BUS311_chapter_07

Therefore if a contract for the sale of goods fails

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Unformatted text preview: fenses to Contract Formation The normal defenses to a breach of contract action available under the common law of contracts are also available when a sales contract is involved, unless they are specifically modified by the UCC. Therefore, if a contract for the sale of goods fails because of lack of a valid offer and acceptance, consideration, legality, capacity, or lack of genuine assent, the failure may be raised as a defense if one party sues the other to enforce the agreement. In other words, if you were sued for breach of contract in this situation, your “defense” is that a contract was never formed. In addition to the common law defenses to a breach of contract, the Code details which sales contracts need to be in writing and precludes the enforcement of unconscionable contracts, which we detail next. Unconscionable Contracts (§ 2-302) If a court finds any provision in a contract to be unconscionable as of the time that the contract was entered into, it can refuse to enforce the contract, or strike out the unconscionable clause, or reform the contract by modifying the unconscionable clause so as to prevent an unconscionable result. An unconscionable bargain is one that is grossly unfair to one party, and typically involves a situation where the parties do not have equal bargaining power. Although at common law unconscionability is also a defense to a breach of contract, the courts have generally interpreted the UCC more liberally in defining what constitutes an unconscionable contract. As a result, it is likelier for a court to find an inherently unfair contract for the sale of goods to be unconscionable than an equally unfair contract not involving the sale of goods. Example 7.16. Sofia, a 65-year-old Ukrainian cleaning lady who does not speak or read English well, goes to Banner Discount Store to buy a new television. She is looking at a 17-inch screen model that costs $150 on sale when Jason, a slick-talking salesman, gets her in his clutches. Jason persuades her to buy a 36-inch TV with lots of special features on an installment plan, stressing that she’ll be paying only $55 a month, but not mentioning that the price is $1,000 plus interest. If Sofia later realizes she really shouldn’t be spending this kind of money on a TV, she may be able to void the contract due to unconscionability. Example 7.17. Sofia also buys a house at an inflated price. She is less likely to be able to get out of this contract, even if the terms seem just as unfair as the TV contract. 7.2 Statute of Frauds (§ 2-201) T he statute of frauds states that contracts for the sale of goods for a price of $500 or more are not enforceable unless they are evidenced by a signed writing. This is done to protect both buyer and seller from entering into potentially damaging contracts too easily or perhaps even under false pretenses. For purposes of the statute of frauds, the writing must make it clear that a contract existed. It need not contain all of the terms of the agreemen...
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This test prep was uploaded on 04/09/2014 for the course BUS 311 taught by Professor Parker during the Spring '10 term at Ashford University.

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