SALE OF GOODS --Governed by UCC

Does K have to be in writing to be enforceable?

Π – Argues there is an enforceable K! Δ – Argues not enforceable K b/c falls within the SOF & doesn’t meet SOF requirements!
(Uses SOF as a defense – Certain types of Ks must be reduced to writing to be enforceable)

STEP 1 Does the agreement fall within SOF?

- Is it for the Sale of Goods? (all things moveable)
o No  SOF does not apply
o Yes  Exceed $500?
 Yes  SOF applies
 No  SOF does NOT apply

STEP 2 Writing Requirement Met?

- K for the SOG for $500+ UNENFORCEABLE unless:
o (1) Writing
 Liberally applied (most any type of writing has been deemed to qualify)
 2+ documents can be combined if:
 together have essential terms &
 at least one document is signed by party being charged &
 unsigned document on its face relates to the same transaction
o (2) “Sufficient to indicate a K” = MUST state quantity of the goods involved
 Note: Output/Requirement Ks included (understood to not continue exact quantity)
o (3) Signed by the party against who enforcement is sought (normally Δ)
- ALL THREE REQUIREMENTS MUST BE MET TO = ENFORCEABLE K
- ALL THREE NOT MEET = UNENFORCEABLE K
o UNLESS – EXCEPTION APPLIES!

STEP 3 Exception Apply?(To make K enforceable despite not meeting SOF requirements)
- “Merchant’s Exception” [2-202]
 K b/t merchants
 Writing is confirmation following oral agreement
 “Sufficient” against sender
 Signed by sender
 Indicates what was agreed upon (subject matter or identify K)
 Sent & Received within a reasonable time
 Receiving party has reason to know of its contents
o Missing Element in “Merchant’s Exception” = K NOT ENFORCEABLE
o All Elements in “Merchant’s Exception” = ENFORCEABLE K
 UNLESS – “Notice Requirement” (Exception to the Exception!)
 Merchant who did not sign writing
 Sent back written notice
 Objecting to contents of the confirmation
 Within 10 days (of receiving confirmation)

SOG - 1
  “Notice Requirement” Met = NOT ENFORCEABLE
 “Notice Requirement” NOT Met = K ENFORCEABLE
- Admission of K
o Party against who enforcement sought admits that there was a K
o Admits while in pleadings, testimony, or court

- “Specially Manufactured” Goods

o Not suitable for sale to others in ordinary course of business
o A substantial beginning towards manufacture before notice of repudiation

- “Part Performance”
o If K can be divided = Enforceable to the extent to which:
 Payment is made & accepted OR
 Goods are delivered & accepted
o If K cannot be divided = Entire K enforced

- “Promissory Estoppel” [3 views]

o 1 view = PE simply does not apply to SOF
o 2 view = PE applies to limited circumstances in SOF
 Only applies (to make enforceable K) where party:
 Promises to reduce agreement to writing BUT does not
 OR
 Misrepresents that K is in writing
o 3 view = [REST 2d 139]
 K enforceable if:
 Reliance on promise
o Foreseeable
o Reasonable
o Substantial
 Enforcement necessary to avoid injustice

SOG - 2
 EVEN IF K ENFORCEABLE UNDER SOF
PARTIES MAY DISAGREE ON THE TERMS OF THE K
TERMS MUST BE ANALYZED UNDER(2-207)
2-207(1) - K based on parties forms?
- YES  2-207(2) Terms?
- NO 2-207 (3) K based on parities conduct?
o If yes  terms?
o If no  no K

2-207(1) K based on parties forms?

- Offer? (common law rules) (Buyers purchase order generally acts as offer)
- Acceptance (or written confirmation of prior oral agreement)
o Does acceptance (assent) contain additional or different terms?
 NO - Assent is acceptance  K
 YES - Is assent (acceptance) expressly made conditional on the other party's assent to
additional or different terms?
 YES  no acceptance and no K unless other party EXPRESSLY assents to
additional or different terms
 NO  then answer to 2207(1) is Yes, K based on parties' forms NOV additional
or different terms in the acceptance

2-207(2) If K is based on parties forms, what are the terms?

- Additional Terms: (terms in acceptance but not in offer)
o K b/t merchants
 Additional terms will be construed as proposals, & become part of K
UNLESS:
 Offer EXPRESSLY limits acceptance to term of offer OR
 Additional terms MATERIALLY alter K OR
 Additional terms are OBJECTED to before or within reasonable time after notice of
terms
o K not b/t merchants 
 Additional terms do NOT become a part of the agreement unless expressly assented to
- Different Terms: (terms in offer and acceptance in conflict)
o 3 views:
 1.) Different terms - do NOT become part of the parties agreement
 2.) Different terms - should be subject to the same analysis as additional terms under (2)
 3.) Preferred view: KNOCK OUT DOCTRINE
 different terms in the offer and acceptance cancel each other out and neither
becomes part of the agreement (terms are those parties agree on and code's
supplementary terms)

2-207(3) Is there a K based on the parties conduct? Did the parties act as if they had a K?
- If no  no K
- If yes - what are the terms?
o Terms parties agreed upon AND
o Supplementary terms (terms set out in Code such as implied warranties, place of delivery, gap
fillers)

SOG - 3
 What if there is a dispute over terms discussed or agreed upon before
OR at the same time agreement was reduce to writing??

Look to PER to see what evidence can be let in:

UCC 2-202: Code’s Version of the PER (as it relates to goods)

- A writing
o Liberally applied

- Intended as a final expression of agreement: (integrated)

o Can NOT be contradicted by:
 Evidence of prior oral or written agreement OR
 Contemporaneous oral agreement
 (but can be contradicted by contemporaneous written agreement)
o But it may be explained OR supplemented by:
 Course of dealing
 Conduct b/n parties BEFORE agreement in question which can be regarded as establishing a
common basis of understanding for integration
 Trade usage
 Practices or methods having such regularity of observance in place, vocation, or trade that it
justifies expectation parties will observe with respect to the transaction in question
 Course of performance
 Conduct by parties AFTER agreement in question accepted w/o objection
 Consistent additional terms

- If the writing is both final & complete expression of agreement: (totally integrated writing)
o Can NOT be contradicted by:
o But may be supplemented by: (departure from C/L)
 Course of dealing
 Conduct b/n parties BEFORE agreement in question which can be regarded as establishing a
common basis of understanding for integration
 Trade usage
 Practices or methods having such regularity of observance in place, vocation, or trade that it
justifies expectation parties will observe with respect to the transaction in question
 Course of performance
 Conduct by parties AFTER agreement in question accepted w/o objection

If can’t reasonably be construed as consistent w/ each other:

- Hierarchy of Control
o Express Terms [Always in charge!]
o Course of Performance
o Course of Dealing
o Trade Usage

SOG - 4
 WHAT TO DO WITH INDEFINITENESS?
INDEFINITENESS? [Use Interpretation OR Supplement]
- Parties purport to agree
o Traditional view
 If promise too vague & indefinite, agreement is unenforceable
o Trend
 Towards finding ways to enforce promise
- Parties agree to agree
o Traditional View
 Not binding K UNLESS parties agree upon definite method of ascertaining term
o Modern View
 If a term can be ascertained w/ sufficient certainty to make agreement enforceable, court
will enforce in order to carry out parties’ intent to be bound notwithstanding the missing
term
- Intent to enter formal agrmnt later does NOT preclude present intent to be bound
o “Present intent” Factors:
 1) Whether agreement is normally in writing
 2) Details discussed &/or agreed upon; complexity
 3) Language

These 3 situationsUse Principles of Interpretation

- Dispute over meaning may arise from:
o Vagueness & ambiguity
o Inability to foresee certain developments
o Deliberate choices (to leave vagueness)

o Use “Plain Meaning Rule”First

 If language “plain on its face,” that meaning will govern
 No attempt to interpret meaning unless ambiguity
 Criticism  no such thing as “plain meaning” since most words have 1+ meaning

o If there is ambiguity -- 3 Approaches:

 (1) Subjective =Parties actual intentions - If no “meeting of the minds” – No K
 (2) Objective = What a reasonable person would conclude parties meant
 (3) Modified Objective Approach [Use for Analysis!]
 Modern approach = Evidence of parties’ intention + other evidence
 No K if:
o 1) Parties attach different meanings to language AND
o 2) neither party knows or has reason to know of the other’s meaning
 If one party knows or has reason to know what the other meant, K based on what
the “innocent” party meant

o Other Rules in Aid of Interpretation [Don’t need to memorize – just be aware of them]
 Principal purpose given great weight
 Surrounding circumstances
 Specific terms controls over general terms
 Negotiated terms control over standardized; handwritten/typed over pre-printed
 Language construed against drafter (unequal bargaining ability)
 Public interest interpretation preferred

SOG - 5
  Word may be affected by its immediate context
 Interpretation resulting in reasonable agreement preferred over one that produces
unreasonable or unlawful result
- Parties silent on material term
o Court may imply omitted term using external sources
o Code/Restatement: (if intent to be bound – try to make enforceable)
 2-305: (limited to goods)
 If intent to be bound, K even if price not settled
 Reasonable price (supplied by the court)
 2-204:
 Where 1+ terms left open, K will not fail for indefiniteness if intent to K &
reasonably certain basis for providing relief

In this situationUse Supplementing the Agreement

- Types of omitted terms that may be implied:
o “Best Efforts”
 Generally applies to exclusive dealing K/exclusive right to perform/exclusive duties
 E.g. Output/requirements Ks

o “Good Faith”
 Always Implied within the Code (SOG):
 1) “honesty in fact”
 2) observance of commercially reasonable standards (merchants)
 Satisfaction
 Objective Test  “Reasonable Person” Test
o Observance of commercially reasonable standards (merchants)
o Commercial or mechanical utility
 Subjective Test  “Good Faith” [“Honesty in Fact”]
o Personal taste (person genuinely dislikes product)
 May apply in commercial setting where:
 Decision made by 3rd party OR
 Intended by parties

o Implied Warranties [Ks for the sale of goods]

 Express warranty (2-313)
 Created by the Sellers:
o Representations
o Models
o Samples
 Implied warranty of merchantability (2-314)
 Merchant warrants goods are fit for ordinary purpose for which such goods are
used
 Implied warranty of fitness for particular purpose (2-315)
 Seller aware of the particular purpose for which Buyer bought goods
 Buyer relied on Seller’s knowledge and expertise regarding goods

SOG - 6