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UCC

1-201(10) Conspicuous With reference to a term: o Means so written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed. o The court (judges decision matter of law) whether or not conspicuous. Ex: headings in capitals, equal to or greater in size than the surrounding text or in contrasting font, color etc. 1-201(20) Good Faith Except as provided in Art 5 means honesty in fact; & observing reasonable commercial standards of fair dealing. 1-201(37) Signed Any symbol with present intention to adopt/accept a writing. 1-303 Course Performance, Course Dealings, UOT CP: sequence of conduct btwn parties to particular transaction exists if: o Agrmt involves repeated occasions for performance and: o Other party, w/knowledge of perf & opp. To object accepts w/o obj. CD: sequence of conduct re: a prior transaction that is fairly re: as creating common basis of understanding. UOT: Existence and scope must be proved as facts. If shown to be embodied in trade code/similar record, interpretation of the record is question of law. (d) any of the above is relevant in determining the meaning of the parties agrmt, and may supplement/qualify terms of K. (f) express terms prevail over CP, CD, UOT CP > CD > UOT, CP that might otherwise establish a defense to an obligation of a party to a negotiable K is not available as a defense against a holder in due course who took the instrument without notice of that CP. 2-102 Need not be a merchant for Art 2 to apply.

2-104: Definitions Merchant; Btwn Merchants; Financing Agency (I) Merchants: for 2-201(2)SOF, 2-205 Firm Offers, 2-207 Confirmatory Memo and 2-209 Modification ALL rest on norm bus practices which ought to be familiar to any person in business. ALL persons for 2-201(2); 2-205; 2-207; 2-209 o (II) Specialized Merchants: 2-314: applies only if the seller is a merchant with respect to goods of that kind. o Requires a professional status as to particular kinds of goods. (III) 2-105 (1)(2)(3)Goods movable things at the time of identification to the for sale other than the money[however, except for dealings for example in ancient coins.] in which the price is to be paid, investment securities (art 8)[not stocks; those are treated as a right to x,y,z], and things in action[an example would be an insurance policy because the paper represents the right those people listed have at the time of death] . Vs. for example a ticket to a bball game. That ticket is not under art 2. That ticket merely represents the right to occupy that space. o Think you order a book from shoedazzle.com. until those shoes are I.D.d they are not under art 2. o P.6 Prob1(e): Defective spinal plate given a patient in a hospital operating room? judges are hesitant to rule on whether or not health care items are goods for the purpose of art 2. When undergoing surgery does the injection of aenesthia constitute a good? Generally courts have found them not to be goods. However, see[Anthony v. Pools] o Sale of membership in a health spa no just the right to use the spa o Entire assets of clothing store? (see 6-103) exam Trick question because the company could have trademarks and things intangible property which is not covered. o MA holds electricity not to be a good. P12 Software No consensus between courts. o Some say not transactions in goods and use common law. o Others hold that software in a package is goods but development of software is service. o Some parties assume it to be the sale of goods and thus courts apply art 2. UCC 2003 version defines goods so as specifically to exclude the sale of information. information is not defined. 2-201: Statute of Frauds In Writing (1)section one o (i) require writing to specify quantity o (ii) Must be signed by the party whom enforcement is sought (2) If between merchants (2-104 almost all sellers) a writing in confirmation of the contract and sufficient against the sender is received (w/in a reasonable time) and the party has reason to know the contents this satisfies section (1) against such party unless written notice of objection to its ocontents is given within 10 days after receipt. (3) not satisfying (1) but is valid in other resects is enforceable if:

(a) specially made goods not sellable to others and b4 repudiation is received and circumstances reaosnbly indicate goods for buyer, seller has made either a substantially start on making the goods or committed for their procurement; (goods unique to buyer) OR (b) PWEAON smira in plwsinf rhR EXISTED. (NOTE: a 12(b)(6) motion might admit the existence of contract and thus negate ability to argue statute of frauds. 2-202. Final Written Expression: Parol or Extrinsic Evidence. 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 agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented (a) by course of dealing or usage of trade (Section 1-205) or by course of performance (Section 2-208); and (b) by 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 . 2-204 Formation in General (1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. (2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. (3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. Very rarely in American contracts are the seller the offeror. More often than not the buyer is the offeror. 2-205 Firm Offers 2-206. Offer and Acceptance in Formation of Contract. (1) Unless otherwise unambiguously indicated by the language or circumstances (a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances: (b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods, but the shipment of nonconforming goods is not an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer. (2) If the beginning of a requested performance is a reasonable mode of acceptance, an offeror that is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance. (3) A definite and seasonable expression of acceptance in a record operates as an acceptance even if it contains terms additional to or different from the offer. 2-313: Express warranty 2-314: Implied Warranty of Merchantability o Narrow Test Need be a merchant in that specialized area. Anthony Pools v. Sheehan 2-315: Implied warranty of Fitness for Particular Purpose Need not be a merchant. o (1) Seller knows purpose buyer needs goods. (Objective Prong) o (2) That the buyer rely on sellers skill or judgment in selecting the product. o Siemen v. Alden (1) knew s purpose for buying saw make pallets (2) Plaintiff claims that D. Alden (merchant in saws) referred customers to D. Korleski and that D. Korleski had expertise. (however, plaintiff brought son for one example showing they relied on his sons judgment and not skill, expertise etc, of defendant) 2-316: Exclusion or Modification of Warranties

P13 ANALYSTS INTERN CORP v RECYCLED PAPER PROD INC. FACTS: RPP publishes/supplies greeting cards/gifts to retail stores nationwide. (IL) AIC (MI) with an office in Chitown creates computer software systems. RPP wanted to computerize their reordering of stuff thought of Computer Assisted Merchandising Program CAMP o CAMP would determine a customers need and whether or not to ship stuff or ship different stuff or reject order altogether. RPP paid AIC $16k to design, develop and implement CAMP. The material terms are all in dispute. o modified to include more at additional cost but date remained same was partly written and partly oral o Jan 17 84: AIC RPP stating would take 36 weeeks at $278,000. AIC contends was rough $$ and RPP agreed to pay hourly. RPP states AIC assured price was fixed and done October. AIC finished in December. System was not tested and no one was trained. CAMP did NOT perform ANY of the intended functions. Between Jan and June 85 RPP suffered sever business prob. AIC tried to fix. RPP paid them roughly ONE million.

o RPP hired someone else. o Remaining moneys around 300,000 o AIC sued breach of and fraud Moved Mot Sum J. & to dismiss RPPS counts chargin common law and statutyr fraud, neg misrep, malpract and RICO. o RPP sued alleging breach of and warranty, fraud and others. SUM JUDGE: o RPP contends breach of contract and breach of an express warranty, implied warranty of merchantability and warranty of fitness for particular ppurpose. o 2-314(merchant) & 2-315(fitness) Implied warranties. Issue: whether the UCC applies to the purchase of CAMP which depends on the issue of whether the involved is one for a transaction in goods. o Programmers knowledge, skill and ability was the subject of the and is important but only insofar as it enables him to produce the software according to the . AIC Arg: that where a transaction involves creative efforts resulting in a unique work product, the is service. Nitrin v. Bethlehem Steel Corp: 41 clearly indicating that the general contractor was responsible only for design and engineering work. Held that because the did not concern the sale of goods UCC not apply. o Here: both oral and written Boddie v Litton Unit: postal worker injured by machine made for postal service. Held: that UCC governed . o Here declined to see how case extended Illinois: uses dominant purpose test. o Whether the essence or dominant factor in formation of the was 4goods HERE: RPP via depositions showed that the essence was for GOODS, and the service aspect merely incidental. o Any specially designed item must necessarily perform whatever work is req to create or produce the item but this does NOT make it a service. HOLD: for goods. RPP entitled to put on proof at trial of breach of , warranties etc. Milau Assc Inc. v. N. Ave Development Corp. H2O pipe broke. H2O hammer sudden unpredictable break in flow. It flooded the cloth. - Hoop tension caused cracks, travelling along pipe. Q. for jury found for D. D. arg rupture in V notch pipe was suf. to find defect in "goods" under hybrid sales-service . o Court admits hybrid P. arg defect made pipe unfit for intent use and thus, they were entitled to have jury decide if implied warranty was breached. Implied warranty of merchantability: need reliance on merchants expertise, skills, etc that the goods will be made according to that specific area of goods expected performance. Implied warranty of fitness for particular purpose ISSUE: whether the was for the sale of goods or the services and installation. -

o Held for D. Installment . Need not be perfect. RULES Warranty: p8 Unless the parties have contractually bound themselves to a higher standard of performance, reasonable care and competence owed generally by practioners in the particular trade or profession defines the limits of an injured partys justifiable demands. Aegis Prod v. Arriflex: holding that in cases where service is performed negligenty the cause of action is for negligence & if it constitutes a breach of contract the action is for that breach. o Here: Job was to design and put together sprinkler system for commercial tenants sub was to furnish and install a wet pipe sprinkler system in accordance with NY Fire ins. o By putting their corp. logo to the sub agrmt, the fire specialist expressly warranted that all materials and equipment 9which they furnished) would be new and work under the sub to be of good quality free from faults and defects and in conformance with the . 2-313: requires that a sellers affirmation of fact to a buyer be made as part of the basis of the bargain, that is the contract for the sle of goods. The express warranty section would therefore be no more applicable to a service contract than the Codes implied warranty provision. However, where the party rendering services can be shown to have expressly bound itself to the accomplishment of particular result, the courts will enforce. HERE: had opp. To test the construction of written warranty in the sub at trial level. Opted to prove fault and if failed, seek to enforce a warranty imposed by law for the sale of goods unfit for their intended purpose. (implied warranty merch) o Judge did NOT find Higgins (sub) negligent in perf. o AND found the sub was an agrmt outlining the materials to be employed and the perf obl to be assumed by a construction specialist hired to install. o AND found to be for services thus, the implied warranty of merchantability only applies to service contracts insofar as it imposes an obligation not to do the work negligently. However, in products liability cases [rather than arising out of the will or intention of the parties] the liability imposed on the manufacturer is predicated on considerations of social policy including consumer reliance, marketing responsibility and the reasonableness of imposing loss redistribution. Yet, tort based cases should NOT be understood as in any way referring to the liability of a manufacturer [or tradesman] under similar laws of contracts for injuries by customer. did NOT raise any of these arguments.

Class 1/9 - Remember UCC is but one possibility. Tort claims, equity which will have dif. Governing laws, statutes, statutes of limitations etc. Art 2 does not require the / agrmt to be in writing. o But if it is in writing this triggers certain other things (FILL IN LATER EXAM) What kinds of damages are we looking for? o If goods are ruined as opposed to someone drowning (which could result from the same defect or problem) Milau Assc Inc. v. N. Ave Development Corp. Class 1/9

Predominant Purpose Test: Majority Rule o When you get your oil changed then the receipt will include a separated billing system into services and parts. Thus, if the part was $40 and the work installation services amounts to $400 the lawyer will argue that this is evidence that the contract was predominantly for services.

Anthony Pools v. Sheehan I: any time product causes injury (personal/injury) theory goes to 402(a) res torts product liability cases In MA there is no 402(a) and they use breach of warranty of merchantability. II: Could also be a breach of warranty MD has a law that does not allow 2-316exclusion of warranties in there rule 2-316.1 in that you cannot away warranties of merchantability for the sales of consumer goods, services, or both and that any language used by a seller of consumer goods and services, which attempts to exclude or modify any implied warranties is unfenforceable. FACTS: sustained bodily injuries when he fell from the side of the diving board. D. designed, built both the diving board and the pool as part of the swimming pool transaction. - arg two theories of liability 1) that the skid resistant material built into top of diving board did not extend to the edge of board stopping one inch short. o claims this breached implied warranty of merchantability 2) That the use of this defective good was unreasonably dangerous. PH: trial ct for D as to liability founded on warranty because the provided that the express warranties were in lieu of any other express/implied warranties. (Theory is based on the contractual limitation) Jury returned verdict for defendant on the issue of strict liability in tort theory. o AP CT: reversed saying The swimming pool package purchased was a consumer good. ISSUES: 1) Whether this is an Art 2 transaction giving the purchaser implied warranties. TESTS: Majority employs the predominant purpose test. More labor/more goods? P23 Worrell v. Barnes (nev): warranty of fitness for particular purpose under 2-315. Contractor doing carpentry work to connect appliances to plaintiffs home to an existing gas system. Appliances not supplied by contractor. P produced evidence that fire caused by defective fitting installed by D gas leak. o Held: that because it had held that the contractor had sold a product so as to bring into operation the doctrine of strict liability, so also must we deem this case to involve goods within the purview of the UCC. Gravaman Test: (MINORITY) If the gas escaped because of defective fitting/connector, the case might be said to be for goods. If gas escaped because of poor work by D the case might be services and outside the UCC. HOLD: Where, as part of a commercial transaction, consumer goods are sold which retain their commercial character as consumer goods after completion of the performance promised to the consumer, and where monetory/pers injury is claimed to

have resulted from a defect in the consumer goods, the MD UCC 2-316.1 applies to consumer goods, even if the transaction is one primarily for the rendering of consumer services. SHORT: For swimming pool construction carried implied warranty 2-314 and disclaimer of warranty was innefective under 2-316.1. SIEMEN v ALDEN Ill App Ct 75 FACTS: sued.1970 Injured while operating automated milti-rip saw bought from defendant in 1968. Saw was made in 1962. Plaintiff showed the new one working 1965. Old one was fixer upper. Plaintiff proceeds only against the guy who he ultimately bought the saw from. This Defendant is NOT in business selling saws. 1) Stirct tort liability sale of defective product; 2) Breach Warranties; 3 )Neg. o appeals against Korleski on the trial ct granting mot sum judge on 1) Tort. Owned sawmill. Bought auto saw to increase pallet production. P ARG: that the defendant had suff relationship to the saw causing injury to subj him to strict liability for sasle of defective product P ARG: under UCC ch 26 2-314 and 2-215 defendant liable for implied warranty. - Arguing that because the defendant was in the business of saws and because he had modified the machine to suit his own purposes thereby putting it in the condition leading to injury. Illinois Law: special liability of seller of product that harms. o One who sells any product in defective condition unreasonably dangerous to the user or consumer or to property is sub to liability for inry caused by the product to the ultimate user or consuer or their protery IF: The is engaged in selling such a product And: It is expected to and does reach the user or consumer without substantial change in the coniction which was sold. o The rules above apply although: Seller exercises all care in preparation and sale user has not bough product from or entered into K w seller. P. ARG TEST: whether the seller holds himself out as having knowledge or skill 2-314 Committee Comments: Make clear that it only applies to a person who, in a professional status, sells the particular kinds of goods giving rise to the warranty. 2-315: when seller at time of K has reason to know any particual purpose for which the goods are required and that the buyer is relying on their skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section and implied warranty P.29 Notes: 2-104: merchant = not only those who deal in goods but those who deal in the practice of those goods i.e. banker, lawyer 2-314: defines merchants as only those where the seller is a merchant with repsect to goods of that kind III. SCOPE OF ARTICLE 2A Leases: gives rise to problem. Many courts apply Art 2 by anology to goods stating that the commentators alluded to this in their comments to 2-102 whereby they said transactions in goods

leases under article 2A o Must pass Test if not governed by Art 2 and 9. 1-203: Lease Distinguished From Security Interest Security interest created if consideration that the lessee is to pay lessor for right to possession and use of goods is an obligation for said term not subj to termination & o Term of lease > economic life of goods o If lessee must renew till end of economic life. o Lessee hs an option to renew lease for remaining life of goods for NO extra consideration upon compliance with lease K or can become owner for NO cons. Security interest NOT created merely because: o Present value of cons lessee obl to pay lessor is substantially equal to or > than fair mrkt at time lease K entered o Lessee assumes risk of loss of goods o Lessee agrees to pay taxes, insu filing, recording or registration fees etc for goods o Lessee has option to renew lease or to become owner o Lessee can renew lease for fixed rent equal to or greater than the reasonably predicted fair market rent for term of renewal at the time of the option or. o Consideration is nominal IF less than reasonably predicted cost of perf lease K if the option is NOT exercised o NOT NOMINAL IF: When option to renew lease is granted the rent is stated to be fair mrkt rent for use for term of renew determined at time option is to be performed; or When option to become owner of goods granted the priceis stated to be mrkt $ at time option is to be perf. CHAPTER 2 CONTRACT FORMATION 2-201 STAUTE OF FRAUDS: terms sufficient (1) quantity (Revised 2003 raises minimum amount from $500-$5,00) o use $500. (2) signed by party against whom enforcement is sought

St. Ansgar Mills, Inc v. Streit Sup Ct Iowa 2000 P36 FACTS: appeal from d court granting sum judge in action to enforce oral based on written info. D court held NOT enforceable because written confirmation not delivered w/in reasonable time Buys corn from locals and sells to livestock farmers for feed. Price based on Chicago Board of Trade for delivery with reference to five.

Calls and gets quate then farmer either accepts or not if accepted protects $ through brokerage house. and entered into multiple together. IF oral woule prepare written then send it to sign and return. o July 1, 1996 called and placed two orders for the purchase of 60,000. Delivery in December 1996 at $3.53/ & May 1997 at $3,73 o then drafted but set it aside for to sign when he was expected to stop by the business. did not stop in until August and at that time he orally refused delivery of corn orally agreed to Price fell well below agreed to price and bought on open market. RULES: S.O.F. enacted to ensure perjury was not used to enforce s Under Iowas S.O.F. writing req considered satisfied if, w/in reasonable time, writing confirming , which is sufficient against the sender (i.e. quantity) is received and the merchant receiving it has reason to know ocontents unless written notice of objecton to contents is given with 10 days after receipt. o UCC defines reasonable time for taking action in realtion to the nature, purpose and circumstances of the action (i.e. UOT, COD, COP) Generally a question of fact for the jury Precedent: says that sum judge should only be used when the evidence is so one-sided that a party must prevail at trial as a matter of law. o Other Jurisdictions have held different times as to what is reasonable. Five month delay reasonable in ligh of merchants relationships and parties Three month delay reasonable in ligh of parties interaction in the interim and non fluctuating prices, thus no prejudice. One month delay unreasonable despite misdirection of confirmation due to mistaken addresss Six month delay for confirmation of modictation order for additional materials unreasonable as a matter of law in light of gulf war, thus increased prices and demand. Eight months delay for two year continuity unreasonable in light of lack of evidence Six month delay delivered one day prior to last day of delivery unreasonable Ten week delay reasonable in lght of immediate perf by both parties following oral HERE: fluctuating prices are but one consideration o Others: include the fact that the parties had maintained a long time custom/practice to delay delivery confirmation. o Long time business relationship o Engaged in many other similar business transactions without incident. HOLD: because lack of an explanation by the is not determinative. Because evidence exists that did not believe a problem exists just becaue did not follow normal custom of business and stop in. To Jury. Parole Evidence Rule: Official Cmts.
1. This section definitely rejects:

(a) Any assumption that because a writing has been worked out which is final on some matters, it is to be taken as including all the matters agreed upon; (b) The premise that the language used has the meaning attributable to such language by rules of construction existing in the law rather than the meaning which arises out of the commercial context in which it was used; and (c) The requirement that a condition precedent to the admissibility of the type of evidence specified in paragraph (a) is an original determination by the court that the language used is ambiguous. 2. Paragraph (a) makes admissible evidence of course of dealing, usage of trade and course of performance to explain or supplement the terms of any writing stating the agreement of the parties in order that the true understanding of the parties as to the agreement may be reached. Such writings are to be read on the assumption that the course of prior dealings between the parties and the usages of trade were taken for granted when the document was phrased. Unless carefully negated they have become an element of the meaning of the words used. Similarly, the course of actual performance by the parties is considered the best indication of what they intended the writing to mean. 3. Under paragraph (b) consistent additional terms, not reduced to writing, may be proved unless the court finds that the writing was intended by both parties as a complete and exclusive statement of all the terms. If the additional terms are such that, if agreed upon, they would certainly have been included in the document in the view of the court, then evidence of their alleged making must be kept from the trier of fact.

Nanakuli v Shell Oil: Holding and Rule Trade usage and course of performance will be implied into contracts if there is evidence that it is not inconsistent with the terms of the contract, and they are so prevalent that the parties would have intended to incorporate them. Colombia Nitrogen Corp v. Royster Co. Ct App 5th 1971 FACTS: ; min 31,000 tons of phosphate each year for three years TO . Price = per ton. stated that the price was subject to an escalation clause dependent on production costs. o Phosphate prices dropped. o Sold for three months at lower price indicating that after the price would go back to the original. Colombia refused to complete Royster forced to sell at price substantially below $ PH: Colombia says lower court erred excluding evidence UOT & COD between the two. offered expert testimony. also offered proof that the between the two (i.e. Colombia selling rosyter nitrogen) all had patterns that demonstrated a substantial deviation from stated amounts or price. RULES: 2-202 authorizes the use of UOT, COD to explain or supplement the . CMT 2. Paragraph (a) makes admissible evidence of COD, UOT, and COP to explain or supplement terms of any and are to be read on the assumption that prior dealings between the parties and UOT were taken for granted when the was drafted. Unless carefully negated they have become an element of the meaning of the words used. Similarly, the course of actual performance by the parties is considered the best indication of what they intended the writing to mean. Minor Hold: a finding of ambiguity in an agreement is not necessary for the admission of extrinsic evidence about the usage of trade and the parties course of dealings. ARG: breached because of UOT and COD factors. And they offer evidence of such. ARG: properly excluded because it contradicts the express terms of the BUT the test of UOT and CODs admissibility is:

TEST whether the proffered evidence of COD and UOT reasonably can be construed as consistent with the express terms of the agreement HERE: the evidence sought to show that because of changing weather, farming, etc (p49) that dealers changed prices, quantities and delivery times to reflect the declining market conditions. [See below and cmt to UCC] The does not expressly state that COD and UOT cannot be used to explain or supplement the written o Min. tons and more phosphate are expressed in terms of products supplied under and NOT as just products or purchased under these contracts this is consistent with the proffered testimony. o The contract refers only to the failure of the buyer to pay for delivered goods and not what occurs upon and if buyer defaults and refuses RULE: the court must reject evidence of additional terms when the writing is found to have been intended also as a complete and exclusive statement of the terms of the agreement. The official comment notes to the code states that course of dealing and usage of trade, unless carefully negated, are admissible to supplement the terms of any writing and that contracts are to be read on the assumption that these elements were taken for granted when the was drafted. QUESTION p51: If you want COP, UOT, COD kept out the drafter must be specific and express about the agreement between the parties to leave those aspects of the transaction out. Offer and Acceptance
Gen Rule:

2-206. Offer and Acceptance in Formation of Contract.

Battle of the Forms 2-207: Conduct demonstrating offer and acceptance is sufficient to form a contract.

Diamond Fruit Growers v. Krack FACTS: Metal Co. supplies for past ten years with steel tubing w/ same COD start of year Krack sent order to metal stating # tubing would need for year. Throughout the year as Krack needed tubing send release purchase order. Metal would send acknowledgment order then ship tube. o Acknowledgement disclaimed liability and limited liability for defects to refund orer or replaice or repair. At end of 10 year. Krack talked with metal about the disclaimers and objected to them. Metal retained the disclaimer. 1981: sells cooling unit to , built with Metals steel tubing. Defect in coil tubing. Leaking Ammonia. ISSUE 1: Whether the disclaimer of liabilities was effective. RULES: 2-207 cmmt1: because printed purchase order and acknowledgment forms are oriented to the thinking of the respective drafting parties, the terms contained therein often to do not correspond. COMMON LAW: an acceptance that varies the terms of the offer is a counteroffer and operates as a rejection of the original offer. o COMMON LAW MIRROR IMAGE RULE

If offerror accepts after receiving counteroffer, his performance is an acceptance of the terms of the counteroffer. UCC RULE: 2-207(1) requires that the responding form contain a definite and seasonable expression of acceptance. The terms of the corresponding of responding form that correspond to the offer = the contract. UNLESS: a definite and seasonable expression of acceptance expressly conditions acceptance on offerors assent to additional/different terms therein The parties differing forms do not = unless offeror assents. IF PROCEED AS IF : results in under 2-207(3) terms contained in both forms & terms supplied by UCC 2-207(3): Conduct by both parties which recognizes the existence of a is sufficient to establish a for sale although the writings of the parties do not otherwise establish a . In such a case the terms of the consist of those terms on which the writings of the parites agree, together with any supplementary terms incorporated under other provisions of the UCC 2-207(2) additional terms of responding form become proposals for additions to the contracts. Merchants: additional terms become part of the unless: 1) offer is specifically limited to its terms; 2) offeror objects to additional terms; or 3) Response terms materially alter terms of the offer. HERE: Metal-Matics acceptance is hereby experessly made conditional to purchasers acceptance of the terms and provisions of the acknowledgement form. ISSUE 2: Whether Krack assented to Metal-Matics limitation of liability term. What constitutes assent under 2-207? First: neutrality so as neither party has an advantage because it happened to send the first or last form. 2-703(3) states that all of the terms on which the parties forms do not agree drop out and the UCC supplies missing terms. C.LAW: different in that the offeree/counterofferor gets all terms because it fired off last with form. Metal ARG: Krack assented by objecting to and continuing to do business w/terms. COURT: we find their argument outweighed by the public policy reflected by Oregons enactment of the UCC REASON: here both parties are responsible for introducing ambiguituy into the . These terms would require the seller to assume more liability than it intends. IF SELLER does NOT want to be bound unless buyer assents it can simply NOT SHIP HOLD: because Krack did not indicate unequivocally their intent to assent the conduct did not amount to assent under 2-207(1) BAYWAY REFINING CO. v. OXYGENATED MARKETING & TRADING US CT APP 2ND 2000 PP60 FACTS: Req 2 pay tax for sale to party not procured tax exemption to sell 60,000 barrells.

Feb 12, 1998 faxed confirmation letter offer; o pleased to confirm purchase.. This confirmation is the entire and represents our understanding of terms and conditions.. Any discrepancies or ommisions should be brought to our notice within next two working weeks. faxed confirmation letter next day; This doc cancels & supersedes any correspondence in relation to this set price, amount, delivery and incorporated companies standard terms: notwithstanding any other provision, where not in conflict with the foregoing, the terms and conditions as set fort in Bayway General terms etc are hereby incorporated in full by reference. Buyer shall pay seller amount of any federa, state etc taxes.. other than taxes on income pad or incurred by seller directly or indirectly with respect to oil. o did not object to the above. refused to pay tax denying assumption of tax liability and refused to pay that invoice item ISSUE: whether under NY UCC 2-207(2)(b) a contract term allocating liability to the buyer for an execise tax is an additional term presumed accepted (as seller contends) or (as buyer contends) a material alteration and thus, rejected. HOLD: i) the party opposing inclusion of an additional term bears burden of proving that it materially alters the ii) the district court properly granted sum judge in favlor of seller because additional term did not materially alter . iii) Evidence of custom and practice was properly admitted. ANALYSIS: s confirmation fax was effective to form (acceptance) The additional terms were not made expressly conditional on s assent. o Thus, 2-207(2) Tax Clause was a proposal for an addition to the Merchants: both are merchants and thus, the Tax Clause becomes apart of the unless: 1) offer is specifically limited to its terms; 2) offeror objects to additional terms; or 3) Response terms materially alter terms of the offer RULE: under NY UCC 2-207(2)(b) party opposing additional terms bears burden. II) Material Alteration: one that would result in surprise or hardship if incorporated without express awareness by the other party Abitration Clause: as a matter of law is a per se material alteration in NY o [Union Carbide v. Oscar Mayer: court distinguished between open ended tax liability material alter o and responsibility taxes for taxes on specific invoice not material alter. III) Surprise: Standard: under the circumstanctes, it cannot be presumed that a reasonable merchant would have consented to the additional terms. A) Subjective what party knew

here: complete surprise to B) Objective should have known. Here: no facts/evidence showing merchant would be surprised. Here: introduced evidence of custom and practice o 2 industry experts. o claims only 3/5 of other s have Tax Clause COURT: 1/4 had them tax added into the price RULING: because the tax imposed here is upon fuels sold to any unregistered buyer it is rational that the allocation of the tax price would be placed on the party in the position to obviate it.

KLOCEK v. GATEWAY US D.CT KAN 2000 PP74 FACTS: 1) class action alleging they induced parties to buy computers and special support packages by making false promises of technical support. 2) individually alleges breach of and breach of warranty because stated its computer would be compatable with standard peripherals and internet services. had ARBITRATION CLAUSE: Standard: is simply a matter of between the parties but only those disputes that the parties have agreed to submit to rbitration. IF parties dispute making an arbitration agreement, a jury trial on the existence an arbitration agreement is warranted if record reveals issues of facts. BURDEN: TO SHOW ENFORCEABLE AGREEMENT TO ARBITRATE. Then shifts to RULES: Kansas and Missouri case law turn on whether court finds the parties formed their before or after seller communicated terms to buyer [Hill: sale of computer which contained within the box a license agreement enabling return within 30 days valid.] Conditional nature of acceptance must be clearly expressed in a manner sufficient to notify the offeror that the offeree is unwilling to proceed with the transaction unless the additional or different terms are included in the contract. HERE: PLAINTIFF IS NOT MERCHANT additional or different terms did not become part of the contract unless expressly agreed to. ARG: that plaintiff keeping the computer longer than five (5) days served and demonstrated acceptance of arbitration provision. HOLD: no evidence produced to show that express acceptance was given. see [Brown Machine where express consent cannot be presumed by silence or mere failure to object]