Applies only to transactions in goods;

not for security transactions (Sec 9)

does not affect any statute regulating sales to consumers,

May be or maybe not for farmers or other specified classes of buyers.

Look at 2-105 for Def of goods.  

1) Goods are movable and identifiable at time of contract NOT "things in action" (money/right to a personal possessions - therefore no life insurance or $ or a debt)

(2) Goods can be "future" goods. 

(3) Can have a sale of a partial interest in goods.

(4) Fungible goods can be identified and exchanged 

(5) "Lot" means a parcel or a single article which is the subject matter of a separate sale or delivery,

(6) "Commercial unit" may be a single article (as a machine) or a set of articles (set of furniture or assortment of sizes) or a quantity (as a bale, gross, or truckload) 

"contract" and "agreement" are limited to those relating to the present or future sale of goods.

"Contract for sale" includes both a present sale of goods and a contract to sell goods at a future time.

A "sale" consists in the passing of title from the seller to the buyer for a price (Section 2-401).

A "present sale" means a sale which is accomplished by the making of the contract.

1) minerals, oil and gas and crops are goods if they are severed from the land - Seller must be the one that severs the minerals from realty

2) If crops or timber must be capable of severance without material harm to the land - can be severed by buyer or seller

3) UCC is subject to 3rd party rights provided by the local realty laws

UCC not for construction contracts but can apply in mixed or hybrid situations where "predominant purpose" was sales of goods vs services. 

Look at ALL four factors for "predominate purpose" are 1) language in contract, 2) nature of the business of supplier, 3) primary purpose of contract, 4) amounts paid for goods vs services. term "purchaser"=goods.   

AVA contracted to install $80K smart home system in Tanzer house, tanzer fires AVA, breaches contract, AVA sues, Tanzer says UCC does not apply bc of services.  

Article 2 of the Uniform Commercial Code governs mixed contracts for services and goods if the contract is predominantly for the sale of goods.

COntract to adapt software to work on apple computers, photon failed to complete project, simulatodes sues, photon says UCC does not apply due to services

Writing software is predominantly services, not goods.  

Downloadable software is also a good (and on disc)

obligation of good faith and fair dealing cannot be removed UCC 1-304 - obligation of good faith for all transactions- all other aspects of the UCC can be modified by contract

If consumer goods sold as part of a hybrid contract retain their character as goods after performance (diving board is always a diving board), and damages result from a defect in those goods, then the implied warranties of the UCC apply to those goods even if the transaction is predominantly for services.

apply gravamen test when goods (not services) are defective in a services contract - apply when you could buy the good in the general marketplace and used the goods without service installation 

Frix has medical clinics, wants to add mammography, hires Integrity to remove old Ct scan, buy and install new CT scanner and mammography equipment.  Sec 2-207 must be between merchants, frix relies on this to get implied warranties - merchant must have particular knowledge of his occupation.  

Physicians are not merchants because they are not experts in the machines themselves

Lease: able to terminate, has economic life at term end

Security: Bound to renew, has option to renew or own at end of term with little or no consideration

In between when: PV of payments is equal to or more than current fair market value, OR lessee assumes risk of loss of goods, or lessee pays taxes, insurance, registration fees, etc.  

Nominal if substan less than fair market value

Good faith means honesty in fact and the observance of reasonable commercial standards for fair dealing in the trade.  

For merchants

 (1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale

(c) are fit for the ordinary purposes for which such goods are used;

This Article applies to any transaction, regardless of form, that creates a lease.

Lease is a transfer of the right to use of the good where that there is economic life left after the lease.  

Article 2/2A applies to sales and leases of goods. 

Does not apply to secured transactions - article 9 - cannot have a security interest.  Sale of goods under credit is not a secured transaction and falls under 2 or 2A

(1) This Convention applies to contracts of sale of goods between parties whose places of business are in different States:

(2) The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract.

for Commercial goods, not consumer goods - can be household goods if sold for commercial purposes

(a) personal, family or household goods, 

(b) good bought at auction;

(c) on execution or otherwise by authority of law;

(d) of stocks, shares, investment securities, negotiable instruments or money;

(e) of ships, vessels, hovercraft or aircraft;

(f) of electricity.

Convention on Contracts for the International Sale of Goods

Applies to the United Nations Countries

Goods as part of the a transaction retain their character as goods. 

The gravamen of the action involves goods rather than services (defect is related to goods rather than services)

Apply the gravamen test when the good could have been purchase din the general market and used by the plaintiff

Apply specific provision of Art 2 when the policies that underlie such provision can be appropriately applied to a 

Agreement is the text and description of the transaction - the bargain - does not mean that it is legally enforceable.  

Contract is a legally enforceable agreement based on mutual agreement to the UCC>   

A written letter from one party to another with the essential terms of an oral agreement between the parties satisfies the writing requirement of the statute of frauds.

 bought ring for $600K, could return it within 1 year but was not in writing, returned ring but wrote in a letter that they could return but get paid when ring was resold (not part of original deal).  

SoF met with post sale letter, and cobbling together commuications but additional condition of needing to resell before payback not valid unless both parties agree.  

Written confirmation of an oral agreement, when received within a reasonable time, will bring an agreement within the Uniform Commercial Code’s exception to the Statute of Frauds, if the agreement is between merchants.

Ansgar regularly sold grain to Streit for future delivery, Ansgar normally takes hedge position on Chicago Merc.  Streit did not take delivery on month because market price for grain was lower than quoted by Asngar, Ansgar sues, Streit says he did not get timely written confirmation of sale, no SoF requirements. 

Was regular practice to get written confirmation upon delivery, SoF still fulfilled

 "Signed" includes using any symbol executed or adopted with present intention to adopt or accept a writing.

1) Contract, sale, goods, $500, writing, signed quantity

CSG5WSQ.  Contract for sale of goods over $500 invalid unless in writing AND has quantity of goods (not always required). Writing can be incorrect and still be OK.  

(2) Between merchants if within a reasonable time a writing in confirmation of the contract unless written notice of objection is given within 10 days after received.

(3) Exceptions to writing requirement include: a) specially manufactured for buyer 

(b) admits in court, or (c) payment received/accepted

Lease is not enforceable unless in writing when: 

1) total payment more than $1000 (without option to buy)

and 2) writing signed by party/agent with reasonable description of item leased (quantity not an issue) - note that the term of the lease must be "reasonable"

Same exceptions as sales SoF

No merchant clause for leases

A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses.

NO SOF ASSOCIATED WITH CISG

Other forms may be behavior, etc.  

REMEMBER ARTICLE 12 AND 96 WHICH SAY IF ONE STATE HAS FORMAL WRITING REQUIREMENT, CANNOT DEROGATE FROM THIS REQUIREMENT. 

Any provision of article 11 (SoF), article 29 or Part II of this Convention that allows a contract of sale or its modification or termination by agreement or any offer, acceptance or other indication of intention to be made in any form other than in writing does not apply where any party has his place of business in a Contracting State which has made a declaration under article 96 of this Convention. The parties may not derogate from or vary the effect or this article.

May not derogate from formal writing requirements when one of the contracting states require this.  

Section 3 - Scope - for all electronic records except for when otherwise under wills, trusts laws or UCC 1-107, 2 and 2A

Section 5 - (intent/agreement) Electronic Signatures - does not require an record or electronic signature, both parties must agree to conduct transactions electronically (INTENT KEY)

Section 7 (Validity) - A record or signature may not be denied legal effect or enforce-ability solely because it is in electronic form. 

Note the difference between sale, lease and secured transaction - must know which is which in a fact pattern to apply Article 2, 2A or 9 of UCC - note that many leases are actually sales - look at the exclusion criteria for sales to actually be sales in 2A

SoF - MYLEGS - marriage, year, land, E, goods >$500, security interest.   

SoF - writing must be sufficient to show contract in place, signed by person who is charged to be enforceable, number of units, needed - not enforceable beyond the quantity stated.  

A valid electronic signature must be the act of the person signing and be executed with the intent to sign the electronic record.  email sig not sufficient under UETA

JBB invested in Fair Companies and suspected fraud, offered to settle fraud allegations with an email to Fair, but email had no signature.  Fair responded to the email with "i agree" and signed his name.  Days later JBB sends another agreement with electronic signature, fair does not sign. First agreement said a final agreement will be made, leading to premise that first agreement wasn't final

Course of performance - same parties, same contract will continue premises of contract without explicit agreement unless there is an objection

Course of dealing - same parties different contract - previous contracts establishes common basis of understanding and interpretation of new contract. 

Usage of trade - Different parties, different contracts but common policies and procedures in trade agreements such as standard payment terms, etc..  

Terms in writing intended by the parties as a final expression of their agreement may not be contradicted by evidence of any prior agreement may be explained or supplemented by: 

(a)  course of dealing or usage of trade (Section 1-205) or by course of performance (Section 2-208); and

(b) evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.

When it enters into an information processing system used to capture electronic records that the recipient designated or used for the purpose of receiving elec records. 

Emails unopened are still recieved. 

Evidence of course of dealing and trade usage is admissible to supplement and explain a contract as long as the proffered evidence can be reasonably construed as consistent with the terms of the written agreement.

Expressed, plain and unambiguous language can NOT be modified. such as the price of a commodity. Merger term said no previous oral agreement, but did not exclude standard practices evidence. Must state in merger clause that standard sor practices are rejected 

Firm offer by a 1) merchant must be 2) signed writing by offeror/merchant, 3) does not require consideration, for a 4) reasonable time but 5) never beyond 3 months.

Oral communication is not a firm offer

Know all 5 elements for DE bar - need consideration if option to buy is more than 3 months. 

(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which shows existence of such a contract.

(2) An agreement sufficient to constitute a contract does not require a definitive time of when it was established.

(3) Terms can be left open and not addressed and still be an valid contract.  

(1) Merchant contract for goods/food/drink has implied warranty that: 

(a) pass without objection in the trade 

(b) fungible goods are of fair average quality

(c) fit for the ordinary purposes for such goods

(d) be of even kind, quality and quantity under acceptable variability

(e) are adequately contained, packaged, labeled 

(f) conform to the promise or affirmations on label

other implied warranties may arise from course of dealing or usage of trade.

(1) Unless otherwise unambiguously indicated by the language or circumstances, an offer to make a lease contract must be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances.

(2) If the beginning of a requested performance is a reasonable mode of acceptance, an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

1) A definite and seasonable expression of acceptance can have additional or different terms unless acceptance is expressly made conditional on new terms.

2) New terms are proposals for addition to the contract. FOR MERCHANTS, new terms become contract unless:

(a) the offer expressly limits acceptance to new terms 

(b) new terms materially alter contract; or

(c) objection to new terms given in a reasonable time 

3) Conduct by both parties showing existence of a contract is sufficient to establish a contract 

(a) the title conveyed shall be good w/ rightful transfer 

(b) the goods cannot have unknown lien or encumbrance 

(c) Must have specific language (writing not needed) giving buyer reason to know that there is a 3rd party involved with rights that need to be verified.  

(3) A Merchant has same requirements - but when a buyer furnishes specifications to the seller, the buyer must hold the seller harmless against any such claim which arises out of compliance with the specifications.

(1) Acceptance of goods occurs when the buyer

(a) shows tacit approval after reasonable opportunity to inspect goods or will take despite non-conformity; or

(b) fails to make an effective rejection after reasonable opportunity to inspect them; or

(c) does any act inconsistent with the seller's ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.

(2) Acceptance of a part of any commercial units is acceptance of that entire unit.

2-607 1-4 Effect of Acceptance; Notice of Breach; Burden of Establishing Breach After Acceptance; Notice of Claim or Litigation to Person Answerable Over

1) Buyer must pay contract rate for any goods accepted.

2) Acceptance of goods by the buyer precludes rejection of the goods unless acceptance was on reasonable assumption that the issue would be seasonably cured 

3)Where a tender has been accepted the buyer must notify the seller of breach in reasonable time or be barred from any remedy; and

4) The burden is on the buyer to establish any breach with respect to the goods accepted.

1) A acceptance to an offer which contains MATERIAL  modifications is a rejection of the offer and constitutes a counter-offer.

2) However, an acceptance to an offer which contains additional non materially different terms is acceptance, unless the offeror objects without undue delay

3) Material items/terms include: price, payment, quality and quantity of the goods, place/time of delivery, extent of  liability to the other or the settlement of disputes

In a commercial transaction, materially new/different terms will not become part of the contract unless the offeror specifically and express agreement to terms.

Krack makes cooling unit using Metal Matic tubes, routinely used POs which limited Matics liability.  Krack expressed disapproval of the liability language but terms were never changed  in 10 years.  Matic tubes resulted in damage to Diamond; Krack and Matic are sued.  

Matics new liability terms are material and never agreed to by Krack, Krack liable for share of damage despite limit liability lang

Under UCC, material new terms between merchants are not presumed to become part of the contract.

Bayway verbally agreed to sell 60K barrels of gas to Oxy; Oxy faxed confirmation, Bay replied with confirmation letter with terms stating buyer had to pay $400K fed tax. Oxy did not object to the new term or show surprise.

Additional terms become part of contract unless offer expressly limits acceptance, new terms materially alter, or party objects within reasonable time

Knockout rule: if an acceptance contains new terms not in original offer, the conflicting terms in both the offer and acceptance are replaced with neutral UCC provisions.  

Litronic sent written offer to Northrop for printer wire boards.  Litronic Offer said 90 day warranty, but Northrop form said unlimited warranty.  Northrop returned boards 6 months later claiming defect.  

Reasonable time rule in UCC replaces both, 6 months reasonable warranty time due to complex testing needed

Additional or different terms provided in the acceptance do not become terms of the contract unless acceptance is made expressly conditional upon acceptance of the additional terms or the non-merchant offeror expressly agrees to the additional terms. 2-207 still applicable.  

Klocek ordered Gateway computer, Gateway has standard terms of 5 days acceptance with arbitration clause. Klocek sues without arbitration. 

Arbitration clause not binding because new terms not expressly accepted by non merchant offeror/buyer.  

1) modifying a contract needs no consideration

2) An agreement which requires signature for modification must have both signatures for modification; between merchants can be a form signed by other party

3) SoF must be satisfied if applicable.

4) if an attempt at modification or rescission does not satisfy above, it can operate as a waiver.

(5) A party who has made a waiver affecting an executory portion of the contractmay retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.

1) Express warranties by seller are created as follows: 

a) Any fact/promise made by seller that buyer relies on 

b) description of goods shall conform to that description.

c) goods shall conform to the sample or model.

2)does not require that the seller use formal words such as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goodsor a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty

SAME FOR LEASES

1) Unless excluded or modified in 2-316, a warranty is implied in a contract if the seller is a merchant

2) Goods to be merchantable must be at least such as

a) pass without objection under contract description; and

b) fungible goods must be fair average quality

c) are fit for the ordinary purposes ; and

d) run, within the variations permitted by the agreement, of even kind, quality and quantity and

(e) are adequately contained, packaged, and labeled and

(f) conform to affirmations made on box/label if any.

3) Unless excluded or modified (Section 2-316) other implied warranties may arise from course of dealing or usage of trade.

1)A lease contract has a warranty that for the lease term no person holds a claim to or interest in the goods that the seller knows about.

2) A lease with a merchant has a warranty that the goods are delivered free of the rightful claim of any person

3) A lessee who furnishes specifications to a lessor or a supplier shall hold the lessor and the supplier harmless against any claim by way of infringement or the like that arises out of compliance with the specifications.

Under the Uniform Commercial Code, a warranty of title is implied in every contract for sale unless the warranty is excluded or modified by specific language.

Corvette was stolen, sales contract was sold "as-is" - sues for warranty of title - first court rejects saying sold as is, disclaimed warranty - and all warranties including warranty of titles are disclaimed were mentioned. 

Sup ct said must have unambiguous and specific language - "as is" all warranties excluded was not specific enough.  

Something in addition to implied warranty of merch

1. Must have substance, more than puffery
2. Must relate to the goods
3. Must be basis of the bargain - a reason to buy the goods - increase the tendacy to induce the buyer
4. Burden is on seller to show buyer did not rely on the statement

Under the Uniform Commercial Code (UCC), an express warranty is created when a seller makes a promise or affirmation of fact relating to the goods that becomes part of the basis of the bargain.

Toshiba markets DVD player as "for today, tomorrow and beyond" despite the fact that blu ray is newer tech and Toshiba abandoned DVDs.  

Toshiba statement "for today..." was puffery - failed to state a claim for breach of expressed warranty

Automatically part of the contract unless seller does something affirmative to get rid of those warranties. 

Like expressed warranties, the sellers intention to create any implied warranty is completely irrelevant. 

Included implied warranty of merchantability and implied warranty of title.  

Under the Uniform Commercial Code, there is an implied warranty of merchantability in every contract for sale, if the seller is a merchant of that kind of goods.

Shafffer ordered glass of wine, glass broke and injured Shaffer, sues for negligence and breach of implied warranty, trial court rejects UCC breach.  On appeal, the court rules that there was an breach of impleid warranty or merch and a negligence cause/action that was valid as well.  

Where the presence of a foreign substance in food should be foreseeable, its presence does not necessarily establish a breach of the implied warranty of merchantability.

Webster gets fish bone stuck in throat from fish chowder.  Sues blue ship tea for implied warranty of munchability.  Trial court favors Webster, on appeal, court ruled that a bone would be "reasonably foreseeable" in a chowder as chowder historically contains fish bones, foreseeability remove breach of implied warranty of munchability

Breach of the implied warranty of merchantability, a product’s defect must be so fundamental that it affects the core functionality or not to REASONABLE customer expectations even when normal functionality is present.

Carrier IQ software pre installed in phones, collected data without customer knowledge. Suit on implied warranty of merch. def tried to dismiss saying communications is ordinary purpose of a mobile phone. Failed.  

#30 Cannot sue Jones for breach of 314 implied warranty because jones did not make any warranties, but Wren may sue Hotblast. Same for 315 fit for use as Wren specifically requested the a1 hotblast and did not rely on Jones 

 #31 - Lees cause of actions woudl be 314 implied warrant of merch 0 should not be offesive odor (c) maybe (d) variations and maybe 315 fit for particular purpose where paint store should have informed him that it may not match and that he may need to get 2 gallons.  

 33 - 314 yes, implied warranty (c) ordinary purposes, not 315, but counterargument of natural substance reasonably expectation to be removed- similar to bones in fish soup.  

2-316(1) cannot disclaim expressed warranty - only way to get out of it is to never make warranty promise from the start.  

Express warranties are affirmatively made by seller CONDUCT - not just words.  

Seller may not disclaim an express warranty that the seller has created and buyer relies upon.

Bell helmet did not protect Yarusso after motorcycle accident.  Helmet was "designed to absorb the force of the blow" and "reduce harmful effects" to the head. Helmet manual said 5 year warranty was to replace any other warranties.   Trial court said bell breached express warranties.  Bell loses

No, Merger clause (no other agreements) indicates fully integrated, final, complete - but the disclaimer does not help the used car company from avoiding express warranties that are NOT IN AGREEMENT. 

#2 does not help as it is just another phrase used to exclude express warranties.  

Only help is the disclaimer that no salesperson has the authority to give express warranties other than those contained in the contract. 

An exclusion or modification of the implied warranty of merchantability must mention merchantability and, if made in writing, must be conspicuous for reasonable consumer (not merchant). Actual knowledge or exclusion may or may not affect outcome. Easier to disclaim than express warranties

Cate bought machine from Dover, did not work, "WARRANTY"text of the agreement disclaimed implied warranties but was same font as rest of warranty. Language must be conspicuous and was not in the agreement - Dover loses on appeal.  

2 - good language would be conspicuous and obvious, must be more than WARRANTY, 

4 - usage of trade cannot be used to bury disclaimer of implied warranty in a used car or any consumer tx. 

5 - as is language must be conspicuous as well to disclaim implied warranties. 

- if car buyer is offered option to examine the car and refuses, there are no implied warranties in regards to items that would have been found in an inspection.  

A manufacturer’s disclaimer of the implied warranties of merchantability and fitness is not effective if the disclaimer is presented to the purchaser after the sale.

Bowdoin hurt by a spray rig from Showell which was made by FMC Corp and had parts from NEAPCO.  Warranty disclaimer was hidden in instruction manual.  Bowdoin sues Showell saying FMC and NEAPCO for implied warranties.  Trial court rules for FMC, Bowdoin appeals, wins because disclaimer not effective because was not conspicuois.  

A warranty disclaimer is not inconspicuous simply because it is located inside the packaging of a product.

Rinaldi sues for Iomega zip drives that damaged data, Iomega had warranty section inside packaging and not able to see until after the sale and package was opened.  Sues and loses because it was conspicuous despite inside of packaging - had time to inspect and reject

Buyer has option to inspect and accept or reject the product with the additional terms - the language was conspicuous and therefore OK even though was inside package with shrink wrap.  

(1) Words or conduct making or negating a warranty shall be construed as consistent with each other; parole evidence cannot contradict written agreement warranties

(2) TO exclude implied warranty of merch must be in writing and conspicuous.OK to say "There are no warranties which extend beyond this agreement."

all implied warranties are excluded by expressions like "as is", "with all faults" or other language 

(b) If allowed to conduct an inspection, no warranties extend to items that should have been found.

(c) an implied warranty can also be excluded or modified by course of dealing or performance or usage of trade.

The intention of the parties shall determine which warranty is dominant. In ascertaining that intention the following rules apply:

(a) Exact or technical specifications displace an inconsistent sample or model or general language of description.

(b) A sample from an existing bulk displaces inconsistent general language of description.

(c) Express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose.

If circumstances cause a limited remedy for breach of warranty to fail in its ESSENTIAL purpose (2-719(2), the general remedy provisions of the UCC may apply.

Wilson sells yarn to Ferguson ltd; language limiting quality of yarn if knitted after 10 days of receipt.  Ferguson knitted into sweaters, then washed, color variations ensued.  Ferguson refuses to pay, wilson sues. Trial and 1st appeals court rule for Wilson due to langua. 

Ferguson wins appeal, latent defects not discoverable within time of limited liability language=unconscionable. 

Yes, was unconscionable to limit personal damages.  

Recover for lost wages, hospital bills, P&S for lack of use of arm, but not camera (can limit damages to property, not personal injuries)- and remedy to limit parts and repair is unreasonable/unconsionable when the snowmobile blows up. Would not recover for additional costs to rent snowmobile.  

Look at failure of essential purpose. 

Peirce bought yacht from Catalina, pre printed warranty drafted by Catalina said any blisters in paint to be repaired but not responsible for consequential damages.  Peirce repeatedly requested blisters to be fixed, then sues.  Trial court allowed only for damages for repairs, saying language was not unconscionable. Pierce appeals. 

Factors to see if unconscionability 1) ability to agree on original contract, 2) disparity in bargaining power, 3) if magnitude of loss was expectable, 4) if agreement is pre printed, 5) if seller acted in bad faith.  Catalina loses.  

Commercial parties may limit/exclude consequential damages unless the exclusion is unconscionable.

Williamson bought seed, fertilizer, chemicals from Helena Chem- agreement waived any and all claims against Helena for consequential damages.  Crops did not grow, williamson did not pay, Helena sued, williamson countered with neglig. 

Helena loses, can exclude consequential damages unless they are unconscionable - this was because unreasonable harsh to one side.  

Under the Uniform Commercial Code, a buyer must notify the seller of any breach regarding purchased goods within a reasonable time after the buyer discovers, or should have discovered the breach, or be barred from remedies for the breach.

Fitl bought baseball card from Strek for $18K, said was in near mint condition.  Puts in lockbox 2 years then appraised.  Appraisal said was altered and worthless. 2 years was still OK for timely notice because it was when Fifl found out.

Prob 39 note expressed warranty analysis first (sale of apples) 2-313 and then too slow to object 2-607

4 Elements of Entrustment

1) Purposeful / actual entrustment of the goods by the delivery to a merchant

2) the party receiving the goods must be a merchant dealing in the kind of goods

3) the merchant must sell the entrusted goods

4) the sale must be to a buyer in the ordinary course of business

If any clause is unconscionable, can 1) refuse to enforce the contract, or 2) enforce the remainder of the contract or 3)  it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

The parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination of unconscionability.

UNCONSCIONABILITY IS A QUESTION OF LAW

A seller's warranty whether express or implied extends to any person who may reasonably be expected to use, consume or be affected by the goods and who is injured in person by breach of the warranty. A seller may not exclude or limit the operation of this section.

Option A limits to household and guest. 

Option C excludes the ability of the seller to limit the personal injury damages.  

1) Buyer must pay at the contract rate for goods accepted

2) Acceptance of goods precludes rejection; if made with knowing non conformity, cannot revoke

3) When tender is accepted, buyer must timely notify seller of any breach. 

(1) Incidental damages from the seller's breach include reasonable expenses of goods rightfully rejected, 

(2) Consequential damages from seller's breach include

(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and

(b) injury to person or property proximately resulting from any breach of warranty.

(a) the agreement  may limit buyer's remedies to return and repayment of the price or to repair and replacement of non-conforming goods or parts; and

(b) a alternate remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy

(2)An exclusive or limited remedy does not apply when the goods fail its essential purpose, revert to UCC rules

(3) Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable; commercial losses can be limited. 

(1) Damages for breach by either party may be liquidated (provided as a punishment or to cover other damages) in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach

2) Where the seller justifiably withholds delivery of goods because of the buyer's breach, the buyer is entitled to restitution - 20% of contract or $500, smaller. 

1 - Consumer product is for personal, family or household purposes

3 - Consumer is a buyer of any consumer product with broad and extensive cover for anyone else who may use the product outside of resale or commercial purposes. 

NOT FOR COMMERCIAL SALES

(a) Warranty must be clearly and conspicuously designate  a FULL or LIMITED Warranty

(b) Does not apply to statements which are similar to expressions of general customer satisfaction - NOT MERE PUFFERY

Minimum standards for warranty include:

1) remedy in reasonable time without charge,

2) cannot impose limitation on duration of any implied warranty,

3) cannot limit consequential damages unless it is Conspicuous,

4) consumer can get refund or replacement if reasonable number of remedies fail.  

Can limit duration of implied warranties if reasonable and not unconscionable and conspicuously displayed. 

Supplier cannot disclaim implied warranties (except duration of warranty) if 1) supplier makes any written warranty to the consumer or 2) if there is a service contract with the consumer for the product.   

2-607  airlines did not timely notify of the breach. Filing of lawsuit is not appropriate notice unless breach obvious to the defendant.     

comment 4 in 607 - between merchants timely notice will be different and less - notification must be sufficient to tell the seller know that the transaction is still troublesome and much be watched - but varies in different jurisdictions, some specifically require mention of "breach" - or no notice required because it was obvious to the seller - different jurisdictions may also need to know specific breach.  best defense is a clear and early warning of breach - learned hand.  

Lack of timely notice not required for a beneficiary/collateral person with injury because they were not involved with the initial acceptance.  Comment 5 to 2-607 and 2-318 third party beneficiaries - still requires notice.  

If it was the original buyer and he gave notice to wine store rather than vinyards, he would have been OK - 2-607 (5) a specifically states this. "Voucher to defend"  - notice to seller before suit is required but not required to manufacturer. 

Plaintiff has the burden to show 

1) creation of warranty

2) breach of warranty

3) proximate cause of breach to injury

4) actual injury

Proof of creation and breach can be an overwhelming obstacle in some situations

Will he have causation problems - 

1) is there a warranty' - yes

2) is there a breach - yes if he can prove fork was wendies and demonstrate that it was this specific to this wendies and prove that there was a defect in the wendies fork or if he chewed and broke the fork himself.  

3) breach prox cause of injuries yes

4) damages from the injuries

The implied warranty of merchantability may not be used as the basis for a claim if the goods at issue are not defective.

Flippo buy pants and was bitten by poisonous spider, loses on negligence and loses on implied warranty of merch as this applies only to the ordinary purpose which is to be worn as clothing.  

legal connection between the parties - normally present between buyer and seller - but vertical privity becomes an issue when there is a manufacturer, reseller, distributor, seller and then buyer.  can the buyer sue the original manufacturer - 

Also horizontal privity where other people besides the buyer may be harmed.  2-318 and 2-607(5)(a) (voucher to defend is 2-607(5)(a)

 Article 2 gets rid of privity issues as they were problematic in Common law contracts.  privity can also be between manufacturer, seller and consumer. 

Privity in UCC 2 automatically allows privity between manufacturer, seller and consumer.  

Vouching in for vertical privity in 2-318 comments 2-607 comment #7

Under the Uniform Commercial Code, a seller’s warranties may apply to certain persons other than the buyer of the goods.

Reed arrested and put in jail, was suicidal, given paper clothes, but still committed suicide with paper clothes.  Family sues city and manufacturers of the paper gown.

No vertical privity required, option a to 318 applicable, can include others in addition to option a.  Motion to dismiss by the manufacture was rejected.  

Strict liability permits recovery as long as the consumer can prove that the manufacturer distributed a product that was dangerous.  No need to prove negligence or privity.

 Note no economic loss recovery allowed for torts, but can go to contract claims for economic loss.    

402A Tort law say, PRODUCT defective or unreasonable unsafe is subject to liability, 2)  if seller is engaged in the business of selling the product, 3) product gets to consumer unchanged, 4) does not matter if seller exercised care and does not require any privity.  

Under the economic loss doctrine, a plaintiff may not recover in tort for a purely economic loss. Statute of limitations time out, then try UCC.  

Bus catches fire, no other damages, Lincoln insurance sues for damages claiming sudden calamitous event - court does not allow, cannot recover for lost profits that the bus would have achieved even in sudden calamitous event.  

Still have contract economic loss claim even when tort claim is invalid for the economic loss.  

Mag and Moss only apply to consumer products

Cannot compel a seller to provide a warranty, but there is always implied warranty unless disclaimed

Mag Moss warranty must be in writing and conspicuous

Mag Moss warranty is only for defects, not promises

Always look for mag and moss AS WELL AS UCC warranties. 

Cannot disclaim implied warranty of merch

Attorney fees can be covered in Mag Moss breach

Look at the differences between full and limited warranties - and be able to describe the difference. 

FULL DURATION MUST HAVE A DEFINED DURATION/TERM FOR THE DURATION OF THE WARRANTY - IF NO DURATION OF WARRANTY THEN IT DOES NOT FALL UNDER MAG MOSS EVEN WHEN IT SAYS "FULL WARRANTY" - lifetime is an acceptable duration

Under Magnuson-Moss Warranty Act, a warrantor may not disclaim implied warranties to a consumer in a written warranty.  Mag Moss 108

Ventura buys Ford car from Marino Auto sales, written contract disclaimed all express an implied warranties except for fords limited warranty.  Lots of problem with car, and Ventura sues Marino, Marino cross claimed ford for indemnification.  

No issues with privity, Mariano is liable even for attn fees

Vertical privity between consumer seller and manufacturer dealt with in UCC 2-607 - 

Privity is a state by state law, even in mag moss situations. 

 ILC Leases ATMs to Arora Exxon through CCC who finds customers and services the ATM - CCC goes bankrupt, consumers stuck with Atms that they cannot use and no longer make lease payments.  Terms of the lease prohibited cancellation CONSIPUCOUSLY but never read the warranty - which also accelerated under default - - 

2A103(1)(g) Finance lease is appropriate for this scenario - non cancelable (2A407) hell or high water clause - was a COMMERCIAL finance lease, but still must allow time for inspection and cannot be unconciounable- ILC failed to mitigate damages,   Aurora loses, UCC upheld

2A-103 Definition of finance lease

See last paragraph of comment (g) on page 170, which says that a lease can be a finance lease if the contract states that the lease is a finance lease 

Lessor does not select, make or supply the goods

Lessor acquires the goods in connection with the lease

AND

The lessee receives the contract or is fully notified of the contract

Three parties in the lease 

Lessor is the bank or financing group (Toyota fin - not subject to warranty of merchantability)

Lesse is the business or person leasing goods (car buyer)

Supplier is the one who the buyer gets the goods (dealer)

Hell or high water clause - can reject goods

(1)  the lease contract become irrevocable and independent upon the lessee's acceptance of the goods.

(2) A promise that has become irrevocable and independent under subsection (1):

(a) is effective and enforceable between the parties, and by or against third parties including assignees of the parties ; and

(b) is not subject to cancellation, termination, modification, repudiation, excuse, or substitution without the consent of the party to whom the promise runs.

(3) This section does not affect the validity under any other law of a covenant in any lease contract making the lessee's promises irrevocable and independent upon the lessee's acceptance of the goods.

(1) The seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.

(2) Goods do not conform with the contract unless they:

(a) are fit for the ordinary purposes to be used;

(b) are fit for particular purpose expressed or implied 

(c) adhere to properties of a sample or model;

(d) are contained or packaged in the manner usual

(3) The seller is not liable the buyer knew or could not have been unaware of such lack of conformity.

(1) If the buyer fails to make specifications of the goods,  the seller may, without prejudice to any other rights he may have, make the specification himself in accordance with the requirements of the buyer that may be known to him.

(2) If the seller makes the specification himself, he must inform the buyer of the details thereof 

(1) THe buyer has special property and insurance rights if the goods are specifically pre identified or specially manufactured even if non conforming.  ID can happen anytime in any manner

a) when contract specifically IDs the goods

b) when the goods are future goods are shipped and or marked by manufacturer for the buyer

c) when crops planted or conceived and born in 12 months or less. 

2) Seller retains an insurable interest in the goods until fully accepted by buyer 

(1) A party may require writing adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return.

(2) Between merchants assurance according to commercial standards.

(3)Acceptance of any improper delivery or payment does not prejudice the aggrieved party's right to demand adequate assurance of future performance.

(4) 30 days allowed to provide assurance else is repudiation of contract.  

A contract’s price term that is to be fixed by the seller or buyer must be fixed in good faith. UCC 2-305(2)

Casserlie leased gas stations from Shell, bought gas from shell at dealer price but also sold gas to non dealers at lower cost that did not include delivery fees.  Casserlie sued on bad faith that shell was trying to force them out of business so that shell could own directly. 

Open variable pricing must be fixed in good faith meaning in reasonable commercial standards - must be objective and not subjective. Lower price for non dealers did not include delivery.  

Even with freedom of contract, duty to read and caveat emptor, can still be unconscionable.  

Blanket assent for wider terms not the same as the terms that are dickered.  

Unconscionability in two types - unfair conduct in the formation of the contract (procedural unconscionability) and unfairness in terms (substantive unconscionability)  - need  BOTH

Arbitration claim argument that arbitration bars Duncans claims.  Lengthy arbitration clause says all claims done by arbitration and also say that they waive all rights for trial.  Not enforceable under navajo law or traditional law  - broad and unconsionable.  

2-302 in UCC - if you pay too much but have the ability to competitively shop is not unconscionable.

Starr vs credit was unconscionable frezer sold for 900 value of 300 and additional charges totalling 1500 was unconscionable.  Gross inequity of bargaining power. 

Hynes had procedural (fine price  misrepresentation of terms and substantive unconscionability in its contract with Sacramento

Substantially unconsiounable with interest rate of 30% usery and lease was twice as long as haynes represented it

The word “warranty” is NOT used in CISG but there are still provisions that resemble the common warranties

Article 41 = warranty of title

Article 42 = warranty against infringement

Article 43 = buyer must give notice to seller for rights or claims of a third party

Article 35 - express warranties in section 1, implied warranty of merchantability in section 2(a), and fitness for a particular purpose in section 2(b)

The knockout rule will apply where terms are conflicting

Reasonable terms will usually be supplied under the UCC

2-305 references an open price term in a contract

Allows parties to conclude a contract for sale with a reasonable price that is set at the time for delivery

Price must be within the range of commercial reasonableness and set in a nondiscriminatory way BUT the price MUST be set in good faith

See comment 3 to 2-305 for what satisfies a good faith price

1) seller indicates entire catch of fish for season - future goods, not part of 2-501-c crops - look at comment 6; therefore ID when delivered. 

2) unborn elephant - not ID as unborn or young must be within 12 months and elephant takes 20 months, ID when born not while gestating for 12 months or more

3) Half of the grain stored in common silo - yes under part a where they are identifyable and fungible is ok - ID at contracting as if they were already existing

4) 5000 widgets with 2mil in stock - ID at contracting

5) wrecked helicopter being repaired - ID at contracting not at delivery

WHo bears loss has nothing to do with who has technical title

When seller is a merchant, risk of loss passes only on actual receipt of goods

When seller is not a merchant, risk of loss passes to buyer when the seller tenders delivery to carrier

Can have a destination contract (risk goes to buyer only when recieved at destination) or a shipment contract (risk of loss shifts when buyer ships the goods). 

Courts prefer shipment contracts and will assume this when the contract is silent.  

• FBO - free on board - by land, risk shifts when carrier has the goods - may be a shipment or destination contract - if there is a location, then it is destination
• FAS Free along side - sea vessel/ship, risk to carrier when has the goods with bill of lading
• CIF - cost insurance and freight - always shipment contract, includes shipment, risk shifts when carrier takes possession
• C&F Cost and freight (no insurance)
• Ex-ship - off the ship - risk to buyer when uploaded delivered

Bill of lading confirms that the shipper has recieved or delivered the goods. 

Under the Uniform Commercial Code, if a seller is required to ship goods by carrier from a specific place, the seller bears the risk of loss until the goods are placed in the carrier’s possession for delivery.

Press brake FOB: Warehouse in Illinois, has insurance for $100K when brake falls off train.  FOB MSI means that the seller has risk of loss XXX - reasonable mode of transportation selected was OK in this example.  

Pursuant to the Uniform Commercial Code, under a shipment contract the risk of loss does not shift from the seller to the buyer upon delivery of the goods to the carrier if the seller fails to promptly notify the buyer of the shipment

No designated FOB location, wine delivered to buyer, but not notified and lost at sea.  

Seller did not promptly notify buyer of shipment. Risk of loss did not pass to buyer because not notified of shipment.   Same rule under CISG 68

Where the seller is to send the goods to the buyer and the contract does not require him to deliver them at a particular destination (FOB without destination), seller must

(a) put the goods in the possession of such a carrier; and

(b) provide any document necessary to enable the buyer to obtain possession of the goods ; and

(c) promptly notify the buyer of the shipment.

(1) Where delivery is rejected by buyer because non-conforming and the time for performance has not yet expired, the seller may seasonably notify the buyer that he will replace with conforming goods in contracted time.

(2) Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable the seller may notifies the buyer that he will substitute a conforming tender.

(1) Where the contract has seller ship the goods

(a) FOB no destination - risk of loss passes to the buyer when the goods are duly delivered to the carrier

(b) FOB with destination the risk of loss passes to the buyer when the goods are ready to be received by buyer.

(2) If goods held by bailee, the risk passes to the buyer when he receives the goods or receives the title.  

(3) In any case not within subsection (1) or (2), the risk of loss passes to the buyer on his receipt of the goods if the seller is a merchant; otherwise the risk passes to the buyer on tender of delivery.

Subject to the provisions of this Article on breach in installment contracts (Section 2-612) and unless otherwise agreed under the sections on contractual limitations of remedy (Sections 2-718 and 2-719), if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may

(a) reject the whole; or

(b) accept the whole; or

(c) accept any commercial unit or units and reject the rest.

(1) Rejection of goods must be within a reasonable time and must seasonably notify seller of rejection.  

(a) after rejection the buyer cannot exercise ownership  to any commercial unit is wrongful as against the seller; and

(b) if the buyer has before rejection taken physical possession of goods he must treat them with reasonable care until seller can remove them

(1) An "installment contract" is where the delivery of goods are in separate lots and separately accepted

(2) The buyer may reject any installment which is non-conforming if the non-conformity substantially impairs the value of that installment

(3) breach of one lot results in a breach of the whole. But the aggrieved party reinstates the contract if he accepts a non-conforming installment without seasonably notifying of cancellation 

Similar to specific performance remedy for the seller - if seller has possession or risk of loss, damages are measured by 2-709

(1) When the buyer fails to pay, the seller may recover damages and price of the goods but must make reasonable efforts to mitigate his losses

(2) The net proceeds of any resale by the seller must be credited to the buyer and payment of the judgment entitles him to any goods not resold

An aggrieved seller may, upon the buyer’s egregious conduct that constitutes breach of an installment contract as a whole, cancel the remainder of the contract with respect to the whole undelivered balance.

Rytman agrees to buy grain from Cherwill/CRI in installment contract, rytman late in payment but was concerned if CRI could deliver but then paid in full.  Then cancells check under rumor that CRI cannot deliver. CRI sues, Rytman countersue. Buyer breach because he did not have sufficient basis to believe failure of delivery.

UCC 2-609

To prevail in a single delivery sale, the seller must make a perfect tender, one that complied with all of the terms of the contract and then show that he buyer refused to take the goods.  

In single delivery sales, the buyer does not have the barganing power that he would if it were an installment sale.  Rule 2-601 - 

A seller of nonconforming goods may conform his tender by minor repairs Per UCC 2-508

Scampoli buys TV from Wilson appliances, 90 day guarantee, did not turn on after delivery, offered to fix but buyer demanded new tv set.  Scampoli sues for repayment for tv.  Wilson appeals

Seller should have ability to make minor repairs, especially when seller can reasonably expect that the solution is acceptable and/or expected that the goods would not have been defected.  

A buyer cannot reject and accept - failure to reject is tacit acceptance since rejection requires seasonable notice to seller.  

Buyer has reasonable time to inspect/trial use to see if goods conform.  Prior to acceptance, the seller must prove that a perfect tender was made under 2-601; after acceptance, the buyer has the burden to prove lack of conformity. 

Maple row properly rejected irrigation system from Koviack, ordered Maple row to return equipment at def expense; Koviack appeals but loses again.  

Pump was delivered late in growing season and was then uhsed in next season.  Koviak refused to install pump because he was not paid yet, Maple row hires another to install the pump and learns that it will not work, purchased another pump. 

Maple row could not reject pump until it was installed, and had good reason to delay the installment to spring. 

A party may rescind a contract when the goods delivered do not conform precisely to the contract and the seller has not cured the defects within a reasonable time.

Ramirez buys camper from autosport, did not accept due to multiple defects, repairs took too long, then rejected the order. 

Seller did not remidy the defects in seasonable time, ok to reject the purchase. 

Acceptance of goods occurs when the buyer, after a reasonable opportunity to inspect the goods, lets the seller know that the buyer will take them despite any nonconformity, or fails to effectively reject the goods.

Machlett buys tanks from Plateq, machlett sees some defects, plateq agrees to fix in 1 day, machlett did not object.  Machlette then rejects order without reason, 

Machlette tacitly approved purchase by not objecting to reasonably seasonable cure to defect.  

After technical acceptance, buyer can still bring a breach of warranty action if proper nocite has been given per 2-607 and 608 but must disclaim the goods.  

Buyer can in theory reject if the goods fail "in any respect" before accepting, but to revoke acceptance buyer must  show that the defect "substantially impairs the value of the goods. 

Under the Uniform Commercial Code, a buyer may be able to revoke his acceptance of nonconforming goods if the nonconformity substantially impairs the value of the goods to the buyer.

Waddell buys RV from LVRV, had major problems after acceptance, motor and LVRV cannot fix all - RV was in shop for 7 of 18 months that waddell's had it.  

Nonconformities substantially affected value of RV, Waddell was right to revoke his acceptance.  

(1) When goods fail to conform to the contract and are rejected, the risk of their loss remains on the seller

(2) Where the buyer rightfully revokes acceptance, treat the risk of loss as having rested on the seller from the beginning. Anti subrogation clause

(3) Where the buyer repudiates or is otherwise in breach before risk of their loss has passed to him, the seller may treat the risk of loss as resting on the buyer for a commercially reasonable time.

Under Uniform Commercial Code, if goods are nonconforming so as to give the buyer a right to reject them, the seller retains the risk of loss of the goods until the defect is cured or the goods are accepted.

Jakowski buys chevy from Carole, was supposed to have undrecoating but did not, returned car to have undercoating and it was stolen from dealership.  Chevy refused to replace or refund

Nonconforming chevy has risk of loss to the buyer until defects cured. 2-510, perfect tender rule not conforming

Very similar to common law impossibility, but was intended to be broader in the UCC.  

2-613 to 616

A party may be excused from performance if performance is rendered impossible or impracticable, unless event was reasonably foreseeable or party assumed the risk.  

Arabian Score bought horse from Lasma, was supposed to be a 2-star stallion for $250,000; horse dies within 1 year but was still promoted to increase value of the horses progeny.  

Horses death was foreseeable and actually had mortality insurance on the horse.  THerefore not excused from performance. 

Under the commercial frustration doctrine, a party may be excused from performance if performance is rendered impossible or impracticable, unless the frustrating event was reasonably foreseeable or that party assumed the risk of the frustrating event.

LousP&L bought tubing from Ludlum, contract allowed LP&L to cancel, but not Ludlum, Ludlum requests additional compensation for tubing due to higher costs.  

Performing party must still perform even at loss unless especially severe, must be 50% to 2x more cost, Ludlum failed to show whole business would operate at loss for a year

(1) Acceptance of goods occurs when the buyer

(a) formally accepts after reasonable opportunity to inspect

(b) fails to make an effective rejection after reasonable time to inspect, OR

(c) does any act inconsistent with the seller's ownership; 

(2) Acceptance of a part of any commercial unitis acceptance of that entire unit.

(1) The buyer must pay contract rate for goods accepted.

(2) If accepted with non conformity, cannot revoke unless reasonable assumption that defect seasonably cured 

(3)Where a tender has been accepted, buyer must seasonably provide notice of breach of conformity, 

(4) The burden is on the buyer to establish any breach with respect to the goods accepted.

(5) Where the buyer is sued for breach of a warranty or other, buyer may give notice of litigation

(1) The buyer may revoke his acceptance where non-conformity substantially impairs its value to him

(a) on the reasonable assumption that its non-conformity would be cured and it has not been seasonably cured; or

(b)  acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances.

(2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered

(1) Under wrongful rejection or revocation by the buyer the seller may resell the goods in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages

(1) After a breach within the preceding section the buyer may "cover" by purchasing substituted Goods in a manner that mitigates damages in good faith AND 

(2) The buyer may recover from the seller the difference between the cost of cover and the contract price together with any incidental or consequential damages

(3) Failure of the buyer to effect cover within this section does not bar him from any other remedy

(1) Where the seller fails to make delivery or the buyer rightfully rejects/revokes acceptance, the buyer may cancel and recover the price as has been paid

(a) "cover" and have damages under the next section OR

(b) recover damages for non-delivery as provided 2-713

(2) Where the seller fails to deliver or repudiates the buyer may also recover goods

(1) Where the buyer has accepted goods and given notification, he may recover reasonable damages for any non-conformity resulting in the ordinary course of events

(2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been conforming, unless special circumstances show proximate damages of a different amount.

(1) If intended, parties can have a contract without a specific price; will be reasonable price at delivery if

(a) nothing is said as to price; or

(b)  the parties  fail to agree; or

(c) the price is to be fixed in terms of some agreed market or other third person

(4) Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract.

(1) Where the seller discovers the buyer to be insolvent he may refuse delivery unless paid in full and in cash

(2) Where the seller discovers that the buyer has received goods on credit while insolvent he may reclaim the goods upon demand made within ten days 

Where the buyer wrongfully rejects or revokes acceptance or fails to make a payment, the seller may

(a) withhold or stop delivery of such goods;

(d) resell and recover damages as hereafter provided (Section 2-706);

(e) recover damages for non-acceptance (Section 2-708) or in a proper case the price (Section 2-709);

(f) cancel.

(1) An aggrieved seller may

(a) identify the conforming goods not already identified if at the time he learned of the breach they are in his possession or control;

(b) treat as the subject of resale goods which have demonstrably been intended for the particular contract even though those goods are unfinished.

Lease agreements can have default measures as goods sold and may limit or alter measure of damages

Can resort to a remedy provided in the lease agreement

Consequential damages may also be limited to altered per the agreement

The lessor may recover from the lessee as damages

1) for goods accepted by the lessee and not repossessed and reasonable commercial damages, expenses for the default of the lessee

Lessor may dispose of the goods

Where the contract requires for specific goods identified when the contract is made, and the goods suffer casualty without fault of either party before the risk of loss passes to the buyer, then

(a) if the loss is total the contract is avoided; and

(b) if the loss is partial buyer has right to take part of all of goods at a reduced price

(1)Where without fault of either party the agreed  manner of delivery otherwise becomes commercially impracticable but a commercially reasonable substitute is available, such substitute performance must be accepted.

(2) If the agreed means or manner of payment fails because of domestic or foreign governmental regulation, the seller may withhold or stop delivery unless the buyer provides a means or manner of payment which is commercially a substantial equivalent. 

(a) Delay in delivery by a seller  is not a breach of his duty under if performance has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made  in good faith 

(b) Where only a part of the seller's capacity to perform, he must allocate production and deliveries among his customers but may include regular customers not then under contract as well as his own requirements for further manufacture. He may so allocate in any manner which is fair and reasonable.

(c) The seller must notify the buyer seasonably

When the deal collapses and the parties turn to thier lawyers, need to minimize damages and how to recover the loss. 

The UCC tends to reward conduct that is reasonable, good faith, ordinary care. Ask the client what he would do if there was no relief granted - that is best course to start.  

Remedies adminstered as liberally so that the aggrieved party may be put in as good of a position- BUT penal, special or consequential damages only allowed per UCC

2-700 dividend into two parts:

1) sellers remedies when the buyer in in breach (2-703 to 710)

2) buyers remedies when seller is in breach (2-711 to 717)

If one party is insolvent, the other party may elect to forgo the damages and try to get the goods themselves in an act called RECLAIMATION

See 2-502 and 2-702 - insolvence of the seller, which means that they cannot pay their debts when they are due. 

Courts are likely to favor secured creditors under bankruptcy code 546(c)

A non-breaching party to a contract for the sale of goods can recover from the breaching party the difference between the contract price and the market price of the goods, even if those damages exceed the seller’s resale price damages.  Put non breach party in best position. 

Market damages allowed:diff b/t contract and market price (more damages, does not have to re-sell per UCC, but if he does, he gets both resell and diff bt market price)

Resale damages: diff b/t contract and price received (less damages)

Even where a party is able to resell goods involved in a breach of contract, that party is still entitled to expected profits less producing and selling costs saved because of the breach.

Iit is commonly accepted that a buyer should not be benefited simply because a seller is able to resell the goods.The Jericho test for determining damages applies

Seller does not need to mitigate damages or even accept a byers substitute offer. 

UCC 2-711 allows for buyer to cancel and reciver the price if the buyer has already paid plus other recoverable damages.  

Follows 1-305 goal to put the aggrieved party in as good of a position as possible after breach. 

When undelivered goods are rejected or revoked, buyer may recover price and other damages

Buyer may seek specific performance or replevin under 716

Get frofm lecture

Test of "unique" aspects related to damages for 7-716 to force performance for unique goods.  

Cyro coolers are not unique - numerous supplies, difference in quality does not make it unique, if there is substitute

upon a seller’s breach of contract, a buyer of goods may obtain substitute goods (Cover) from another seller and recover the increased cost of the reasonable substitute goods as damages. UCC 2-712 plus losses

Hughes contracted with NASA to launch hughes satellites in best efforts on or before 30 sep 1994.  Nasa stopped launching after Challenger explosion but could have launched all before challenger. Hughes then launches with expendable vehicles at higher cost.  

Hughes OK to cover cost and recover from nasa

The appropriate remedy for a seller’s failure to deliver contract goods is the difference between the contract price and the market price, even where this measure of damages exceeds the buyer’s actual loss.

Tongish contracted to sell seeds to thomas, after first delivery, market price of seeds double, tongish sold to another for greater profit, thomas sues but awarded only handling costs of transabtion - actual damages.

Court rules that market damages are appropriate.  

When either party expects anticipatory repudiation (overt representation of not meeting K requirements), they may:

(a) wait for performance commercially reas time

(b) notify that they prefer performance but will resort to  remedy for breach (Section 2-703 or Section 2-711), AND

(c) in either case suspend his own performance or act on seller's right to identify goods to salvage unfinished goods (Section 2-704).

(1) Repudiating party can reassure (retract repudiation) unless aggrieved party has cancelled or already  considers repudiation final.

(2) Retraction must clearly indicate that the repudiating party intends to perform, but must include any assurance of performance per 2-609 (Assur of performance).

(3) Retraction reinstates the repudiating party's rights under the K with allowance (no penalty) to the aggrieved party for any delay occasioned by the repudiation.

(1) In anticipatory repudiation, damages calculated based on market price (Section 2-708 or Section 2-713) when the aggrieved party learned of the repudiation.

(2) If Market price is not available when breach is learned, any commercially reasonable time before or after and also include cost of transporting.

(3) Notice must be given to avoid unfair surprise to the liable party re the Evidence of a relevant price prevailing at a time or place

(1) 4 years after the breach - 4 years may be reduced to 1 year, nothing less, cannot extend past 4 years.  Language does not need to be conspicuous.  

(2) Breach occurs when the knowledge (or should have known) of breach occurs - A breach of warranty generally occurs when delivery is made unless future delivery

(3) SOL can be extended by 6 months if another breach 

(4) This section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action which have accrued before this Act becomes effective.

4 years for leases, same as sales

A repudiation must be a definite refusal to perform - suspicion is not sufficient.  The uncertain party can be forced to provide assurance of performance per 609

Under the Uniform Commercial Code, an action for breach of contract must be brought within four years after the breach occurs or, for a breach of warranty, when tender of delivery is made.

Mydlach bought car with 3 year warranty, daimler fixed several repairs but Mydlach not satisfied, sues under Mag moss 5 years after delivery, (no duration in mag moss)

Breach of warranty occurs upon delivery, not based on when aggrieved party knew for most warranty of merch, but this warranty covered repairs, and the repairs themselves  failed breach of warranty -   therefore can bring breach of warranty 4 years after last failed repair.  

The statute of limitations on an indemnity claim begins to run when the party seeking indemnity pays damages to a third party (this is the cause of action).

Central washington installed cold storage rooms for Yakima orchards; McCormak engineering supplies special refridg coils, the orchard had problems with the refrigs and defaulted on payment sto Central.  Central paid a settlement to Orchards after 4 years of problems.  Central brought suit agains McCormak for contribution/indemnity. 

Indemnity claim was tolled to the indemnification payment, not the initial 4 years

1) Third party beneficiaries - a party not named in the K be benefits from the K as the parties intend - one person buys something for another - not a party to a K but still benefits - 

2) Assignment of rights and delegation of duties - subcontracting out some or all of your duties

3) Novations - where one of two parties finds another to take over their role in the K.  

A promise to repay a debtor's obligation in consideration for a sum of money received from the debtor is valid.

Holly loaned fox $300, holly owed the same amount to Lawrence. Holly promised  to pay Lawrence the next day.  Fox then promised to pay the $300 to Lawrence.  Fox did not pay lawrence and lawrence sued. 

Where one person makes a promise to another for the benefit of a third person, that third person may maintain an action upon it. Here, there was sufficient consideration because Fox promised to repay Lawrence for Holly in return for the loan. 

In order for a third party to enforce a contract made for his benefit, there must be some liability to him on the part of the promisee.

Beman drafted wifes will to give 1000 to seaver$500 to bemans sister and 100 to another sister and house bequeathed to him as husband and then to PETA.  Wife changes mind and says house goes to Seaver and husband says he will bequeath house to Seaver in his will but he never does.  Seaver sues for house. 

Four circumstances where right of a 3rd party enforcement is upheld, 1) pecuniary obligation running from the promisee, 2) K is made for the benefit of the wife or child, 3) public contracts with municipalities, 4) promise runs to beneficiary without consideration.  

Attorneys owe a duty of care as to the interests of intended third party beneficiaries in wills.

Kilburn hired Flaig to draft a will and wanted to pass entire estate to her daughter Heyer and was going to marry Kilburn in the near future.  Flaig drafted the will before the marriage and did not tell mrs Kilburn that marriage will change the will.  Daughters brought malpractice suit to Flaig for negligence. 

Attny owe duty of care to clients, using ordinary skill and capacity commonly possess and exercise.  Flaig breached 

2nd restatement of contracts says:

Intended beneficiaries may enforce promises but incidental beneficiaries may not.  A beneficiary is intended if:

(a) It is appropriate to effectuate the intention of the parties and

(b) either:

 i.  The performance will satisfy an obligation of the promisee to pay money to the beneficiary; or (Creditor)

ii.  The circumstances indicate the promisee intends to give the beneficiary promised performance. (Donee)

Finance lease, where buyer does not select the financier

Hell or high water clause

Unconscionability - when K was made

Three classifications of 3rd party benefitciary

1) Creditor - has a right to recover - someone who will sadtisyg a real or supposed obligation

2) Donee Beneficiary - someone who the promisee wishes to confer a gift to the promisor - has a right to recover

3) Incidential beneficiary - does not have right to recover

3rd party beneficiary, must show that the parties clearly and definitely intended him as a 3rd party beneficiary. 

Renss water entered into K with city of Renss to provide water and sewer services for 10 years.  During this time, a warehouse owned by Moch burned down b/c hydrant water pressure insufficient.  Moch sues Renss water for damages.

Loses on appeal as he was not definitely indicated as a 3rd party beneficiary.  His benefit was not "immediately" but is rather incidental to original K between city and water co.  

A K, made specifically to benefit third person, may be enforced by him at any time before the parties to the contract rescind it, not so for people who are incidentally or remotely benefited by the K.

Socoma entered into K with city of LA to establish manufacturing facilities under program to renew low income neighborhoods.  Martinez headed a class of residents who were qualified to be employed by Socoma - but Socoma did not establish factory or jobs.  martinez sues and loses because they are incidental beneficiaries even though dissent indicated they were expressed beneficiaries in the fed legislation.  

A party to a K may discharge, rescind, or revoke a donee beneficiary’s benefits prior to the vesting of the donee beneficiary’s rights

Robson is dad and son, each owned 50% of PB services, both executed K for Dad to recieve $1000/month until death and then $500 to widow.  Son has same clause if he dies first with $500 going to widow.  Son and wife divorce and remove ex wife as stated 3rd party beneficiary, son dies of cancer, ex wife sues.  Ex wife loses as the principles in the K can modify and recind 3rd party beneficiary status.

One who assumes another’s debt to a third party is liable to the third party to the extent that the assuming party is liable to the principal debtor.

Winston sells house to Rouse, rouse assumed payment of $850 for a house heater that Winston bought.  Original note with Wilson was guarnateed by FHA/Fed gov, Winston defaults, FHA pays $850 and sues Rouse.  Rouse countersues saying Winston misrepresented condition of heater and the company installed improperly.  Rouse CAN counter for fraud but not for improper installation as the K clearly states Rouse owes specific sum of money. 

No liability to members of the public for breach of gov contract unless:

1) contract provides liability for public members

2) Allowing the alleged 3rd party beneficiary standing is consistent with the contract and the policy authorizing the K and provides remedies for the breach.  

Contract CAN be modified unless:

1) contract prohibits modifications

2) 3rd party beneficiary materially changes his position in justifiable reliance on the promise

3) 3rd party beneficiary bring suit on it before the modification

4) 3rd party beneficiary manifest intent to rely upon the benefit to either primary party to the contract.   

Assignor - the party xferring rights

Assingee - party to whom rights are xferred

Obligor - The party who owes the rigfhts due under the underlying contract

Delegator or Obligor - the original party who owed a duty

Delegate - the party to who the duty is xferred

Obligee - The party to whom the duty is owed

Duties can be delegated unless the delegation is contrary to public policy or the terms of the promise, or if the oblige has a substantial interest in having the original person perform or control the acts promised

“The principle exceptions relate to contracts for personal services and to contracts for the exercise of personal skill or discretion…Even where delegation is normal, a particular contract may call for personal performance.”

A right is not freely assignable if the substitution of a right of the assignee for the right of the assignor would:

• Materially change the duty of the obligor, or

• Materially increase the burden or risk imposed on him by his contract, or

• Materially impair his chance of obtaining return performance, or materially reduce its value to him, or

• If the assignment is forbidden by statute or is otherwise inoperative on grounds of public policy, or

• If the assignment is validly precluded by contract

Warranties made by an assignor to an assignee:

• That he will do nothing to defeat or impair the value of the assignment and has no knowledge of any fact which would do so;

• That the right, as assigned, actually exists and is subject to no limitations or defenses good against the assignor other than those stated or apparent at the time of the assignment;

• That any writing evidencing is genuine the right which is delivered to the assignee or exhibited to him to induce him to accept the assignment is genuine and what it purports to be.

A contract for personal services for a definite period of time cannot unilaterally be assigned by one entity to another entity.

Jones was an agent for Rutgers insurance in Michigan for 5 years; had monthly obligation to give account statements to Rutgers.  Rutgers merged with Global and Jones ceased sending statements.  Jones was offered job but refused.  

New entity of Globe Rutgers Ins cannot re-assign duties to Jones without his consent.  

In the absence of a contrary provision, rights and duties under a contract may be assigned and delegated -personal services may never be delegated.

Pizza of G contracted to have Virgina vending machines in their stores for coffee for 1 year with auto renewal and 30 day notice.  Viginia coffee bought by Macke, Pizza tried to terminate the contracts, Macke sues.  

These dutes are not personal and can be transferred/assignable

A transaction enacts an assignment of a contract only if it is the intention of the assignor to do so.

Baker owned 30 acres, entered into K with Eufaula Concrete to mine sand and gravel for 10 years with royalty for every cubic yard taken and limit on xfer without Baker consent.  Eufaula bought by Williams Bos, Williams Bros start to mine property, Bakers sue for cease and desist.  Appeals court determined that Eufaula did not expressly intend to assign lease to Williams.   Its a question of fact for the jury and could go both ways.  

Imperial Refining Co. v. Kanotex Refining Co., 29 F.2d 193 (8^th Cir. 1928)

Assignment of a contract transfers both the rights and duties of the assignor under the contract to the assignee.

Imperial entered into K with Fern Oil to purchase all oil that Fern could produce for 1 year.  Imperial assigned K to Kanotex, Fern to connect to Kanotek pipeline and pay Imperial 10cent per barrel sold to Kanotex.  Fern connect pipeline but Kanotex does not buy oil from Fern.  Fern sues Imperial for $18K, Imperial notified Kanotex to pay but they do not.  Imperial pays and sues Kanotek arguing that Kanotex had same obligations to Fern that Imperial had to Fern.  Imperial wins because Kano had taken Imperial's duty to buy all of Fern's oil,