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Chapter 20:Scope of article 2oYou must always first establish how you know article 2 applies to a transaction before you use code provisions to support your analysis!oGoverns contracts for sale of “goods.”oArticle 2 ONLY applies to salesof goods. CODE SECTION 2-102oA “Sale” is the passing of title from seller to a buyer for a price (payable in cash, goods, services) CODE SECTION 2-106(1)oWhat are goods? A “good” must be tangibleand movable. CODE SECTION 2-105(1)Tangible: has physical existence. Movable: carried from place to place. oIf contract deals with both goods & services then “Predominant Factor” Test – if goods, then UCC governs, if services then common law governs entire contract.“Merchant”? CODE SECTION 2-104(1)Art. 2 imposes special standards upon a “merchant” who has special business expertise and is not a casual buyer/seller. Deals in goods of the kind in the sale.Holds herself out as having special expertise, knowledge, or skill.A person who employs a merchant as a broker, agent or other intermediary.Offer: At common law once a valid offer is unequivocally accepted, a binding contract is formed. (Formation of Sales and Lease Contracts)UCC allows for open pricing, payment, and delivery terms, even if terms undefinedUCC2-204, Open Terms: “Indefiniteness” is OK as long as the parties intended to make a contract and there is a reasonable basis for a court to grant a remedy. Open Price Term: If parties have not agreed on pricing, court can determine “reasonable price at the time of delivery.” UCC2-305. Open Payment Term: Unless otherwise agreed, payment is due on delivery (COD). UCC2-310(a).Open Delivery Term: Unless otherwise agreed, buyer takes delivery at the seller’s place of business. UCC2-308(a). (If no time or date specified, court will impose a reasonable time.)Open Quantity: generally courts will not impose a quantity and there is no remedy, unless: the contract is either a requirementsor outputcontract.Merchant’s Firm Offer (2-205), Offer made by merchant in a signed writingis irrevocablefor reasonable period of time. No consideration necessary.The Offer Must be in Writing and Signed by the Offeror.Methods of Acceptance: offeror can specify a means of acceptance.Any reasonable means of acceptance under the circumstances is permissible. CODESECTION2-206: A promise to ship or prompt shipment is acceptance. Shipment of non-conforming goods is both an acceptance and a breach unless goods were sent as an “accommodation” to buyer, with prompt notice.
CODESECTION2-207– ADDITIONAL TERMS PROVISION – THE UCC DISPENSES WITH THEMIRROR IMAGE RULE (If offeree’s assent contains additional or different terms, and it is conditioned on offeror’s assent, it is not an acceptance).