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oMost states then decided to adopt most of the UCC for their contract law.oStates retain some of their old common law rules for some contract law issues and use some of the UCC rules for other issues.Article 2 of UCC = section that governs sale of goodsoI. Contract Formation: Firm Offer Rule = if a merchant signs a written promise to keep anoffer open for a set amount of time, it must honor this promise even if it has received no payment.oII. Contract Enforcement:Statute of Frauds Provision = sale of goods contract over $500 must be in writing to be enforceable.Verbal Agreements under $500 can be seen as enforceable contractsoIII. Contract Interpretation:Courts resolve disputes in contracts by examining: course of performance (what happened in performance of contract), course of dealing (what happened when other contracts between these parties were performed), and usage of trade (what is the industry standard for this type of contract).oIV. Duty of Good Faith:Everyone has an obligation of good faith but merchants have a duty to be “honest and observe reasonable commercial standards for fair dealing in the trade”Good = tangible, movable, physical object (laptop is a good but house is not)
Sale of Goods is governed by article 2, sale of non-goods (employment contract, labor or real estate) = common lawMerchant = “deals with goods of the kind”. Often someone that makes their living off of selling a good.oMerchants have special obligations under article 2International Sale of Goods Contract Conventions: oUnited Nations Convention on Contracts for the International Sale of Goods (CISG) = body of contract law adopted by most nations including US for international contracts.oAutomatically use CISG unless parties opt to use a different body of law beforehand.Warranty = Promises that goods will meet various standardsoExpress Warranties = Warranty created by a seller’s words or actions. “This tool will last for 5 years”oImplied Warranties = Warranty that the UCC created.oImplied Warranty of Merchantability = Promise that when a merchant sellsgoods, these goods are fit for their ordinary purposes.-disclaimer doesn’t have to be in writing but if so should be conspicuousoImplied Warranty of Fitness = When a seller knows that a buyer needs a product for a specific use, and that buyer will rely on the seller’s recommendation or expertise, goods are not fit for expressed purpose.-disclaimer must be in writing and conspicuousoImplied Warranty of Title = Guarantee that items sold have not been stolen and are not encumbered by security interests.oA breach in warranty can often result in compensatory but not punitive damages.oDisclaimer = seller can disclaim warranties verbally but more often in writing.