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Unformatted text preview: AC. Questions for Discussion
1. Under UCC 2-302, who has the best chance of getting out of the contract due to
2. The symbol for justice features a woman wearing a blindfold, to illustrate that the law should
be applied the same way regardless of who the parties are. Does the UCC rule seem to contradict this? Which approach do you think is more ethical?
3. Note that both Glamour and Shady Rest are businesses, and courts rarely find that contracts
between two businesses are unconscionable. The rationale is that a business is a sophisticated
entity, familiar with transactions and able to protect themselves. Do you think Glamour and
Shady Rest are in a comparable position with regard to this contract?
4. Section 2-302 leaves a goodly amount of discretion to the courts in deciding whether a contract term is grossly unfair and whether the parties had such disproportionate ability to bargain that the contract should be found unconscionable. Do you think this is a good approach?
Would it be better if the law were more specific? Case Study: Kahn Lucas Lancaster, Inc. v. Lark International Ltd.
1997 WL 458785 (S.D.N.Y. 1997)
Facts: Lark is a Hong Kong corporation that acts as a purchasing agent for businesses seeking to buy and
import clothing manufactured in Asia. Kahn Lucas is a New York corporation, with its principal place of
business in New York City engaged in the children’s clothing business, primarily in reselling imported
clothing to major retailers. Kahn sent purchase orders for clothing to Lark that contained an arbitration clause. Lark did not sign the orders, but neither did Lark make any objection. Lark helped Kahn
fill the orders with producers in the Philippines. Lark was to be paid a commission on the sale. When
the clothing turned out to be defective, Kahn refused to pay. Kahn also demanded that the dispute be
settled by arbitration. rog80328_07_c07_134-156.indd 152 10/26/12 5:52 PM CHAPTER 7 Section 7.6 Chapter Summary Case Study: Kahn Lucas Lancaster, Inc. v. Lark International Ltd. (continued)
Lark raised two defenses: (1) it was not the actual seller of the goods and thus not responsible for their
quality, and (2) the arbitration clause would not in any case be binding, as it was not accepted by Lark.
Issue: Did Lark accept Kahn’s offer and form a contract on Kahn’s terms?
Discussion: The court found that Lark had subcontracted for the goods and thus was in the position of
being the seller. Under UCC Section 2-306, “an offer to make a contract shall be construed as inviting
acceptance in any manner” and “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 non-conforming goods.”
Holding: Lark and Kahn have a contract, which includes the arbitration clause. The parties were ordered
Questions for Discussion
1. Go through the facts and separate what was the...
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