. D reneged on deal and told P to buy the generator elsewhere. P found a generator, from a supplier that D recommended, for $27,541. P sued for $6,041 in DGs from BR

d. Issue. Do SW and Martin have a K

e. P: memo prepared by D had essential elements of K; D: future negotiations

f. 1-201(A)37 signature can be any symbol to mark the ACC of writing

g. 2-204 allows for formation of K even if all terms are not agreed upon

5. P.4, pg 55: signature, but no intent; no K formed-blank form not an intent

a. Two Arguments: 1) if enforceable, no K formation; 2) Not enforceable (SOF)

6. 2-201(2) Decatur Cooperative Assoc v. Urban

a. Decatur called Urban; gave oral AGR for sale of grain; Decatur puts AGR in writing; Urban does not sign; Decatur sells Urbans wheat to another broker; $$ of wheat goes up; Urban refuses to sell stating no K formed; Decatur sues for BR

b. TC found for Urban stating farmers are not MCs

c. Issue: Farmer MC? Urban equitably estopped to assert SOF as a defense?

d. 2-201(2): SOF applies unless S specifically objects to EVD of K within 10 days

e. MC Status

i. Dealer who deals in goods of the kind involved

ii. One who by occupation holds himself out as having particular knowledge to the practices or goods involved in the transaction

iii. A principal who employs an agent that holds himself out as having knowledge to the practices/goods in the transaction

f. Court: Urban was a wheat farmer he was not in the business of selling wheat

g. SOF: Urban states since hes not a MC there must be a signed AGR (general Ks SOF): therefore no K. Decatur contends since Urban knew that he would immediately sell the wheat that he is estopped from using SOF: promissory estoppel (promise; rely on it; expect promisee to rely; justice requires enforce)

h. Decatur tries to apply Promissory Estoppel to A2 SOF

i. 1-103(a) allows use of promissory estoppel in order to prevent fraud

ii. 1-103(b) not apply if conflicts with other sections (conflicts with 2-201)

i. SOF: Courts generally allow all defenses under general K SOF in A2 SOF: Restitution; Unjust Enrichment; Promissory Estoppel; Part Perf

j. Urban knew Decatur would sell the wheat, so promissory estoppel is justified

7. P.2(b). K is formed if there is an intent to form a K: $$ may not be agreed upon

a. $$ is whatever is deemed a rbl $$: 2-305

b. Battle of the Forms: 2-207

c. If K is not between MCs: the ADD terms fall out: the ACC must mirror the O

d. If parties are MCs then the ADD terms are a part of the K unless:

i. (a) the O expressly limits ACC to the terms of the O;

ii. (b) they materially alter it; or

iii. (c) notification of objection to them has already been given or is given within a rbl time after notice of them is received

e. Conflicting terms knock each other out (Knockout Rule)

8. P. 67. Code section for when payment is due; section 2-310(a)

a. H1: no, counter O

b. H2: Payment is a constructive condition precedent to delivery of goods; Services: services are a condition precedent to payment; Payment already in K as condition precedent: ADD term. K law, no ACC

c. H3: No K at CL; no mirror image; What about 2-207? ADD term? Is it material? No. Expression of ACC, so we have a K . What are the terms?

d. H4. 2-207: Yes, they express ACC: intent to form a K (i.e. expression of ACC); but, material alteration, so fails to form K under 2-207(s)

e. H5. Maybe a K, depends on how different must ACC be to be a rejection

i. Constructive condition in Law: Court imposed: constructive condition POD, unless K implies otherwise. Even under gK law, can imply when payment due. ACC: POD makes implied term express

ii. Accept w/ precatory Q (even under gK law) does not imply rejection

9. 2-207 (ADD Terms) Belden v. American Electronic Components

a. Facts. Belden manufactures wire and AEC manufactures auto sensors; Belden had K w/ AEC stating it would supply wire with insulation from Quantum; It used insulation from Dow; New insulation had different properties and Chrysler had to issue a recall. AEC sued Belden to recover DGs

b. Belden: language on Order Acknowledgement limits DGs available to AEC

c. Conduct ACC by B = express ACC of terms of their form (including WR)

d. AEC paid/kept goods: gK law there is a K. Terms=last terms before perf

e. 2-207(1): K formed under assent unless ADD terms require specific assent

f. 2-207(2): not apply if 2-207(1) not apply (i.e. need expression of ACC)

g. 2-207(3): If there is perf then there is a K, then the ADD, unagreed upon terms are replaced by gap fillers/code

h. K is silent on DGs

i. CoD - 1-303(b) - A CoD is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct. How parties have dealt with each other in other Ks

ii. CoP (this K) - 1-303(a): how parties have dealt with each other in this particular transaction; UoT: part of a K also

i. Held: for AEC stating Beldon failed to prove CoD established a limitation on Beldens liability for consequential DGs

10. P.2, pg 72. No. 2-207(1): ACC is made conditional upon assent to ADD terms then there is no K . Then court will look to see if there was assent in the response

11. P.4, pg 72. Can still be an ACC: the materially differing terms will fall out

12. Northrup Corp v. Litronic Industries

a. Northup asked Litronic for quote for electronic boards

b. If accepted then Northrup will send PO stating that their terms control

c. Litronic sent O stating 90-day WR is in lieu of any other WR proposed by B

d. 3-4 months later Northrup sent the PO, with an unlimited WR, requiring Ss written acknowledgement; Litronic never sent acknowledgement

e. Tested 5-6 mo after delivery; returned for defects; Litronic refused-90-day WR

f. Issue: When K formed? 2-207(3): parties proceeded-K by conduct! WR in K?

g. CoP indicates K between parties. Which WR terms control?

i. ACC contains materially different terms than the O, which prevails?

ii. Fall out Rule - Oees discrepant terms drop out & Oors terms part of K

h. Oor is master of O, so any terms different from his fall out. If Oee wants ADD terms then make your ACC conditional upon ACC of ADD terms

i. KO Rule: New terms knock each other out; use UCC to supply terms of K

j. Illinois goes by minority view, which is item 1. Oor is the master of O

k. TC found gap filler was a rbl time for a WR and 6 months was rbl

l. 2-602(1) provides for a rbl time for WR

m. H: for Northrup. Gap filler since terms of O and ACC materially differ. Rbl time.

13. P.2, pg 79. Is limitation of DGs a material alteration? Part of K? Depends on rule:

a. FO: Term would fall out and the Bs O would stand (includes limitation)

b. KO: Both terms fall out; go to UCC, which does not limit DGs

c. If one party was not a MC then the O is the K

14. P.3, pg 79. Is there an expression of ACC 2-207(1)? If yes, then are differing terms material change per 2-207(2)? If yes, then use Knock-out/Fallout:

a. KO: both terms knock-out; no configuration of shirts;

b. Look to 2-311(2); assortment of goods are at Ss option

c. FO: go with Oors term (assortment)

15. P.4, pg. 79

a. 2-207(1) not apply bc payment made X conditional upon assent to terms

b. 2-207(3): K by conduct. Terms? KO/FO not apply to 2-207(3)Conflicting terms replaced by gap fillers; UCC states POD

16. Hill and Klocek: K between MC and non-MC

a. Hill: Gateway Os computer; Hill = Oee; can accept by keeping (Oee assents)

b. Klocek: K = Oor; G is Oee; not bt MCs so terms FO; UCC silent re arbitration

17. P.4, pg 89. Under Hill, WR if B is MC; Under Klocek, no WR. 3rd way to look at it: K was formed when S accepted money (when parties expressed intent to form K); anything else after that cannot be added to K (most courts have not accepted this)

K modWaiver

1. 2-209 Wisconsin Knife v. National Metal. mods in writing

a. K states that delivery was due 10/1981; Bits delivered 01/1983 (half)

b. P sues based on failure to deliver on delivery date

c. P: late delivery not mod [2-209(2)]; mod must be in writing

d. D: 2-209(4) waiver allows mod without writing

e. Waiver (no reliance) different from est (requires reliance to detriment)

f. CT: waiver requires reliance. NMW relied on continued late production

g. WKW: not waiver bc allowed late delivery to mitigate DGs (oblig)

h. NMW: no duty to mitigate bc only required when BR; no BR

i. TA: K provides mod by writing, can be waived conduct 2-209(2)

2. BMC Industries v. Barth Industries, Inc.

a. K to build and install an automated production line for eye glass lenses

b. K requires that all modifications must be in writing

c. Original delivery was June 1987. Written extension to December 87. Orally agreed to extend to April 1988; D finally delivered on June 1989

d. ISSUE: Waiver of new delivery date of April 1988?

e. BMC: no waiver bc trying to mitigate DGs: cant mitigate unless there is BR

f. Barth: waiver of delivery bc no cancellation of K: waived by conduct

g. So, UCC: 2-309: Delivery = rbl time; TA: Reliance not needed for waiver

3. 2-209(5) Retraction of waiver

a. Retraction - Must give person rbl notice of intent to return to original K

b. Ex.: S sells items on monthly iK, payment due on 1st; each month B submits payment on 3rd; S keeps giving notice of return to original K. Conduct becomes K

4. P.3, pg 111. lqDGs are normally not enforceable. Must prove in the absence of DGs then Declare K as BR: ACC of goods is only to mitigate DGs.

5. P.8, 114. CL: pre-existing duty rule: new K not allowed bc no new CSD

a. Counter is that there is a novation: a new K has been formed

b. Rescission: previous K rescinded: if there was a new condition affecting the K then a rescission allowed. S wins the $20,000. A2: S loses2-209(1): CSD not needed; 2-209(4): Waiver under perf

6. P.8(b). CL: any CSD is sufficient. A2: Mods enforceable without CSD

a. 2-209(1) comments: does not need CSD, but BF to escape perf is barred

b. CSD: promise, promise induces a detriment, detriment induces a promise

2-202. AGRs/Ks and Parol EVD Rule

1. General K Law: K consists of xTerms and iTerms

2. AGR is the general terms the parties have negotiated

3. K is the legal effect of these AGRs

4. Implied K terms: CoD; CoP; UoT; GF; Other within A2: gap fillers

5. 2-202. Final Written Expression: Parol or xEVD. Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their AGR with respect to such terms as are included therein may not be contradicted by EVD of any prior AGR or of a contemporaneous oral AGR but may be explained or supplemented

(a) by CoD or UoT (1-205) or by CoP (2-208); and

(b) by EVD of consistent ADD terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the AGR .

6. Parol EVD. gK law: prevents you from looking at xEVD.

a. All prior writings, AGRs cannot be used to modify K: four corners of K

b. A2: terms of K may be explained by CoD, CoP, & UoT, & consistent ADD terms

c. Writing cannot be contradicted, but can be supplemented by the items above; Unless K expressly states that all terms are included in K.

d. Ks include express & iTerms: 2-202(a) and (b) exceptions

7. ARB (B) v. E-System (S)-fully integrated K has no gaps; has all terms

a. Facts - K for electronic systems that had a clause for re-procurement charges; cover DGs were deleted from final K

b. Procedure - S BRed; B sued and demanded cover DGs

c. Issue: can B get cover DGs if provision deleted; K intended integ AGR?

d. D: K had an integration clause, so parties may seek all DGs in law & equity

e. A2: if K fully integ, party may seek other provisions

f. Integration clause not dispositive of showing that it contains all AGRs

g. Terms of K cannot be contradicted by prior AGRs, etc, but may be explained by the iTerms including consistent ADD terms

i. If the cover DGs contradict clause for recovery under any means

ii. Could be included under CoD

8. Noble v. Logan-Dees Chevrolet

a. Facts: wrecked, 2100, insurance check for wrecked El Camino; K does not mention the insurance check, so B (Noble) does not think he has to pay

b. Issue: Is parol EVD allowed to show whether B agreed to give insurance check ?

c. Parol EVD may be entered to clarify an ambiguity

d. CA Rule: Term may not be ambiguous on its face; may be a latent ambiguity

e. If you say it is ambiguous I will let in EVD to show that it is ambiguous

f. NY Rule: Meaning of ambiguous term is defined by other terms in K

g. Court determines ambiguity: when term susceptible > one interpretation

h. Term may not be ambiguous on its face, but Parol EVD may be introduced

i. HELD: not entitled to parol EVD; K was fully integrated; EVD would have provided inconsistent/contradictory terms

9. Nanakuli Paving Company v. Shell

a. Nanakuli Paving has a K to buy asphalt from Shell for MP: only 2 asphalt suppliers at the time; $$ was the MP at the time of delivery

b. Shell raises $$, N sues for BR of K; N alleges that Shell failed to $$ protect

c. N: $$ protection should be allowed as a UoT

d. S: not in the trade of asphalt paving

e. N: UoT extends to all who deal in the trade or deal in that trade

f. $$ protection was common trade usage in Hawaii

g. N: even if no $$ protection, still in K bc of CoP: Shell had $$ protected twice

h. S: not CoP, but waiver

i. GF: Q of fact for jury

j. S: xTerms take precedence over iTerms: 1-303(e); and 2-208(2)

k. N: iTerms are used to explain the xTerms. Explains that K will be MP after period of $$ protection.

l. TA: When we have iTerms they may not be ostensibly consistent with the xTerms, but may be used to explain the terms as long as they do not contradict. iTerms can always explain xTerms, but cannot contradict

1-303. COP, COD, AND UOT

1. 1-303(a) A "CoP" is a sequence of conduct between the parties to a particular transaction that exists if: (1) AGR of parties with respect to transaction involves repeated occasions for perf by a party; and (2) other party, with knowledge of nature of the perf & opportunity for objection to it, accepts perf or acquiesces in it w/o objection

2. 1-303(b) A "CoD" is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.

3. 1-303(c) A "UoT" is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in Q. The existence and scope of such a usage must be proved as facts. If it is established that such a usage is embodied in a trade code or similar record, the interpretation of the record is a Q of law.

4. 1-303(d) A CoP or CoD between the parties or UoT in the vocation or trade in which they are engaged or of which they are or should be aware is relevant in ascertaining the meaning of the parties' AGR, may give particular meaning to specific terms of the AGR, and may supplement or qualify the terms of the AGR. A UoT applicable in the place in which part of perf under AGR is to occur may be so utilized as to that part of perf

5. 1-303(e) Except as otherwise provided in subsection (f), the xTerms of an AGR and any applicable CoP, CoD, or UoT must be construed whenever rbl as consistent with each other. If such a construction is unrbl: (1) xTerms prevail over CoP, CoD, and UoT; (2) CoP prevails over CoD and UoT; and (3) CoD prevails over UoT.

6. 1-303(f) Subject to Section 2-209, a CoP is relevant to show a waiver or modification of any term inconsistent with the CoP.

7. 1-303(g) EVD of a relevant UoT Oed by one party is not admissible unless that party has given the other party notice that the court finds sufficient to prevent unfair surprise

8. Limestone. Trade Usage - certain delays are acceptable. Time for Payment

a. 2-309 C2; time for payment, where not agreed upon=about time of delivery

b. 2-302 C4; Unreasonably early Os for delivery are intended to be read as an expression of desire or intention, requesting assent/acquiescence of other party

c. Ongoing K relationship

i. 2-209(2) may terminate at any time when it is for an indefinite duration

ii. 2-309(3) except you have to give rbl notice (allow time to seek substitute)

Statutory Terms

1. Statutory terms aresubordinateto ITerms

2. Rank: COP, COD, TU,thenstatutory terms

3. Why? ITerms are considered to already be a part of AGR; stat terms not

4. Unless otherwise agreed 1-302(c): phrase not imply effect of other provisions may not be varied by AGR; Only mandatory provisionscannotbe disclaimed by AGRs

a. Examples: GF, diligence, unconscionability, care, etc

b. Allnon-mandatoryprovisions are basically gap-fillers

5. Not all missing terms may be filled with sTerms (represent ordinary understanding)

a. Rationale: most likely would have been used by the parties had they considered the term when they made their AGR

b. What can be filled? $$; QT; Payment; Delivery; RoL

c. Court may enforce K despite the missing term; Requires:

i. Total situation shows parties intended to be bound;and

ii. Reasonably certain basis for giving an appropriate remedy

$$

1. Risks by K Type

a. Open-$$

i. S Risk: $$ of good will decline before it is sold

ii. B risk: $$ of good will increase before it is purchased

b. Fixed-$$

i. S Risk: $$ of good will increase after entering into K

ii. B Risk: $$ of good will decrease after entering into K

2. CL: K will not be valid if $$ is left open. Grounds: indefiniteness, illusory, lack oblig

3. 2-305. $$ need not be set for K to be valid; $$ will berbl $$at time of deliveryif

a. Nothing is said as to $$; Left open for parties to agree, but parties do not agree; $$ to be fixed using standard that is set or recorded by a third party, but it is not; $$ may be set by one party; must be set in GF

b. If parties fail to reach an AGR on $$ by fault of one party, the other party may choose to either cancel the K or set $$ himself (must be rbl)

c. If parties notintend bound unless $$ fixed, and it is not, then no K exists

4. Variable $$ Term Not truly open

a. Depend on occurrence of contingencies that are: at the time of K

b. If the contingency bears little or no relationship to Subject matterwager

c. May become open if external standard becomes non-existent or otherwise fails

d. Court consider: parties intend to be bound should their valuation scheme fail to operate? If yes, what factors are considered in setting the $$?

e. Drafting Open $$ Terms

i. Should make it clear whether they intend to be bound in the event the $$ is not fixed in accordance with their AGR

ii. Should state factors that should be used in determining the rbl $$

iii. Beneficial to state a range with a minimum and maximum amounts beyond which the parties do not contemplate the $$ should be set

5. Mutuality of Obligation

a. 2-305(2) permits parties to agree $$ may be fixed by one party alone

b. GF! Parties may not effectively agree $$ set through unfettered discretion of 1

c. CL: K must be bilateral. K fails. One party has not made any commitment

6. Mathis v. Exxon Corporation

a. P: $$ set at an uncompetitive level, and is not commercially rbl from an economic perspective bc it was a $$ that put franchise at disadvantage

b. Competitors able to purchase for lower

c. Commercially rbl $$ = rack $$ + normal distribution charges

d. D goal is to put franchise out of business, and convert to their own stores

e. D: commercially rbl: reflects investments; Verdict for P: Exxon appeals

f. Basis for Appeal:BR of K claim is precluded as a matter of law, bc $$ was comparable to those competitors charged

g. JML: appropriate when a party has been fully heard on an issue and there is not legally sufficient evidentiary basis for a rbl jury to find or that party on that issue

h. ISSUE: What constitutes a BR of the duty of GF? P: GF obj & sub; D: GF obj

i. Does 2-305 create exception to normal GF governing Sale of goods? (both)

j. GF:

i. Subjective: Honesty in fact: 1-201(19): actual state of mind of the party

ii. Objective: Commercial rblness; 2-103(1)(b): adds an objective element for MCs: honesty in fact + rbl commercial standards

iii. C3: Rejects non-commercial idea that an AGR that S may fix the $$ means he may set it at whatever he likes

iv. GFincludesrbl commercial standards in fair dealing in the trade

v. In normal cases, a posted $$ or a future S/B given $$/$$ in effect/MP (or something similar) will satisfy the GF requirement

k. CTerms: implies that it is more thanjustobjective standard; must be more than commercial rblness

l. Normal(GF safe harbor) a case in which honesty in fact (subjective GF) exists

i. objective GF satisfied by listed reasons, as long as subjective GF exists

m. Drafting History

i. P: BR is for Ds failure to use subjective GF; EVD

1. D planned to replace a number of franchises w. CORS

2. DTW $$ was higher than rack $$ + transportation

3. D prevented P from purchasing from jobbers after 1994

4. # of franchises were noncompetitive

ii. D: Answer: We never said pricing was our way of accomplishing the goal of eliminating franchises

QT

1. Riegel Fiber Corp. v. Anderson Gin Co.

a. Ks: Master: Between P & D - purchase cotton at .32/pd; Individuals: Between D & individual farmers - purchase cotton at .32/pd

b. Cotton rose to .81/pd prior to delivery

c. P told D andfarmers that they intended to enforce K

d. P brought suit seeking K be declared valid & asking for enforcement

e. DC: PI directing Ds to deliver; Judge: K invalid bc it did not contain a QT term

f. Issue: QT term contained in K too indefinite to support judicial enforcement?

g. 2-204(3) K for sale does not fail for indefiniteness if parties have intended to make a K andthere is a rbl certain basis for appropriate remedy

h. Parties both acknowledge their intent; QT provision: farm numbers/acres totaled + Ds personal acreage; CT:Specific fields not necessary

2. Payment: CL, POD. UCC: 2-507(1); 2-511(1); 2-310(a) requires payment at time/place at which B receives good regardless of where delivery

3. Delivery: CL & UCC both look at COP/COD/Trade Usage [2-307/8/9]

4. Luedtke Engineering

a. P bidding to receive govt. K to repair breakwater; given 2 acceptable suppliers

b. D one of permitted; having previously worked with P, D sent P a quote

c. P learned of cheaper breakwater, D found out and lowered $$ to $5.50

d. P issued a PO to D who accepted: 70k tons at $5.50/ton shipped at the rate of 1500 tons/day starting July 24, 1978; various reasons D does not ship @ rate

e. P finishes project in time, despite wanting to finish earlier

f. P brings suit claiming BR of K for failing to follow shipment schedule

g. D: not BR. Unaware P planned to finish early; Delays caused factors out control

h. DC: for D. Original quote letter was an O; and PO was ACC. Delivery requirement was a material alteration, therefore it was never agreed to

i. Delivery terms fell out and COP/COD/TU was used instead (rbl time)

ii. D delivered at a rbl time

i. P Appeals. 2-207 governs. ADD term will not become a part of the K when it is a material alteration. C4: would result in surprise or hardship if incorporated without express awareness by other party. Court finds surprise/hardship

j. Surprise/hardship EVD:

i. D didnt know P intended to finish 1 year early

ii. Corps told D Nov. 1979; D made 2 refs to 1979 in communications with P

iii. No EVD P communicated 1978 completion to D

iv. P submitted construction project chart to corps showing July 1979

v. Contrary to parties previous dealings

vi. Admissible under 1-205, Record:

1. P testified delivery schedule was arbitrary in-between QT

2. P testified they did not meet delivery rate

3. D testified understanding shipping rate to be maximum

4. P arguments for BR

a. D PO shows understood delivery rate to be a part of K

b. D never claimed no responsibility for delivery rate

5. Both fail on appeal bc challenge motive/credibility of witnesses

vii. If shipping rate not part of K, 2-307 applied & shipment due in 1 delivery

viii. Fails bc of exception: where circumstances give either party the right to make or demand delivery in lots, UOA includesCOP/COD/TU

RoL

1. CL: RoL passes S to B at precise moment title transferred, unless K provides other

2. 2-504: shipment by S. If K not require deliver to particular destination, 2-504(a) states that S has risk until goods are given to carrier.

3. 2-509: If K requires S to deliver to a particular destination, 2-509(b) RoL passes to B when goods are duly tendered to the B

4. 2-319: FOB

5. CL and UniformSales Act (USA): owner has RoL when goods are lost, DGs, or destroyed.Losses/gains in value were thought to be normal aspects ofownership

a. RoLpassed from one to theother at theprecise momentthat title was transferred from S to the B, unless the K otherwise provided.

b. Pre-Code law madetheintention oftheparties preeminent in determining when title passed, but since that intention was seldom expressed, a number of presumptive rules were developedto determine it

i. Ifgoodswerespecificandnothingremained to be done to put them into a deliverable state, the title passed when the bargain was struck

ii. Ifgoodswere unascertained (i.e., not yet identified as goods constituting Subject matter of the K), or if somethingremained to be done to them to make them deliverable, the passage of title was postponeduntil goods were appropriated to the K and made deliverable

6. UCC A2 scrapped the passage-of-title, or property, approach to RoL and replaced itwithwhat its drafters called a Kual approach

2-509.RoLin the Absence of BR

1. 2-509(1) Where the K requiresorauthorizes Sto ship goodsby carrier:

a. 2-509(1)(a) if it does not require him to deliver them at a particular destination, the RoL passes to B when goods are duly delivered to the carrier even though Shipment is under reservation (4-2-505);but

b. 2-509(1)(b) if it does require him to deliver them at a particular destination andgoods are there duly tendered while in the possession of the carrier, the RoL passes to B when goods are there duly so tendered as to enable B to take delivery.

2. 2-509(2) Where goods are held by a bailee to be delivered withoutbeing moved, the RoL passes to the B:

a. on his receipt of possession or control of a negotiable document oftitle covering goods; or

b. on acknowledgment by the bailee of the Bs right to possession of goods; or

c. after his receipt of possession or control of a nonnegotiable documentof title orother directions to deliverin a record, as provided in 2-503(4)(b).

3. 2-509(3) In any case not within subsection (1) or (2), the RoL passes to B on his receipt of goods if S is a MC; otherwise the riskpasses to B on tender of delivery.

4. 2-509 (4) The provisions of this sectionaresubject to contrary AGR of the parties and to the provisions of this chapter on sale on approval (2-327) and on effectof BR on RoL (2-510).

5. (2)Under 2-509theRoLdependsin the first instanceon whether S isrequired or authorized to ship goodsby carrier.If S is so required or authorized, then the RoL depends on where S is to deliver goods.

a. (a) Often, theplaceofdeliveryisexpressed byuse ofa mercantile term, such a F.O.B., c.i.f., ex ship, etc.The most important mercantile terms are elaborately defined in 2-3192-325

b. (b)When partiesuse oneofthese termsthey are making an express K

2-510.Effect ofBRon RoL.

1. (1) Where a tender ordelivery of goods so fails to conform to the K as to give a right of rejection the risk of their loss remains on S until cure orACC

2. (2) WhereB rightfully revokes ACChe mayto the extentof any deficiency in his effective insurance coverage treat the RoL as having restedon S from the beginning

3. Where B as to conforming goods already identified to the K forsale repudiates or is otherwise in BR before risk of their loss has passed to him, S mayto the extentof anydeficiencyinhis effectiveinsurance coverage treat the RoL as resting on B for a commercially rbl time

4. A.M. KnitwearCorp. v. AllAmerica Export-Import, (N.Y. App. 1976)

a. FOBis aDelivery Term

b. UCC providesthat, unlessotherwise agreed, the term F.O.B. at anamed place even though uses only connection with the: $$, is a delivery term.

c. Where the term F.O.B. the placeofshipment isused,asin thiscase with the term F.O.B. plant, the code provides that S must ship goods in the manner provided in 2-504 of the UCC and bear the expense and risk of putting theminto thepossessionof thecarrier.

d. With respect to shipment by S, the codeprovidesthat where S is required or authorized to send goods, but not required to deliver them to a particular destination, then UOA S must put goodsinto the possession of acarrier.2-504(a).

i. (4)Further,with respect to RoL, the code provides thatwherethe K requires or authorizes S to ship goods by carrier ifit does not require him to deliver them at a particular destination, the tendered as to enable B to take delivery.

ii. Where goods are held by a bailee to be delivered withoutbeing moved, the RoL passes to the B:

1. on his receipt of possession or control of a negotiable document oftitle covering goods; or

2. on acknowledgment by the bailee of the Bs right to possession of goods; or

3. after his receipt of possession or control of a nonnegotiable documentof title orother directions to deliverin a record, as provided in 2-503(4)(b).

4. In any case not within subsection (1) or (2), the RoL passes to B on his receipt of goods if S is a MC; otherwise the riskpasses to B on tender of delivery.

iii. The provisions of this sectionaresubject to contrary AGR of the parties and to the provisions of this chapter on sale on approval (2-327) and on effectof BR on RoL (2-510).

iv. (2)Under 2-509 RoLdependsin the first instanceon whether S isrequired or authorized to ship goodsby carrier.If S so required or authorized, then RoL depends on where S is to deliver goods

v. (a)Often, theplaceofdeliveryisexpressed byuse ofa mercantile term, such a F.O.B., c.i.f., ex ship, etc.

vi. Important mercantile terms are elaborately defined in 2-3192-325.

vii. When partiesuse oneofthese termsthey are making an express K

5. Silver v. Wycombe, Meyer& Co.,Inc., (N.Y.C. 1984)

a. Absent contrary AGR by parties, RoL determined by delivery manner. 2-509.

b. Clear that UCC 2-509(1)governs issue of when RoL passes to Bwherethe K requires or authorizes S to ship goods by carrier.

c. Shipment K: K requires Sto deliver merch at a particular location, RoL passes upon tender ofgoodsatthatlocation.2-509(1)(b).

d. Destination K: K does not require S to deliver goods to a particular destination, it passes upon their delivery to the carrier. 2-509((1)(a). Where the K provides for delivery at Ss place of business or at situs of goods, RoL passes upon actual receipt by the B, if S is a MC, and otherwise upon tender of delivery. 2-509(3).

e. C3 to 2-509 makes it clear that a MC S cannot transfer RoL and it remains upon him until actual receipt by the B, even though full payment has been made B has been notified that goods are at his disposal.

f. 2-509(2) contemplates a situation in which goods are in the physical possession of a third party who will continue to hold them after consummation of Sale. Therefore, not a provision appropriately applied to circumstance at bar which anticipate passing of title & physical possession ~ simultaneously.

g. Furthermore, bailment requires delivery of goods to the bailee. Having concluded that defendant failed to establish delivery of the furniture to plaintiff, by no stretch of the imagination may plaintiff be said to have redelivered it to defendants for safe-keeping.

h. AGR between B and S clearly contemplates delivery at the Bs home and, under UCC, RoL remains upon a MC S until he completes his perf with reference to the physical delivery of goods. 2-401(2); 2-509(3); and C3 to 2-509.

i. Receipt-Tender Rules Under 2-509(3).

i. Consumer from MC: Under 2-509(3), if a consumer purchases goods from a MC, RoL does not pass to B until B receives goods

ii. Consumer from Consumer: If a consumer purchases from another consumer, RoL passes upon tender of deliver.

1. Often tender occurs an instant before B receives goods. But sometimes B may not receive goods until sometime after S tenders delivery.

2. Ex. B may leave goods with S for a time, as when a car dealer calls a B to set up a time for B to pick up her newly arrived car, or when a B of furniture at a garage sale promises to return the next day with a truck

6. Jakowski v.CaroleChevrolet,Inc. (N.J. 1981).

a. S: RoLpassed to B upon hisreceipt ofthe auto (receipt of goods).

b. 2-509(4), however,expresslyprovidesthat thegeneral rules of 2-509 are subject to specific provisions of 2-510 which deals with effect of BR upon RoL

i. B relied on 2-510 which provides: Where atender ofdelivery ofgoods so fails to conform to K as to give a right of rejection the risk of their lossremains onS until cure orACC.

1. 2-106 clear in intentto preserve rule ofstrict compliance (perfect tender) Goods...conform to K accordance w/ K oblig

2. 2-510(1), so failsto conform, ismisleading in this respect: no particular quantum of nonconformity is required where asingle delivery iscontemplated.The allusion is to 2-612which substitutes a rule of substantial compliance where, and only where, aninstallment deal is contemplated

c. UltimateRoL: RoL doesnot referto ultimate loss.Rather, it is used to determine which party takesthe initialloss.Often initialloss can be shifted to other party to sales K or to a carrier, warehouseman,orinsurance company

WRs

1. WR?

a. Is it an opinion or statement of fact

b. Specificity

c. Is the person making statement an expert

d. Is it subjective or objective

e. Relative knowledge of parties

f. Formality of statements

g. Oral are likely to be opinions

h. Affirmation of fact is likely to be written

i. Qualification of statement: i.e. it is my opinion

j. Obviousness of the nonconformity

k. Obvious statement is not consistent with condition of goods

l. Statements in K v. Statement in Ad (likely opinion)

m. Position of person making statement: Fiduciary v. stranger

2. Doug Connor v. Proto-Grind, Inc. K for sale of a grinding machine

a. Expressly: machine would grind materials effectively, including palmettos

b. P used machine grind palmettos; P sued BR of WR; D: opinion (puffery)

c. CT: statement of fact or puffery is a Q for the jury

d. D: P had prior knowledge: his competitors were using same machine/problems

e. D: since P knew it was defective then he did not rely on D statement

f. CT: reliance on a statement; basis of a bargain; Q for jury

3. Royal Business Machines Case v. Lorraine

a. B: 8 statements S made were express WRs

i. of high QL: opinion: ambiguous

ii. Low frequency of repairs: opinion: not specific and subjective

iii. readily available: general and subjective

iv. Cost low at cent per copy for supplies and maintenance: opinion: statements about the future are not affirmations of fact

v. Machines have been extensively test and are ready to be marketed: opinion: not specific, and subjective;

vi. may be ready to be marketed but still have problems (opinion on when it is ready to be marketed) Opinion: statement about the future

vii. Safe and would not cause fires: opinion: safe is general and subjective; could not cause fires: statement of fact

viii. service calls would be required on average every 7000 to 9000 copies: opinion: about the product, specific (statements of fact), but talks about future perf (opinion)

b. If Statements were statements of fact: not BR if made after purchase

c. Basis of WR must be a part of bargain; affirmations after AGR do not create WR

4. P.4, pg 225. Not WR, may be K duty. Promise to replace in future not create a WR

a. Promise: a commitment to do (or not do) something in the future

b. Guarantee: an assurance that the promise will be enforced (type of promise)

5. Two types of WRs

a. WR of future perf. (Car free from defects; promise for next 3 years)

b. WR of present conditions (Car free from defects)

6. P.4 (part 2), pg 225. No affirmation of fact by manufacturer: therefore there is no WR

7. P.7, 228. Mechanically sound, affirmation fact; in good condition, opinion; no problems, affirmation fact; B: BR of WR; S: no BR; WR not basis of sale: sale was based on $$ of car not statements. 3 ways: Facts; Description; Sample or model that becomes part of bargain basis

8. S warrants title; has right/power/capacity to transfer to B (free of liens, other encumb)

9. 2-314: WoM: applies whenever S is a MC/Dealer/Expert with respect to goods being sold: normal and ordinary purpose

10. IWR of fitness for particular purposed

a. S knew of Bs particular purpose for which goods would be used

b. S recommends goods to be used for that purpose

c. B relies on Ss recommendation in selecting goods

d. S knows that B is relying on Ss judgment/skill in making selection

e. Ss arguments - In good condition: opinion: no BR of iWR

f. Bs argument: statement of fact: look at factors; who is making statement

g. S: K was the final expression of the AGR

h. Parol EVD rule: only allow consistent ADD terms

i. Yes BR of WR: statement of facts that B relied on

j. No BR of WR: B did not rely on information

k. The description is qualified (opinion) by Statement for B to inspect equipment

l. Is it rbl to rely on the description if S states B should inspect

11. IWRs

a. Three iWRs

i. iWR of title. 2-312: once B takes possession S also gives title

ii. iWR of MCability. 2-314: S a MCin WR of sale goods are MCable

iii. iWR for particular purpose: 2-315

1. If S has reason to know B would use goods for particular purpose

2. B relying on Ss skill/judgment on selection of goods

3. B relied on statement/recommendation in selecting goods

4. S knew B relied on recommendation for particular purpose

b. P.1, pg 233. No, MC is not a telephone MC

c. P.2, pg 234. Yes, replacement goods is viewed as Sale of replacement goods

d. P.3, pg 234. S: Im not a MC with respect to spray paint machines; or, Sale of used goods, therefore there may be an issue with its condition; or, would machine working at 50% pass without objection; Look at sale $$

12. Ambassador Steel v. Ewald Steel

a. K for commercial QL steel; not in K: (iWR); P claims BR; No BR of WR for particular purpose: S did not know of purpose to be used

b. Claims BR of MCability; Not MCable

13. Bethlehem Steel v. Chicago Eastern

a. Steel for wall sheets in grain storage tanks (i.e. silos)

b. B specified that they wanted ASTM 446 Grade C

c. S complied with specs, but the process used to produce Steel made Steel brittle

d. B states that WR of MCability was Bred

i. CT: that use in grain walls was not an ordinary use of this steel

ii. Steel would not be rejected in ordinary UoT

e. B then argues WRPP

f. S: not recommend anything and S did not rely on any recommendations

g. B gave specs: No Reliance!! No iWR for particular use!!

h. Ss steel met the ASTM 446 Grade C, but 25-50 times as much

i. Ordinary purpose is to make things stronger: new steel fit for ordinary purpose

j. 2-314 is conjunctive: all requirements must be met: Pass w/o objection; Fair average QL within the description; Fit for the ordinary purpose; Permissible requirements; Adequately contained, packaged; Conform to promise or affirmations of fact made on the container or label if any

k. When B provides specs, he does not rely, so there is no WPSF

l. All requirements under 2-314 must be met for WOM

14. P.5, pg 244. Does A2 even apply? Hybrid goods/services. Restaurant is largely about service. YES! Last sentence 2-314(1): food or drink, consumed on premises or elsewhere, for value, is a SALE. Not MCable

15. P.6, pg 244. Book contains recipes; poisonous. MCable: if fell apart on opening, non-MC

16. P.8, pg 244. BR of MCability: even if S knew nothing of the condition of the car: knowledge not required: if not pass objection in the trade, not MCable: sell at your peril

17. If $$ was $500 then it may pass the objection of the trade: $$ matters

18. Tyson v. Ciba-Geigy

a. B went to D to buy herbicide to kill crabgrass in his soybean crop

b. Killed Bs crop (reduced yield)

c. S: Dual8E is as good as job as the one B was asking for

d. S recommended Dual8E be mixed with other chemicals to reduce crabgrass

e. BR of express WR: good job is an opinion

f. Pretty general statement, even though spoken by expert; Verbal favors opinion

g. BR of iWR of MCability: no, killed vegetation, which was its ordinary purpose

h. BR of iWR of use for a particular purpose

i. B told S the particular purpose; S made a recommendation (purpose)

ii. B relied (in fact, agreed not to use her original selection); S knew B rely

i. S: I told him to buy goods, but I told them to mix goods

j. CT: Jury Q. Still might be a cause of action in Tort, for example

Disclaimer of WR

1. 2-316. 1) Do not make express WR! Disclaim express WR; Disclaim iWROM

a. Must be explicitly state disclaimer of MCability; writingconspicuous

b. Disclaim WRPP, must be conspicuous and MUST be in writing

c. 1-201(b)10 - "conspicuous" or not is a decision for the court. Rbl person ought to have noticed it. Conspicuous terms include the following:

i. (A) a heading in capitals equal to or greater in size than Surrounding text, or in contrasting type, font, or color to Surrounding text of Same or lesser size; and

ii. (B) language in the body of a record or display in larger type than Surrounding text, or in contrasting type, font, or color to Surrounding text of Same size, or set off from surrounding text of Same size by symbols or other marks that call attention to the language

2. Sierra Diesel Injection Service v. Burroughs

a. Sale for a B-80 computer to be used for bookkeeping

b. S: B should buy the B-80; B-80 did not work; S: B, buy the B-91; it did not work

c. B hired expert: computers would never perform their intended purpose

d. iWR of MCability: Computer normally computes: cannot do accounting

e. BR of iWRPP; S: not liable bc the K has a disclaimer

f. S: all WRs were disclaimed: mentions MCability; conspicuous + in writing

g. CT: need to look to see if a rbl person in Shoes would have noticed WR

h. Factors to consider: Sophistication of the parties; B was only a high school graduate: not used to Ks; Does not know anything about computers; Disclaimer was on the back of the K; Other section disclaimer called WR; CircumstancesTherefore the disclaimer was not conspicuous

i. Items to show for disclaimer: Put on front page: conspicuous; Explain it to them; Have B initial next to WR

3. P.6, pg 288. Most courts state that if a B knows of disclaimer then the disclaimer is effective; some courts might go the other way (minority): Must first look to see if it meets the code requirement; but also; Must also look at the B: is it conspicuous to the rbl B; If not conspicuous to the B, and B read it, is it effective

4. Gindy Manufacturing v. Cardinale Trucking

a. B purchased 25 new trailers from P; K had clause stating Sale was as-is

b. B: that 2-316(3) has clause - unless shown by other factors

c. B states that the as-is was intended to be applied to used equipment Same K was used in Sales of both; Can always use iTerms to supplement K

d. B argues that as-is is not conspicuous

e. S (re-possesses goods; sales $$ less; suing for the difference, or deficiency judgment) states 2-316(3) not require the disclaimer to be conspicuous

f. Circumstances are that Same language is used for new and used trailers; past dealings fair to include that the as-is WR only effective for used trailers (i.e. the circumstances indicated otherwise)

g. Court states that subsection 3 must be read in conjunction with subsection 2

h. It was the intent of the framers to make the disclaimer conspicuous; it is non-sensicle if as-is can get rid of the requirement for a disclaimer; 2-314(3) unless excluded or modified (2-316) other iWRs may arise from CoD or UoT

i. B must notice disclaimer; any disclaimer, even as-is, must be conspicuous

Privity: Kual relationship between parties

1. Vertical: answers Q, who may be sued: may I jump to the mfr

2. Horizontal: answers Q, who may sue

3. Randy Knitwear (P) v. American Cyanamid (D)

a. Ds chemical is supposed to prevent shrinkage; P was end user

b. D: no privity between P and D; Q: must you be in privity of K

c. UCC 2-318 does not address vertical privity (Randy not directly sue Mfr): so, state law: most states have abolished vertical privity requirement (sue Mfr)

d. Does speak to horizontal privity

i. Alt A: natural person; friend, family; lose an arm - 3rd parties can sue if they suffer injury

ii. Alt B: not specify family, household or guest (any natural person)

iii. Alt C: anyone can sue for any loss if they are affected by the loss of warranted goods; no personal injury limitation

iv. B (as ultimate beneficiary of express WR) can sue through vertical privity

e. xWRs: vertical privity is not required (in most states)

f. When mfr gives express WR it follows down the chain to ultimate B

g. It is unsound and unjust to permit the manufacturer to persuade the consumer to buy his product by means of mass advertising and then deny the consumer the right to recover in the event goods fail to correspond to representations made

4. P.7 (pg 295)

a. B inspected several at Random

b. Bought, but then many tables and chairs were defective

c. 2-316(b): B has examined goods (or sample, or model) as much as he desires, no iWR to the defects that ought to have been revealed with the rbl inspection

d. Protected from latent defects, but not obvious defects that you could have discovered by routine / rbl inspection

5. Tex v. Brockway. Vertical privity with iWRs

a. IWRs are given from S to B

b. An B cannot sue for BR of iWR for any party that he is not in privity with

c. Except for 3rd party beneficiary (i.e. WR of MCability: retailer - B)

d. Any person in the chain can expressly disclaim WR to prevent it from being carried down the chain

6. ACC, Rejection, RV of ACC

a. 2-606 ACC: (a) rbl opportunity to inspect; (b) Fails to make an effective rejection; (c) Any act inconsistent with Ss ownership

b. 2-607(1) pay at K rate for any goods accepted (does not matter whether goods were defective, BRed WoM, etc.)

c. 2-607(2) ACC of goods by B precludes rejection of goods

d. 2-607(4) burden of proof on B

e. 2-601: B may reject whole: perfect tender rule: S right to cure; not owe money; S has burden to prove rejection was wrongful

f. As a result of the harshness, 2-508 allows S to cure:

i. 2-508(1) where tender rejected for NC and time for perf not yet expired, may inform B of its desire to Cure within the time remaining

ii. RV: S does not have right to cure

g. Accepted w/ rbl assumption NC would be cured or w/o having noticed defect; or

h. Accepted goods bc latent defect (difficult to discover); or

i. Relied upon Ss assertion, dont worry, goods conform

j. accept whole; might revoke ACC under 2-608 (higher threshold than rejection)

k. NC substantially impairs commercial value of goods to the B

l. Accept commercial unit or unites and reject the rest

7. DP Technology v. Sherwood Tool, (D. Conn. 1990)

a. DP creates custom computer system for Sherwood Tool

b. 18 Apr 1989: delivery date

c. Software met deadline; Hardware did not meet deadline (4 May 1989)

d. B returned (rejected); S sued for BR of K

e. Hardware came 16 days late and Sherwood doesnt pay;

f. B: rejected; had right to reject under perfect tender rule; K expired, so S could not cure (had no right to cure)

8. Held. applies minority rule-frown on perfect tender rule-we hold no material BR b/c substantially performed

a. Although the rule has been criticized by some scholars, Connecticut is not alone in its interpretation of UCC section 2-601 and its application of the perfect tender rule.

b. Court noted that Texas, Maine, Nebraska, Michigan, Arkansas, and New Jersey follow the perfect tender rule; When should we not allow rejection?

c. Unsubstantial, non-harmful NC

d. Specially manufactured goods and the BR is unsubstantial

e. Done in bad faith-looking for any way to get out of the deal

IKs

1. 2-612(2) Only if: installment has a NC; NC substantially impairs value of the installment, and NC cannot be cured

2. Midwest mobile diagnostic imaging v. dynamics corp of America: Can B cancel entire K? Only trailer number 1 so far! B: delivery of all my trailers will be effected while S cure

3. Test did the court apply to determine whether or not there was substantial impairment?

a. Purpose of K; substantially impairment?

b. Totality of circumstances?

c. Injustice if B is forced to wait?

4. P.1, page 364. 1,000 kw/hour; plus/minus 2%; six generators; 1st generator only 900; must give S opportunity to cure. S agreed to fix the problem, not the generator produces 960 kw/hour. Thats the best I can do. Not possible to cure.

5. Miron v. Yonkers Raceway, Inc., 400 F.2d 112 (2d Cir. 1968), the court held that rejection of the purchase of a horse twenty-four hours after Sale was untimely, as custom dictates that the animal was inspected at the time of sale.

a. Facts:he is soundcreated a WR that the horse was sound

b. purchased horse from at auction. The horse was represented as being sound. However, 24 hours later, after being transported to s stables, it was found to have a fractured leg. then notified and demanded to return the horse

c. Issue. Basic factual issue tried below was whether Red Carpet was sound, as warranted, at the time when the auctioneer's hammer fell and all risks passed to Finkelstein as the B. The defendants' EVD on this issue consisted of X-rays

d. Procedure. Suit brought by Ss against horse B and against raceway which acted as Ss' agent in auction sale of the horse to recover purchase $$.

e. DC entered judgment in favor of plaintiffs, and defendants appealed

f. ACT: Bs own testimony showed that it is customary, when buying a racehorse, to have veterinarian or trainer examine the horse's legs, and as defendant did not have the horse examined either at place of sale or at his barn later on day of sale, defendant passed up rbl opportunity to inspect horse within meaning of UCC section providing that ACC of goods occurs when B fails to make an effective rejection * * * but such ACC does not occur until B has had a rbl opportunity to inspect them, and accordingly, burden was on defendant to establish any BR with respect to goods accepted

g. Held. Affirmed. We affirm the judgment below on the BR of WR issue, bc we agree with the District Court that under New York law Finkelstein had the burden of proving a BR of WR and we find ample support in the record for the finding that Finkelstein did not carry that burden successfully.

6. Zabriskie. Paid by check. Within 7/10 of a mile after the car drove off the lot, it stalled, and had serious transmission problems. Smith immediately called to cancel Sale and cancel check. Zabriskie towed car back to the lot (next day); replaced transmission

a. Procedural: Zabriskie sued for the balance of the purchase $$

b. Issue: Whether B had accepted car & was thus liable for purchase $$

c. Holding: No. Ss Reasoning: 2-606(1)(a) provides that ACC occurs when the B, after a rbl opportunity to inspect goods signifies to S that goods are conforming or that he will take/retain in spite of their NC. [B liable for $$]

d. spin around the block at the dealership did not comprise a rbl opportunity

e. expectation a new car will be mechanically sound and does not have to perform a thorough mechanical inspection for latent defects before leaving the lot

f. 2-606(1)(c) any act inconsistent with the ownership S. Drove it home.

g. Even if they did not accept, I have a right to cure (new transmission)

h. B: unknown lineage transmission is not a cure for a defective new car transmission; even if you say I did not reject, then I now revoke bc I have detected a latent defect

i. S: you did not revoke in time; substantial change of goods? no longer a new car b/c its a used car; but that is ridiculous, since you would never be able to revoke ACC. More of a change in function or appearance (not used v. new)

j. B: put transmission in after I revoked

k. S: RV came; stopped payment; did not want it repaired

l. Watch out for the repair or replacement WR of car dealers. The AGR may provide (2-719(1)(a)): rejection and RV and may limit and alter the DGs; by limiting Bs remedies to R&R. Hope for state lemon law

Ss remedies when B BRed

1. B BR: Wrongfully rejects goods; Wrongfully revokes ACC; repudiates

2. Remedies

a. 2-703: S withhold delivery; S stop delivery in transit;

b. 2-706

i. S may (not required) resell; recover difference in resale $$ and K $$

ii. 2-701 requires resale is in GF & w/i commercially rbl manner

c. 2-706(2) requires all aspects of resale be commercially Rbl; S may keep profits

d. 2-706(3): S must send B notice of resale

i. Public: must send notice of time and place; B may bid

ii. Private: must send notice of time

e. 2-708 (alternative to 2-706)

i. Recover DGs for BR; UCC not require S to resell

ii. 2-708(1). DGs is diff btwn MP at time tendered and K $$

1. If MP exceeds K $$ then there are no DGs

2. Assume that S suffered a loss at time of BR

f. 2-709. S may recover the $$ of goods if:

i. Goods are accepted;

ii. Goods have been lost stolen or DGd in transit after RoL to B

iii. When S is unable to resell goods

iv. If S can recover $$ then B gets goods (disguised specific perf)

g. 2-710. In 2-706-9 S can recover incidental DGs; DGs occurred after B BRes

3. Jorgensen: Bs purchased mobile home; ++defects; sought to revoke ACC/cancel K;

a. D: Ps did not produce EVD that the cost of repairs was substantial

b. Impairment of value is not shown unless goods are useless for purpose

c. Ps unreasonably refused to allow further attempts to repair the unit

d. Use of the mobile home after the notice of rescission constituted a use of the good inconsistent with Ss ownership and that therefore a new ACC of goods occurred

e. Held: substantial impairment of value, S has limited number of chances to cure

f. 2x inquiry: subjective test for whether NC impaired value to B

i. Substantial impaired value to B

ii. Actual impaired value

g. Requires EVD that Bs needs were not met; B was living in the home!

i. 2-601: perfect tender rule

ii. 2-602(2)(a): after rejection, exercise ownership by B wrongful

iii. 2-604: if S gives no instruction (after rejection/RV, MC B has to follow any rbl instructions received by S; if perishable, can sell ASAP

iv. B may store goods, reship goods, or resell goods

h. CTs: if goods are durable, cannot just ship them and sell. Must keep them until S picks it up! Carpet, refrigerator, keep until they pick it up

i. S should be happy someone is taking care of it and keeping it from getting more DG. B now caretaker. Need money back before can give it back and move

j. 2-608: C2: The test is not what S had reason to know at the time of K; the Q is whether NC is such as will in fact cause a substantial impairment of value to B though S had no advance knowledge as to the Bs particular circumstances

k. S does not have an unlimited amount of time to cure

l. Most courts say caretakers do not have to pay bc they are not lessors

4. Page 393-97 Problems

a. P.1. Bs ACC was reasonably induced by Ss assurances; also, Jorgensen could not have reasonably inspected before they actually moved in and began to experience the leaks

b. P2. 2-608(2) requires rbl time for RV. Jorgensens rbl? Yes, in view of the water leaking circumstances. Would have been very expensive to secure in a covered location.

c. P3. before any substantial change in condition of goodsnot caused by the defects: Living in a mobile home for a year probably decreases its value.

d. Seems B could have inspected prior to doing all the work of cutting the paper and selling to its Bs. RV not permitted; Subsection 2 probably precludes RV; Says B has same rights and duties as though he had rejected

e. Continued use after RV of ACC

i. Jorgensens continued occupation was to prevent further DG

ii. What qualifies as a rbl time to revoke is a Q for the jury

iii. Whether use after RV is inconsistent with RV is also for jury

f. P5. RV and privity. Does 2-608 actually require privity? It really seems like 2-608 is talking about B and S as having direct contact with one another-if a remedy is not available, then B could go to the manufacturer, but here, it seem his first approach should be to address S from whom he directly acquired goods

g. Force Delivery of Goods, 2-716, 2-502. SP if goods unique or other

i. Sedmak v. Charlies: Charlies reneged on its promise to sell a corvette pace car to Sedmaks; Held-specific perf is appropriate b/c, although the car is not unique, would have been impossible to obtain otherwise w/o considerable expense and inconvenience-i.e. inability to cover

ii. Hilmor Sales Co. v. Supronica Corp. claims lipstick and nail polishes ordered at close-out $$s are unique; Held-specific perf not granted; could cover at a higher $$ and obtain the difference. a very low $$ of goods does not make them unique. Even if a B shows that he cannot find replacement goods at an equally favorable $$, a SP may be denied bc replacement is objectively obtainable.

h. Valley Die Cast Corp. v. A.C.W., Inc.: Continued use after reject

i. B of a car wash system took delivery in July 1966, rejected it in January 1967, but continued to use it until May of that year, when a replacement system was installed. B recognized depreciation on equipment; HELD. neither the taking of the depreciation nor the continued use after rejection amounted to ACC of goods. Hence, where CT can find Bs have been substantially wronged in the purchase and further wronged by Ss refusal to refund, it may be inclined to read section 2-712 literally

5. Page 416-418 problems

a. P1. If identical cover is not reasonably available, substitute cover should be allowed. UCC 2-712, Cover; Bs Procurement of Substitute Goods

b. (1) After a BR w/in the preceding section B may cover by making in GF and w/o unrbl delay any rbl purchase of or K to purchase goods in substitution for those due from S. Goods purchased during cover do not have to be identical, only that they are commercially usable as rbl substitutes under the circumstances of the particular case. C2

c. The test of proper cover is whether

i. at the time and place B acted in GF (honesty in fact and w/in the boundaries of rbl commercial standards) and

ii. in a rbl manner, and it is immaterial that hindsight may later prove that the method of cover was not the cheapest or most effective. C2

d. P2. 2-715 covers Bs rights to incidental and consequential DGs

e. P3. Lost profits. 2-711(a) indicates B may cover and have DGs under the next section as to all goods affected whether or not they have been identified to the K might NOT be available under 2-708(2) (b/c this is a prior section); 2-712(2) allows for incidental and consequential DGs under 2-715(2)(b); Lost Profits might be considered to be an injury to person under 2-715(2)(b)

6. Allied Canners & Packers, Inc. v. Victor Packing Co. (Cal. App.1984)

a. Rule. if S knows B has a resale K, and does not BR in bad faith, then award limited to actual loss (i.e. profit that would have been made from resale $$).

b. Buy at 28.50, re-sell at 29. Bc of BR, B lost $4,462.50

c. MP at time of BR? 87 cents / pound; MP v. KP differential? $150,281.25

d. NOT windfall to B; S: about making V of BR whole

e. CT: agree. We know that 2-713 gives MP / K $$ differential. UCC Drafters (2-713) probably wanted to place B in as good a position as she would have been

7. Texpar Energy v. Murphy Oil USA (7th Cir 1995)-I suffered a loss; irrelevant what B intended to do with the asset. Should have benefitted.

a. Texpar to buy asphalt from Murphy and then sell it to Starry;

b. $$ oil up; Murphy BRed, forcing TexPar to BR w/Starry (who it settled w/);

c. Held. SP 2-713 applies, TexPar entitled MP DGs (non-BRing party windfall)

d. What if B has already covered? Can B recover MP if B has covered at a lower $$?

e. CTs divided; most, no, b/c B would then be better off than had S performed; some courts-always entitled to market DGs (even if cover DGs are less)

f. Better way to look at it, is actually, the MP / K $$ differential IS THE LOSS.

g. Most courts follow 2-713, regardless of what B did

h. 2-712-if you pay over the MP, in GF, you may recover the difference

i. incidental DGs, 2-715(1)-DGs that arise in the ordinary case, expenses reasonably incurred; may recover post-rejection costs

ii. consequential DGs, 2-715(2)-loss that is foreseeable and unavoidable

8. Industrial Molded v. Gross & Son

a. K to manufacture and sell 5 million plastic clothing clips; Total K = $37,500; 772k clips delivered; B tells S to hold on to remaining clips; B tells S that they cant sell them so they do not want them

b. LC for S; awarded lost profits. Under 2-709(1)(a), B had accepted goods and therefore Definition of ACC: intent to keep goods

c. 2-709(1)(b). S is awarded the $$ of goods if they cant resell them after rbl attempt OR circumstances reasonably indicate such effort will be unavailing.

d. S cant resell due to lack of market

e. 2-708. Allows difference btwn MP and K $$. No one wants to buy them: therefore they should be able to recover full $$ ($0-$K)

9. Tesoro Petrol v. Holbourn Oil

a. K to sell gas at $1.30/gal; Market at time of BR was $0.80; S resold at $1.10/gal (D of $0.50/gal); How much can S recover?

b. 2-708: (difference btwn K and market); S would recover $5 million

c. 2-706: (diff btwn K and resale); S would recover $2 million

d. S: UCC not require S to resell; should not have to pick btwn 708 and 706 DGs; pick vehicle that allows most recovery

e. B: Code may not require S resell, but gK law requires S to mitigate (2 million)

f. CT: S is not obligated to resell, but had they mitigated the court will look at the difference MP and K to determine DGs

g. Any DGs recoverable under 2-708 would be limited to the DGs you would have received had you mitigated. You do not have to mitigate, but if you did, we will look at what you would have lost had you covered. You should mitigate!!

h. If B can show S would have sold > MP, B will only be on the line for the MP

10. Neri v. Retail Marine: page 466

a. Neri had a K with D to purchase a boat; D resells boat to a 3rd party for Same $$ as the Bs K; B sues S for restitution

b. S has not suffered loss from BR therefore they should not keep deposit of $4250

c. D would be unjustly enriched if they keep deposit

d. K $$ to MP differential is ZERO; K $$ to retail $$ differential is ZERO

e. CT: awarded B everything but $500

f. 2-718(2)b: statutory liquidated DGs provisio

i. absence of such terms, 20% value of total perf for which B is obligated under the K or $500, whichever is smaller

ii. If B BRes and you give a deposit then you can get your money back minus (20% or $500, whichever is smaller)

g. Exception to 2-718(2):

i. 2-718(3): B does not have a right to recover under 2-718(2) if S can show that S was DGd under another section of the code.

ii. S: lost profits under 2-708(2): Lost Volume S Provision

iii. If you lose a volume then you lose a profit (here, $2579.00)

iv. Therefore S entitled to lost profit and incidental DGs (2-710)

v. S must show that but for the BR they would have sold one more unit

vi. 2-718(1): A2 liquidated DGs provision

vii. DGs for BR by either party may be liquidated in the AGR, but only at an amount which is rbl in the light of the anticipated or actual harm caused by the BR, the difficulties of proof of loss, and the inconvenience or non-feasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated DGs is void as a penalty

viii. DGs will only be enforced under 2-718(1) if:

1. rbl relationship to actual harm and rbl $$ (cant punish)

2. Must be difficult to prove the loss

3. Must be inconvenient in absence of the liquidated DGs provision. In the absence of this you cannot cover.

11. 2-610 Anticipatory Repudiation

a. If party announces that they will not perform a future duty under the K

b. (must be clear, definite, unambiguous, and certain); cant say I may not perform must be I will not perform

c. Party has 3 options

i. Wait to see if party will retract repudiation

ii. Party may resort to any remedy for BR

iii. Non-BRing party may suspend their perf

d. Weakness of this code section: the repudiation must be clear, unambiguous: she has to pay me even if I say I do not think I will deliver

e. 2-609: Adequate Assurance of perf

i. grounds for insecurity, party may make a request in writing for adequate perf and until you get that assurance you can suspend their perf.

ii. If you do not receive adequate assurance within 30 days, then you can declare the K anticipatorily repudiated (you can then sue for BR)

f. 2-719: parties can limit their remedies for BR

i. If I BR this is the maximum amount you can recover

ii. S can add a limitation of liability clause. 2-719(1)b

g. ONLY RELATE TO S (B can always come up with; or not come up with money) 2-615 - A2 K BR defenses: under general K law, impossibility excuses perf; force majore excuses perf; illegality excuses perf; frustration of purpose. Code carries these concepts

h. Excuse by presupposed conditions: Frustration of purpose; Commercial incompatibility (unforeseen events, perf can only be made at an excessively and unreasonably high cost - e.g. war breaks out); Impossibility

i. If something unforeseen occurs that make perf impracticable then perf is excused; Act of God, labor strike (etc)

i. THUS, if unforeseen event makes delivery of goods impracticable, perf by S excused. BR w/ immunity or to not deliver without there being a BR.

ii. Requirement: event that made perf impracticable must be unforeseen

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