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The Uniform Commercial Code Summary General Provisions 1-103 o (a) The UCC must be liberally construed and

applied to promote its underlying purpose and policies; which are: o (1) To simplify, clarify, and modernize the law governing commercial transactions o (2) to permit the continued expansion of commercial practices through custom, usage, and agreement of the parties o (3) to make uniform the law among the various jurisdictions. (b) Unless displaced by particular provisions of the UCC, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its positions. Form, Formation, and Readjustment of Contract 2-201 Formal Requirements, Statute of Frauds o (1) A contract for the sale of goods over $500 must be in signed writing to be enforceable. A writing does not fail because it omits or incorrectly states terms, but the contract will not be enforced beyond the amount of goods shown in the writing o (2) between merchants, if there is an oral contract, and there is written confirmation within a reasonable time, and the party receiving it has knowledge of the contents, it is enforceable under 2201 unless the receiver notifies of objection within 10 days after received

o (3) A contract which would normally fail under (1) is enforceable if (a) if the goods are to be specially made for the buyer and are not suitable for resale under ordinary course of business and the seller has made either a substantial beginning or commitments to obtain/procure before receiving repudiation. (b) If the party admits that it considered itself under contract, that a contract had in fact been made, but this cannot be enforced to more then is admitted to. (c) goods on which payment has been made and accepted or have been received and accepted

o Policy: The policy behind the statute of frauds is the protection against stale memories. We like for contracts to be done in writing, as it protects both parties, and keeps us away from a he said/ she said argument. o Impact: If you have a contract that has to meet the SOF and does not, you are not allowed to prove your case on the merits. o Most Important Term to be Included: QUANTITY! If you can show an output requirement that will work too. 1

o Required to be met in MYLEGS! Marriage- Contracts in regards to marriage. Year- Contracts which cannot be completed within a year. Land- Contracts for the sale of land. Executor- Contracts when the executor of an estate promises to pay a debt from his own pocket Goods- Goods over a certain price ($500) Surety- Guaranteeing someone elses debt.

o UCC Exceptions: Merchant Exception: If there is a written confirmation of an oral agreement sent between merchants within a reasonable time, and the receiving party has reason to know its contents, the SOF requirements will be met unless written objection is made within 10 days. [Thompson Printing Machinery Co. v. B.F. Goodrich] Specially Manufactured: If the goods were made specially for the buyer, and there has been substantial performance then the SOF is overcome Admission: If there is admission to a contract somehow in court. Payment/Acceptance: If there has already been payment for the goods or they have been accepted. 2-204 Formation in General o (1) A contract for the sale of goods can be made in any manner sufficient to show agreement. This includes conduct by both parties that show contractual intent. o (2) An agreement sufficient to constitute a contract can be found even though the time of its formation is undetermined. o (3) Even if terms are left out, a contract does not fail for lack of certainty if there is clear contractual intent, and we have a reasonably certain basis for giving an appropriate remedy. o Policy: This gives us the ability to find a contract in many different situations where the parties might not have been specific. They might have documents and action we can add together to show a contract. The more terms are included, and the more specific, the more likely it is we will have a contract. o Terms: Again we want to see quantity in a contract. o Impact: We can find a contract where there might not of have appeared there was one. Intentionality is paramount. o Requirements: We need to have the intention of the parties to form a contract. It is possible that if either party did not intend to form a contract then we might have one. There still must be the mutual assent and the meeting of the minds. We also need to have a reasonably certain basis for 2

enforcing a remedy.

2-205 Firm Offers o 2-205 Firm Offers: An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurances that it will be held open is not revocable, for lack of consideration; during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such terms of assurance on a form supplied by the offeree must be separately signed by the offeror. Policy: We want to hold merchants to their promises. Thus a merchant cannot claim that an offer, signed by both the offeror and an offeree is invalid due to lack of consideration. Impact: Be careful about what you say and how you say it. Notes: If an offer by a merchant is supported by consideration, it can go on as long as the parties have specified.

2-206 Offer and Acceptance in Formation of a Contract o (1) Unless otherwise unambiguously indicated by language or circumstance; (a) An offer to make a contract shall be construed as inviting acceptance in any manner and any medium reasonable in the circumstances. (b) An order or other offer to buy goods shall be construed as inviting acceptance thru prompt promise to ship or shipment of conforming or non-conforming goods. A shipment of non-conforming goods does not constitute acceptance if the seller seasonably notifies the buyer that it is offered as an accommodation to the buyer.

o (2) Where the beginning of a requested performance is a reasonable mode of acceptance, and offeror who is not notified of this acceptance within a reasonable time may treat the offer as having lapsed before acceptance. o Policy: (1) An offeror is the master of his offer! He can control all aspects of the offer, including the method of acceptance, which can in fact be in anyway he deems necessary. If he sleeps on this right, then he must recognize acceptance in any manner reasonable, thus keeping him form saying there was never a deal. (2) When a seller ships the goods that are nonconforming (blue snowmobiles instead of yellow) as an accommodation, this keeps the seller from being in breach by doing the best they can. This accommodation functions as a counter offer, inviting acceptance from the buyer. o Impact: An offeror cannot simply say that there was in fact no acceptance when it objectively and clearly appears as if there was acceptance, and the reasonable person would assume acceptance. 3

[Fujimoto v Rio Grande Pickle Co.] Where someone has begun to perform, but fails to inform the other party, the first party may treat the offer as lapsed if they are not given notice. 2-207 Additional Terms in Acceptance or Confirmation; the Battle of the Forms! o (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional or different from those offered or agreed upon, unless acceptance is made conditional on assent to the additional or different terms. o (2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (a) The offer expressly limits acceptance to the terms of the offer; (b) They materially alter it (c) Notification of objection to them has already been given or is given within a reasonable time after notice of them is received. o (3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such a case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplemental terms incorporated under any other provisions of this act. o Policy: This section is designed to keep business running at the speed of business. Corporations tend to exchange preprinted documents, and if we required the approval of all the terms on the back of them each time there was an exchange of documents business would grind to a halt. o Impact: This comes into play when the offer and acceptance differ in terms. The common law Mirror Image Rule required that the acceptance of an offer be exactly the same, if they werent then it became party to the Last Shot Doctirne, meaning whoever had the last word, if there was a contract, those terms dictated. This did not protect the offeror as the master of his offer, as we would like. Now 2-207 protects the offerors terms in a situation of misunderstanding. o Functioning: (1) Here we look for a contract. Was there a meeting of the minds? Is it apparent that there was in fact a contract in the documents exchanged, are the ideas and terms exchanged enough to show a contract? The proviso section means that if in the reply to the offer there is a term stating that all terms must be assented to in the reply there cannot be a contract. If this is the case, or if there is no contract we go to (3) If we find a contract, then we are going on to section (2) (2) If between merchants, the additional terms become part of the contract unless the offer has limited the terms agreed to, the additional terms materially alter it, or there is written objection given within a reasonable time. If not between merchants, then the terms are construed as just proposals to the contract. Majority View: We treat this section as it says, only addressing the additional terms, the different terms are knocked out, similar to section (3) Minority View: We treat section (2) as saying both additional and different and we 4

knock them both out of the contract. (3) Knock out. When there is only conduct sufficient to show a contract. We take the terms that agree and kick the rest out. We fill back in with the gap filler section (2-313, 2314,2-315)

2-208-: Course of Performance o (1) When the contract requires repeated occasions for performance, ad either party is aware of the nature of the required performance, any performance accepted will be relevant to determine the meaning of the agreement. o (2) The express terms of the agreement, and the subsequent performance, as well as the course of dealing and usage of trade, shall be construed whenever reasonable as consistent with one another. When unreasonable express terms will control. o (3) Subject to 1-209, course of performance will be relevant to show a waiver or modification of any term inconsistent with the course of performance. o Policy: The parties themselves know what they meant by their agreement. o Functioning: Thus when performance starts to happen, if it is not in exact agreement with the terms of the contract, the course of performance will act as a modification on the contract, subject to reasonableness and 2-209. The course of performance and the contract will be read together whenever possible.

UCC 2-209; Modification, Rescission and Waiver o (1) an agreement modifying a contract within this article needs no consideration to be binding. o (2) a signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form must separately be signed by the other party. o o o o (3) (4) (5) Notes: This is an express rejection of the common law requirement of new consideration being given for a modification of a contract. Because the UCC requires all parties to operate in good faith, we assume that the original exchanged consideration was good enough

o Policy: We want parties to be able to freely contract, and modify that contract when needed and accented to better help business run. The good faith requirement keeps us from adding another layer of consideration and thus another argument, onto the existing contract. General Obligation and Construction of Contract 2-301 General Obligations of Parties o The obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance. 5

o Policy: Just like what it says. Do what you are supposed to do. 2-305 Open Price Term o Roughly: o (1)The parties can conclude a contract even if no price is settled. The price is reasonable at the time of delivery if, (a) nothing is said to the price; (b) the price is left to be agreed to by the parties and they fail to agree; (c) it is to be fixed on some agreed outside source [market, 3rd person], and it has not been set. o (2) Must be fixed by buyer or seller in good faith. o (3) When one party is at fault on fixing the price, the other may treat the contract as being cancelled or himself fix a reasonable price. o (4) If the parties do not intend to be bound with out the coming together on price, buyer must return goods (or pay reasonable amount) and seller must return money, o Policy: This is a rejection of the common law principle that an agreement to agree is invalid as a contract. Rather we look to the intention of the parties as to the contract. This allows for the formation of a contract where the term of price is left open. Under common law this would not be enough to contract. o Functioning: More requirements of good faith dealings. When there is a breach and there is no price, the non-breaching party may act as if there was no contract (subject to giving any previously exchanged goods back or paying the reasonable price for them) or fix a price himself according to reasonableness. Where there is clear intentionality that the parties did not mean to be bound with out the agreement of price there is no contract. In that case, buyer must return goods or pay reasonable value, and seller must return money. 2-306 Output Requirement and Exclusive Dealings. o (1) (Roughly) A term which measures the output of a party to be sold to another requires that the output tendered or demanded must be reasonably proportionate to course of dealings, any estimate given, and be done in good faith. o (2) When exclusive, it is required of the best effort of one party to supply said goods and the best effort of the other to sell. Output: What the seller can produce Requirement: What the buyer may need. o Policy: When we find a requirement contract, we construe it to be the reasonable output and requirement of the parties, not necessarily all that they would like from each other, as that could be immeasurable. We also construe an output/requirement contract to mean that the buyer will do his best to sell what has been made and the seller will do his best to produce the needed product, more good faith, best effort, righto chap dealings. [Sylvan Crest Sand & Gravel v. US] [Mchmichael v Price] o Functioning: Good Faith all the way around. 6

2-308 Absence of Specified Place for Delivery o Unless otherwise agreed (a) the place for delivery of goods is the sellers place of business or if he has none his residence; but (b) in a contract for a sale of identified goods which to the knowledge of the parties at the time of contracting are in some other place, that place is the place for their delivery; and (c) Documents of title may be delivered through normal banking channels o Policy: Lets not have there be no delivery because the seller claimed there was no place specified to deliver. In the alternative lets not have john the fish seller receive 4000 salmon at his house and not his business. Also, if you know where to take the goods, take them there.

Gap Fillers; Warranties 2-313 Express Warranties by Affirmation, Promise, Description, Sample o (1) Express warranties by the seller are created as follows: (a) any affirmation or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise. (b) Any affirmation of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description. (c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model. o (2) It is not necessary to the creation of an express warranty 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 value of the goods or a statement purporting to be merely the sellers opinion or commendation of the goods does not create a warranty. o Policy: When a seller says something, he should be held to it. We do not want gross exaggerations of fact, or statements of a goods function that are patently false, thus we have the creation of express warranties. If you are being told something that you are reasonable in believing about the good, this is an express warranty. Puffing is the exaggeration and cannot be an express warranty, though could elevate the reasonable expectations of the buyer. This is a strict liability code section, if what you said turns out to be false you are gonna pay. These cannot be disclaimed. o Functioning: The sale of goods is going to be governed by all statements that go to the basis of the bargain. If you promise me this tv will get great reception at home, and I believe you and buy it and it sucks, you have violated 2-313. The words used to form an express warranty must be said or written somewhere. Express being the operative term. o You do not have to be a merchant for this to apply. 2-314 Implied Warranty: Merchantability; Usage of Trade o (1) Unless excluded (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 and drink to be consumed either on the premises or elsewhere 7

is a sale. o (2) Goods to be merchantable must be at least such as (a) pass without objection in the trade under the contract description; and (b) In the case of fungible goods, are of fair average quality within the description; and (c) are fit for the ordinary purposes for which such goods are used; and (d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and (e) are adequately contained, packaged, and labeled as the agreement may require; and (f) conform to the promise or affirmations of fact made on the container or label if any. o (3) Unless excluded or modified (section 2-316) other implied warranties may arise from course of dealing or usage of trade. o Policy: We will hold the merchants to a higher standard, that of implied warranties that operate by their being a merchant. They garrunty certain things by cavorting about as merchants. This is to protect the consumer, who might not have knowledge to the extent the merchant does. o Functioning: these operate unless exclaimed (2-316, 2-719). Goods delivered by a merchant must be of a quality comparable to the generally acceptable quality in that line of trade. This is the only section of 2 which can be applied to service, that of the sale of food or drink. There is a standard of care duty there. All we have to show is that the seller sold the goods to the buyer. o Impact: These warranties are disclaimable, but must be done conspicuously and specifically disclaim the warranty of merchantability to be effective. 2-315 Implied Warranty; Fitness for a Particular Purpose o Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the sellers skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such a purpose. o Policy: When a seller purports to have special knowledge of a subject that he has imparted on to the buyer, and the buyer is relying on this knowledge to make this purchase, we want that knowledge to be true. There could be quite a bit of damage done. o Functioning: Wittenberg with a .22 fighting an elephant. The breach is in this section, is in 2-315 and 2-313. The express warranty that this .22 will bring down the elephant, and the knowledge that it would coming from the seller. It is not enough that the seller knows the purpose of the sale, he must have knowledge of reliance. The buyer must plead and prove reliance. o Impact: Again the seller is going to have to be careful about what he says. 2-316 Exclusion or Modification of Remedy o Roughly (1) Words or conduct that relevant to the creation of an express warranty and words or conduct that limits or negates implied warranties shall be construed as being consistent with each other whenever possible. Negation or limitation is inoperative to the extent that such construction is unreasonable. 8

o (2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that there are no warranties which extend beyond the description on the face hereof. o (3) Notwithstanding subsection (2) (a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like as is, with all faults or other language which in common understanding calls the buyers attention to the exclusion of warranties and makes plain that there is no implied warranties. (b) when the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regards to defects which an examination ought in the circumstances to have revealed to him; and (c) An implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade. o (4) Remedies for breach of warranty can be limited in accordance with the provisions of the Article on liquidation of damages and on contractual modification of remedy o Policy: We want the buyer to know what it is he is buying, and what comes or does not come with it in regards to guarantees, thus we ask for conspicuous disclaimers. o Functioning: Basically like it sounds. If you are not going to do something normally done you best say so, or if you intend to limit the remedy you better say so. o Impact: It has got to be conspicuous when you tell someone you are not going to hold yourself to the implied warranties. Therefore many contracts have MERCHANTABILITY written loud and large. Performance 2-503 Manner of Sellers Tender of Delivery o (1) Tender of Delivery requires that the seller put and hold conforming goods at the buyers disposition and give the buyer any notification reasonably necessary to enable him to take delivery. The manner, time and place for tender are determined by the agreement and this article in particular (a) tender must be at a reasonable hour, and if it is of goods they must be kept available for the period reasonably necessary to enable the buyer to take possession; but (b) unless otherwise agreed the buyer must furnish facilities reasonably suited to the receipt of goods. o (2) where the case is within the next section respecting shipment tender requires that the seller comply with its provisions. o (3) where the seller is required to deliver at a particular destination tender requires that he comply with subsection (1) o Policy: In accordance with the general obligation of parties, you got to deliver the goods in a reasonable manner and the buyer needs to be able to reasonably receive them unless otherwise agreed 9

upon. o Impact: A delivery of oranges can not be made by dumping them on to the ground in front of the grocery store. 2-504 Shipment by Seller o Where the seller is required or authorized to send the goods to the buyer and the contract does not require him to deliver them at a particular destination, then unless otherwise agreed he must (a) put the goods in possession of such a carrier and make such a contract for their transportation as may be reasonable having regard to the nature of the goods and other circumstances of the case; and (b) obtain and promptly deliver or tender in due form any document necessary to enable the buyer to obtain possession of the goods or otherwise required by the agreement or usage of trade; and (c) Promptly notify the buyer of the shipment. o Failure to notify the buyer under paragraph (c) or to make a proper contract under paragraph (a) is a ground for a rejection only if material delay or loss ensues. o Policy: We want to require the seller, when shipping, to conform to the bounds of the contract entered into with the buyer, and to make sure the goods get where they are supposed to go when they are supposed to be there. Though we dont want the buyer bailing out for a simple hour delay, material delay or loss is the operative idea here. o Functioning: Why do you get email confirmations of a shipment from amazon? 2-504 thats why. o This is: An exception to the perfect tender rule. There needs to be a material delay or a loss ensuing from the failure of delivery to invoke the perfect tender rule (2-601) 2-507 Effect of Sellers Tender; Delivery on Condition o (1) Tender of delivery is a condition to the buyers duty to accept the goods and, unless otherwise agreed to his duty to pay for them. Tender entitles the seller to acceptance of the goods and to payment according to the contract o (2) where payment is due and demanded on the delivery to the buyer of goods or documents of title, his right as against the seller to retain or dispose of them is conditional upon his making the payment due. o Policy: When the goods are there you should pay for them. Or even, you should pay for them before I go about the hastle of shipping them of. o Functioning: Often I have to pay for something then it comes in the mail o Oddly: gotta pay before delivery. Opposite of 2-511(1) So who goes first? The person with the larger task almost always has to perform first. 2-508 Cure by Seller of Improper Tender or Delivery; Replacement o (1) Where any tender or delivery by the seller is rejected because of non-conforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery 10

o (2) Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if he seasonably notifies the buyer have a further reasonable time to substitute conforming tender. o Policy: Because of the requirements of good faith dealings, and the fact we like second chances, we like people to have the opportunity to make something right, rather then the hassle that is rejection or a lawsuit coming out of that. o Functioning: This means that if someone delivers a good that does not conform, he should be given the right to fix it before being held liable. Also if the seller is unfairly surprised by your rejection (blue pencils v yellow pencils) then he should be given the chance to cure. o This is: An exception to the perfect tender rule. 2-511 Tender of payment by buyer; Payment by Check o (1) Unless otherwise agreed tender of payment is a condition to the sellers duty to tender and complete any delivery. o (2) Tender of payment is sufficient when made by any means or in any manner current in the ordinary course of business unless the seller demands payment in legal tender and gives an extension of time reasonably necessary to procure it. o (3) Roughly: payment by check is conditional and is defeated as between the parties by dishonor of the check on the due presentment. o Policy: You got to pay if you want to get the goods. Payment is good if it is commercially reasonable, unless the seller demands legal tender, at which point the seller would have to give adequate time to procure the pament. o Functioning: If you pay by check and it is dishonored you are gonna be in breach. Breach, Repudiation and Excuse 2-601- Buyers Right on Improper Delivery; The Perfect Tender Rule o Subject to the provisions of this Article on breach in installments contracts (2-612) and unless otherwise agreed under the sections on contractual limitations of remedy (2-718 & 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 o Policy: The goods I buy from you should be perfect in every respect. If they are not I can reject for almost any reason. o Functioning: Rejection of the goods is a much better place for the buyer to be. The goods are still in control of the seller and the ultimate responsibility for any decline in value is borne by the seller. o Exceptions: There are four exceptions to the perfect tender rule (1) The Deminimus Rule: If the problem is so negligible that you are being ridiculous to 11

complain, we will not recognize the rejection. I.e. The car had a red starting button rather then crimson. (2) 2-508: The sellers right to cure. If the seller delivers before the contract is up, or is unreasonably surprised by your rejection then he should be given a chance to fix the situation. (3) 2-504: Shipment contract situation. The buyer can only reject because of delay if it was a material delay or loss ensuing. The shipper probably is going to have to be aware of the loss possibility (4) 2-612: Installment contracts, the seller cannot repudiate the entire contract unless the breach goes to the substantial impairment of the whole.

2-602 Manner and Effect of Rightful Rejection o (1) Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer seasonably notifies the seller o (2) Subject to the provisions of the two following section on rejected goods (section 2-603, 2-604), (a) After rejection any exercise of ownership by the buyer with respect to any commercial unit is wrongful against the seller; and (b) If the buyer has before rejection taken physical possession of goods in which he does not have a security interest under the provisions of this article, he is under duty after recjection to hold them within reasonable care at the sellers disposition for a time suffiecent to permit the seller to remove them, but (c) the buyer has no further obligations with regard to goods rightfully rejected. o (3) the sellers rights with respect to goods wrongfully rejected are governed by the provisions of this article on sellers remedies in general. o Policy: If the buyer is going to reject, he must do so within a reasonable period of time. In addition after he rejects he cannot toss the goods out on the street. o Functioning: This is going to make a buyer inspect his goods in a reasonable period of time, and possibly allow for cure if the contract time has not run out yet, or allow the seller to reclaim the goods and resell.

2-603 Merchant Buyers Duties as to Rightfully Rejected Goods o Roughly: The merchant has a duty to take reasonable care of the goods he has rejected, to follow reasonable instructions from the seller as to the care of the goods, and in the absence of such instructions to make a reasonable effort to sell the goods if they are perishable or will decline in value speedily. o When the buyer does resell the goods, he is entitled to be reimbursed for the sale of tehm, and the reasonable care and expense for holding the goods and selling them. He is entitled to reasonable commission in the course of trade or in the absence not to exceed 10% o When complying with this the buyer cannot be held liable for conversion nor the basis of other actions for damages. o Policy: Lets promote capitalism. If the fruit is going to go bad, or the elmo dolls, though defective will only be hot for a month, sell them. o Funtionality: A buyer who fails to make a good faith effort to resell can be held liable for damages.


2-604: Buyers Option as to Salvage of Rightfully Rejected Goods. o Roughly: In the absence of instructions the buyer may sell, reship, or store the goods for the seller. Such action is not acceptance or conversion. o Policy: This aims to reduce the stake in dispute and to avoid pining the label of acceptance on a buyer who in good faith attempted to resell on the sellers account.

2-605: Waiver of Buyers Objections by Failure to Particularize o (1) the buyers failure to state in connection with rejection a particular defect which is ascertainable by reasonable inspection precludes him from relying on the unstated defect to justify rejection or to establish breach (a) where the seller could have cured it if stated seasonbly (b) between merchants when the seller has after rejection made a request in writing for a full and final written statement of all defects on which the buyer proposes to rely o (2) payment against documents made without reservation of rights precludes a recovery of payment for defects apparent on the face of the documents. o Policy: We are permitting the buyer to give a quick and informal notice of defects in tender without penalizing him for omissions in his statement, while at the same time protecting a seller who is reasonably misled by the buyers failure to state curable defects. o Functioning: This is going to make the buyer state his reason for rejection, and give the seller something to rely on. The seller can get a particularized version after rejection. This can keep a buyer from just rejecting for no reason and trying to get out of an unprofitable deal.

2-606; What constitutes acceptance of goods o (1) Acceptance of goods occurs when the buyer (a) after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their nonconformity (b) fails to make an effective rejection (subsection (1) of 2-602) but acceptance does not occur until the buyer has had a reasonable opportunity to inspect them (c) does any act inconsistent with the sellers ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him o (2) acceptance of a part of any commercial unit is acceptance of that entire unit o Policy: We do not want a buyer keeping the goods for awhile and then deciding he doesnt like them and rejecting. We must have end to the sale at some point. o Functioning: Again, the buyer inspects and then makes a decision. The decision will be made for him if he does something like carves his initials into the couch. The not necessarily if he begins to use the product as designed and expected by the seller only to discover in this initial use and inspection the non-conformity of the item.

2-607 Effect of acceptance; Notice of breach; Burden of Establishing Breach after acceptance; notice of claim or litigation to person answerable over. o (1) The buyer must pay at the contract rate for any goods accepted o (2) Roughly: if you accept the goods you cannot reject unless the acceptance was based on the 13

reasonable belief that seller was going to cure. This applies even to goods that have a nonconformity. o (3) Where tender has been accepted: (a) the buyer must reasonably notify the seller after he discovers the problem or be barred from remedy. (b) whatever o (4) The burden is on the buyer to establish any breach with respect to the goods accepted. o Policy: Once you accept you cannot reject. There needs to be an end to the shenanigans at some point doesnt there. o Functioning: The buyer, again, shall inspect his goods and make a decision on acceptance or rejection with speed. The notification by the buyer will preserve his rights of rejection, and does not need threaten litigation, just talk of the problem. 2-608 Revocation of Acceptance in Whole or Part o (1) The buyer may revoke his acceptance of a lot or commercial unit whose non-comformaity substantially impairs its value to him if he has accepted it. (a) on the reasonable assumption that its non-conformity would be cured and it has not been seasonably cured (b) without discovery of such non-conformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the sellers assurances. o (2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in the condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it. o (3) A buyer who so revokes has the same rights and duties with regards to the goods involved as if he had rejected them. o Policy: If the buyer accepts and then trys to get out of the deal, the burden has shifted to him. At some point the seller must be relieved of the burden of care for the goods. o Functioning: Once the buyer has accepted, if he trys to revoke, the burden of proof is going to be on him. The Buyer must then show Substantial Impairment a somewhat difficult term. The test is not whether the seller had knowledge at the time of contracting, but such that the non-conformity will cause a substantial impairment of value to the buyer though the seller did not know. 2-612 Installment Contract Breach o (1) an installment contract is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause each delivery is a separate contract or its equivalent o (2) The buyer may reject an installment which is non-conforming if the nonconformity substantially impairs the value of that installment and cannot be cured or if the nonconformity is a defect in the required documents; but if the nonconformity does not fall within subsection (3) and the seller gives adequate assurances of its cure the buyer must accept that installment. o (3) whenever nonconformity or default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole. But the aggrieved party reinstates the contract if he accepts a nonconforming installment without seasonably notifying of cancellation or if he brings up an action with respect only to past installments or demands performance as to future installments. 14

o Policy: Though we may say that each delivery is a separate contract, it is recognized as an installment contract. Therefore the breach of one installment should not get rid of the whole arrangement unless the breach goes to the substantial impairment of the whole. o Exception: Substantial impairment is not perfect tender. This can be an exception to the perfect tender rule. Sellers Remedies 2-703- sellers remedies in general (friends with 2-711) o Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract (2-612) , then also with respect to the whole undelivered balance, the aggrieved seller may (a) withhold delivery of goods; (b) stop delivery by any bailee as hereafter provided (2-705); (c)proceed under the next section respecting the goods still unidentified to the contract; (d)resell and recover damages as hereafter provided (2-706) (e) recover damages for non-acceptance (2-708) or in proper case the price (2-709) (f) cancel. o Policy: This is the shopping list available to the aggrieved seller. o Functioning: The going after of one remedy here does not necessarily bar the attempt to goafter another remedy, that will depend entirely on the situation. This covers the case of a dishonored check. 2-706: Sellers resale including contract for resale (Roughly) (friends with 2-712) o (1) this is a sellers remedy as under 2-703 (d) ; the seller may resell all goods that the buyer breached on and recover the balance thereof. The seller may recover the difference between the sale and the contract, plus incidentals, minus any money saved by the buyers breach. o (2) the sale of these good s except as otherwise provided in section (3), may be in almost any commercially reasonable form. Public or private sale, as a whole or in parcels, at any time and place as long as all aspects of the sale or commercially reasonable (method, manner, time, place, and terms) The resale must be reasonably identified as referring to the broken contract. It is not necessary that the goods exist at the time of sale or that any and all of them have been identified to the contract at the time of the breach. o (3) where resale is in private, the seller must give the buyer reasonable notification of the intention to sell. o (4) Where resale is a public sale (a) only identified goods can be sold, except when there is a market for a public sale of the future in goods of a kind (b) it must be made at a usual place or market for public sale if one is reasonably available. Exception of reasonable notice to buyer if the goods are perishable or threaten to decline in value (c) if the goods cannot be at the place of sale, there must be a way for those attending the 15

sale to inspect the goods. (notification of location of goods) (d) seller may buy o (5) a purchaser in good faith at this sale gets the goods free of any duties to the original buyer if bought in good faith and the seller does not apply with one or more of the requirements of this section o (6) the seller is not accountable for any profit on resale. o Policy: This is the mitigation of damages in the UCC. We want as little waste happening as possible. o Functioning: All done in a commercially reasonable manner according to this situation. Like everything else in this fun section. Basically notification where appropriate, and the seller when mitigating these damages cannot gain more then he would had the contract not been breached, plus incidentals. We are also trying to protect the breaching buyer from a seller getting rid of the goods at a low price because he knows someone is on the hook. The whole transaction needs to be above ground and in good faith. 2-708: Sellers Damage for Non-Acceptance or repudiation (Friends with 2-713 & (2) is friends with 2-715) o 1) subject to subsection (2) and with respect to proof of market price 2-723; the measurement of damages for breach is between the market price and the unpaid contract with incedental damages provided in 2-710; less expenses saved as consequence of breach. o 2) When the remedy provided in (1) does not restore party to place it would have been with performance, the measure is the profit with what full performance would have done, together with reasonable expenses incurred. (lost volume seller situation) o Policy: (1) simply defines the measure of damages. (2) might allow for something similar to consequential damages for the aggrieved seller. Thus where lost profits are reasonably ascertainable they can be included in the damages, this is not limited to a business with a history of profit. o Functioning: the measure of damages. The consequential damages available to the buyer for a breach are included here, limited apparently to lost profits. o Notes: Market price is going to have to be set in good faith and reasonable, as everything else in the code is. 2 is simply trying to put the seller in the position he would have been in had the buyer performed according to the contract. 2-709: Action for Price (talking to 2-716 (1)) o 1) When the buyer fails to pay when payment is due, the seller may recover together with incidentals, the price, a) of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of loss has passed to buyer. b) goods identified in the contract if he cant sell them after reasonable effort, or if the effort looks as if it will be unavailing. o 2) if the seller sues for price, he must hold goods unless he can resell them, and if resale he must 16

credit against any judgment he may receive. o 3) Where there has been a breach, a seller who cant get to this section gets 2-708. o Policy: intended to put the seller in the position he would have been in had the contract bveen honored in the cases where he cannot resell. o Functioning: This is a limited remedy to the cases where there has been a commercially reasonable effort to resell and the seller cannot, because of the buyer having accepted the goods or where the buyer refuses to pay because the goods have been destroyed after the risk of loss passed to the buyer. o Notes: Acceptance, casualty to the goods. 2-710: sellers incidental damages o incidental damages to an aggrieved seller include commercially reasonable charges incurred in ; stopping delivery, transportation, care and custody of goods after breach, all costs in connection with resale of goods o Policy: Enumerating the idea that if a seller has to do things he did not expect with the goods (transportation, storage, costs involving transactions unforeseen and resale) after a buyers breach he should be reimbursed for that. These are the reasonably incurred expenses. o Functioning: This will be less the costs he saved by not having to perform. Buyers Remedies 2-711: Buyers remedies in general, buyers security interest in rejected goods. [similar 2-703] o (1) where the seller doesnt deliver, or there is justifiable rejection of goods, the buyer may cancel and whether or not he has done so may recover in addition to price paid (a) cover and have damages under the next section as to all the goods affected whether or not they have been identified to the contract; or (b) recover damages for non-delivery as provided in this article (section 2-712) o (2) Where the seller fails to deliver or repudiates the buyer may also (a) if the goods have been identified recover them as provided (2-502) (b) in a proper case obtain specific performance or replevy the goods as provided (2-716) o (3) A buyer upon rejection, can act like an aggrieved seller with the goods he holds. Can get all reasonably incurred costs from this. o Policy: The buyer list of remedies o Functioning: yes it does. 2-712: cover; buyers procurement of substitute goods [similar 2-706] o (a) after a breach within the preceding section, a buyer may purchase in good faith and at reasonable market price goods to replace those due from the seller o (b) The buyer can recover the difference between the price of the goods got to cover and contracted for, plus incidentals, less expenses saved as to breach o (3) failure to cover does not limit buyer remedy 17

o Policy: Identifying the buyers need to continue business, this is the equivilent of the sellers right to resale. o Functioning: A buyer cannot go out and buy the most expensive ridiculous thing available, it must be reasonable and equivalent under the circumstances. 2-713: Buyers Damages for Non-delivery or repudiation [similar 2-708] o (1) subject to to proof of market price (2-723); the measure for non-delivery is the price between price paid and what the market is when the buyer learned of the breach plus incidentals. o (2) market price is to be determined first at the place of tender, or in the case of rejection or revocation at the place of delivery o Policy: Trying to identify the damages as experienced by the buyer. o Functioning: the Crucial time here is when the buyer learns of the breach. This is the time we measure the market price and damages at. Where the market price is unascertainable because of the scarcity of goods involved we have a good case for the enforcement of specific performance. 2-714 buyers damages for breach in regard to accepted goods o (1) Where buyer has accepted goods, but thinks they suck and said so, he may recover for any nonconformity of tender for the loss over the course of normal events as determined to be reasonable. o (2) the difference seems to be from the time and place accepted to the now if they had been warranted, unless special circumstances arise o (3) in a proper case, any incidental and consequential damages may also be recovered o Policy: Sometimes goods will fail after the time for revocation has come and gone. o Functioning: Given the nature of some goods, the failure and reason for problem might arise deep into the exchange of goods, when covered by warranty or otherwise 2-715: Buyers incidental and consequential damages: [similar 2-708(2)] o (1) What are incidental damages? Reasonable expenses incurred, custody of goods kept after rejection, commercially reasonable expenses after effecting cover, anything else reasonable. o (2) Consequential damage resulting from sellers breach include any loss resulting from general or particular requirement that seller knew at time of contract and buyer could not cover reasonably injury to person or property as a result of breach of warranty o Policy: This is a larger remedy then 2-708(2) as consequential damages are explicitly approved. o Functioning: The seller must have reason to know of the consequential damages that might be caused by his breach. This is limited by the requirement of the buyer to cover, only if he cannot cover are there rights to consequential damages. Prticular needs of the buyer, those unforeseeable 18

to the seller must be made known to the seller for him to be liable. 2-716: buyers right to specific performance o specific performance may be decreed where the goods are unique or in other proper circumstances. Other proper circumstances- you could not reasonably cover. 2-713 Even if you could cover temporarily, you might be able to get specific performance. 2-718: Liquidation or Limitation of Damages; Deposits. o (2) Where the seller justifiably withholds delivery of goods because of the buyers breach, the buyer is entitled to restitution of any amount by which the sum of his payments exceeds; the amount to which the seller is entitled to by virtue of terms liquidating the sellers damages in accordance with subsection (1) in the absence of such terms, twenty percent (20%) of the value of the total performance by which the buyer is obligated under the contract or $500, whichever is smaller. o Policy: This better not be a penalty. Also it may give the breaching buyer right to restitution. 2-719 Contractual Modification or Limitation of Remedy o (1) Subject to the provisions of subsection (2) and (3) of this section and of the preceding section on liquidation and limitation of damages (a) the agreement may provide for remedies in addition to or in substitution for those provided in this article and may limit or alter the measure of damages recoverable under this article, as by limiting the buyers remedies to return of the goods and repayment of the price or to repair and replacement of non-conforming goods or parts; and (b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy. o (2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided for in this act. o (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not. Limitation of remedies o Policy: The seller should be able to limit his exposure, but only to a point, eventually we are going to hold him liable for the failure of his product. o Functioning: This clause discusses a merchants limitations of remedies on implied warranties, and then goes on to get rid of consequential damages that might result from any situation in which there needs to be a repair, replacement, payment for goods purchased. (2) then says that there can be no more damages the what were agreed upon unless the product fails of its essential purpose. And even then a buyer is limited to the provisions in the act and cannot get consequential damages. (3) provides access to consequential damages when the breach is prima facie unconscionable (personal injury, willful/wanton) but not commercial. Parole evidence rule 19

2-202; Final Written Expression: Parol or Extrinsic Evidence. o Terms with respect to which confirmatory memoranda of the parties agree or which are otherwise set forth in 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 (1-205) or by course of performance (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. Notes: o Partial Integration - A final written expression of the parties intent that shows a high level of finality with respect to terms already there. Evidence of Trade Usage, Course of Dealing, Course of performance will be admissible as long as it is in agreement with the writing. Course of Dealings- Past contracts, way they have dealt Course of Performance- What they did before in this contract. If it is a partially integrated document (as to specific terms seeking to be admitted!), then additional and supplemental terms will be allowed in as long as they do not contradict or are inconsistent with the contract. o Wittenberg says there is an argument to be made about the course of performance modifying terms so as to be inconsistent with the written expression. Though the modification unless in writing does not necessarily make it ok. If I give you notice that it is not alright then the modification is immediately ceased, but if the parties are silent as to the change in the relationship we might have something o Total Integration its not only final with respect to terms that are already there, but also as to anything else that might be introduced. This is it. Many difference views, case by case basis. Can still use consistent course of performance, course of dealing, usage of trade. Cannot add terms, but can only use the ones that supplement or explain the terms in the contract. o Trying to determine between partial and total. We use the certainty test (Comment 3) , if it certainly should have been in there, then it is not admissible. Wittenberg: Case by case basis as to whether we are dealing with a total integration as to what we are seeking to admit o There are quite a few exceptions to the parole evidence rule Mistake, fraud Preprinted- not the final written expression of BOTH parties Condition precedent o Policy: To show respect for the writing. To make sure the jury does not hear what it shouldnt. False memories, people lying. The majority rule is that it is a rule of law, and can be raised on appeal.

2-509 Risk of Loss in the Absence of Breach o (1) Where the Contract requires or authorizes the seller to ship the goods by carrier 20

(a) if it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation (2-205); but (b) if it does require him to deliver them at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery. o (2) Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer (a) On his receipt of a negotiable document of title covering the goods; or (b) On acknowledgement by the bailee of the buyers right to possession of the goods; or (c) after his receipt of a nonnegotiable document of title or other written direction to deliver, as provided in subsection (4)(b) of 2-503 o (3) In any case not within (1) or (2), the risk of loss passes to the buyer on his receipt of goods if the seller is a merchant; otherwise the risk passes to the buyer on tender of delivery o (4) The provisions of this section are subject to contrary agreement of the parties and to the provisions of this Article on sale on approval (2-327) and on effect of breach on risk of loss (2-510) Policy: This is to figure out when and how the risk of loss ships to the buyer. We want to know who is responsible for the goods and who has to pay for them in the event of an unforeseen anything. Functioning: Notes: If it all, and if so when, does the risk of loss switch to the buyer? 2-504; Shipment by Seller; This applies to (2)(b) on the shipment contract where the sellers place of business is the place for the goods. It tells us when under 2-509 the goods are duly delivered in a shipment contract. 2-503; Manner of Sellers Tender of Delivery; when the tender is at the place of the buyer, a destination contract is called for and 503 tells us when there is tender. (3) the requirement for receipt being more specific, therefore leaving the risk in the sellers hands longer in the case of a merchant as a merchant is more likely to have the insurance to cover the cost of the goods. (1) lets talk about what the specification is. Tender? The goods are put at the buyers disposition. The risk of loss here passes only for a commercially reasonable period of time.

2-319 F.O.B. and F.A.S. Terms. (Friends with 2-509 (1)(b) ) o (1) Unless otherwise agreed the term F.O.B. (which means Free On Board) at a named place, even though used only in connection with the stated price, is a delivery term under which (a) when the term is FOB the place of shipment, the seller must at that place ship the goods in the manner provided in this Article (2-504) and bear the expense and risk of putting them into the possession of the carrier; or (b) When the term is FOB the place of destination, the seller must at his own expense and risk transport the goods to that place and there tender delivery of them in the manner provided in this Article (2-503); 21

(c) When under either (a) or (b) the term is FOB vessel, car or other vehicle, the seller must in addition at his own expense and risk load the goods on board. If the term is FOB vessel the buyer must name the vessel in an appropriate case the seller must comply with the provisions of this Article on the form of bill of lading (2-323)

o (2) Unless otherwise agreed the term FAS vessel (which means Free Alongside) at a named port, even though used only in connection with the stated price, is a delivery term under which the seller must (a) at his own expense and risk deliver the goods alongside the vessel in a manner usual in that port or on a dock designated and provided by the buyer; and (b) obtain and tender a receipt for the goods in exchange for which the carrier is under a duty to issue a bill of lading o (3) Unless otherwise agreed in any case falling within subsection (1)(a) or (c) or subsection (2) the buyer must seasonably give any needed instructions for making delivery, including when the term is FAS or FOB the loading berth of the vessel and in an appropriate case its name and sailing date. The seller may treat the failure of needed instructions as a failure of cooperation under this Article (2-311). He may also at his option move the goods in any reasonable manner preparatory to delivery or shipment. o (4) Under the term FOB vessel or FAS unless otherwise agreed the buyer must make payment against tender of the required documents and the seller may not tender the buyer demand delivery of the goods in substitution for the documents. 2-320 CIF and C & F Terms (Friends with 2-509 (1)(b) ) o (1) The term C.I.F. means that the price includes in a lump sum the cost of the goods and the insurance and freight to the named destination. The term C&F or C.F. means that the pice so includes cost and freight to the named destination o (2) Unless otherwise agreed and even though used only in connection with the stated price and destination, the term C.I.F. destination or its equivilent requires the seller at his own expense and risk to (a) Put the goods into the possession of a carrier at the port for shipment and obtain a negotiable bill or bills of lading covering the entire transportation to the named destination; and (b) Load the goods and obtain a receipt from the carrier (which may be contained in the bill of lading) showing that the freight has been paid or provided for; and (c) Obtain a policy or certificate of insurance, including any war risk insurance, of a kind and on terms then current at the port of shipment in the usual amount, in the currency of the contract, shown to cover the same goods covered by the bill of lading and providing for payment of loss to the order of the buyer or for the account of whom it may concern; but the seller may add to the price the amount of the premium for an such war risk insurance; and (d) prepare an invoice of the goods and procure any other documents required to effect shipment or to comply with the contract; and (e) forward and tender with commercial promptness all the documents in due formand with any indorsement necessary to perfect the buyers rights. o (3) Unless otherwise agreed the terms C. & F. or its equivalent has the same effect and imposes upon the seller the same obligations and risks as a CIF term except the obligation as insurance o (4) Under the term CIF or C&F unless otherwise agreed the buyer must make payment against tender of the required documents and the seller may not tender nor the buyer demand delivery of the goods in 22

substitution of the documents. 2-510 Effect of Breach on Risk of Loss o (1) Where a tender or delivery of goods so fails to conform to the contract as to give a right of rejection the risk of their loss remains on the seller until cure or acceptance (2-508, 2-606) o (2) Where the buyer rightfully revokes acceptance he may to the extent of any deficiency in his effective insurance coverage treat the risk of loss as having rested on the seller from the beginning. o (3) Where the buyer as to conforming goods already identified to the contract for sale repudiates or is otherwise in breach before risk of their loss has passed to him, the seller may, to the extent of any deficiency in his effective insurance coverage treat the risk of loss as resting on the buyer for a commercially reasonable time. Policy: Functioning: o Notes: (1) non-conforming goods, this simply says the right to rejection, not actual rejection. If you had the right to reject under to Trying to avoid subrogation by the insurance companies for either party. When the buyer breaches after the goods come in, we got to 509. 2-610 Anticipatory Repudiation When either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may o (a) for a commercially reasonable time await performance by the repudiating party; or o (b) resort to any remedy for breach (2-703 or 2-711), even though he has notified the repudiating party that he would await the latters performance and has urged retraction; and o (c) in either case suspend his own performance or proceed in accordance with the provisions of this article on the sellers right to identify goods to the contract notwithstanding breach or to salvage unfinished goods (2-704) 2-611 Retraction of Anticipatory Repudiation o (1) Until the repudiating partys next performance is due he can retract his repudiation unless the aggrieved party has since the repudiation cancelled or materially changed his position or otherwise indicated that he considers the repudiation final. o (2) Retraction may be by an method which clearly indicated to the aggrieved party that the repudiating party intends to perform, but must include any assurances justifiably demanded under the provisions of this Article (2-609) o (3) Retraction reinstates the repudiating partys rights under the contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation