Sales--Contract Formation

Front 1

How can an offer be accepted?

Back 1

Unless otherwise unambiguously indicated by K or circumstances....by any reasonable manner.

*special rule when beginning of performance operates as acceptance.

**special rule for an offer to buy goods for prompt or current shipment.

Front 2

Can beginning of performance operate as acceptance? If so, how?

Back 2

Yes, but only if followed by notice to offeror within a reasonable time ....

otherwise, offeror may treat offer as having lapsed before acceptance

Front 3

How can an offer for prompt or current shipment be accepted?

Back 3

(1) prompt promise to ship; OR

(2) prompt or current shipment of conforming or nonconforming goods.

*BUT shipment of nonconforming goods NOT acceptance IF seller seasonably notifies buyer that shipment offered only as accomodation

Front 4

What happens if the acceptance contains terms different from the offer?

Back 4

May or may not be included--there is a split of authority:

(1) knock-out rule (majority): conflicting terms cancel out

(2) other courts treat same as additional terms

Front 5

What is required to make a K if there are missing terms?

Back 5

As long as there is a quantity term, missing terms do not prevent formation of K if it appears:

(1) parties intended to make a contract; AND

(2) there is a reasonably certain basis for giving a remedy.

Front 6

Price Gap Filler

Back 6

The price will be a reasonable price at the time of delivery if:

(1) Nothing is said as to price;

(2) The price is left to be agreed to by the parties and they fail to agree; OR

(3) The price is to be fixed by some external factor or third party and it is not so set.

EXCEPT if parties intended not to be bound unless price fixed or agreed, then no K if not so fixed or agreed.

Front 7

What is required if the K says price is to be fixed by one party?

Back 7

Must do so in good faith

otherwise, other party may (1) cancel K or (2) fix reasonable price himself

Front 8

What is required with respect to the quantity term for K to be enforceable?

Back 8

Must be stated in K and must be certain or cable of being made certain

Front 9

Requirements and outputs Ks---two limitations re: quantity

Back 9

(1) Must be the actual, good faith output or requirements of the party; AND.

(2) Must NOT be unreasonably disproportionate to:

(A) any stated estimate; OR

(B) if no stated estimate, any normal or otherwise comparable prior output or requirements.

Front 10

Firm Offer Rule

Back 10

A promise to keep an offer open is enforceable, even if no consideration has been paid to keep the offer open, IF:

(1) A merchant

(2) Offers to buy or sell goods in a signed writing; AND

(3) The writing gives assurance that it will be held open.

Front 11

For how long is a merchant's firm offer irrevocable?

Back 11

(1) During the time stated; OR

(2) For a reasonable time if no time stated.

***BUT duration no more than 3 months (unless consideration given)

Front 12

What if the term of assurance (re: firm offer) is included on a form supplied by the offeree?

Back 12

That specific term must be separately signed by the offeror.

Front 13

How can an offer be accepted?

Back 13

Any reasonable manner.

Front 14

How can an order or offer for prompt or current shipment be accepted?

Back 14

(1) by prompt promise to ship; OR

(2) by prompt or current shipment of conforming OR nonconforming goods

Front 15

Does a seller automatically breach by shipping nonconforming goods in response to an offer for prompt or current shipment?

Back 15

Yes, UNLESS seller seasonably notifies buyer that it is offered only as an accomodation

Front 16

Does beginning of performance constitute acceptance?

Back 16

If reasonable, yes.

BUT not effective until offeree gives notice of acceptance within a reasonable time.

Front 17

If offeree responds to offer with form that purports to be an acceptance but also includes additional or different terms, is that an acceptance?

Back 17

Yes, unless acceptance is expressly made conditional on assent to the original terms of the offer.

Front 18

In a battle of the forms case, are the additional or different terms included in the K?

Back 18

(1) If any party is a nonmerchant, the additional/different terms are considered mere proposals to modify and DO NOT become part of K unless other party expressly agrees.

(2) Between merchants:

(a) the additional terms are usually included;

(b) split of authority re: different terms, but majority says no (knock-out rule).

Front 19

in battle of forms case, between merchants, when are additional terms not included in K?

Back 19

(1) they materially alter the original terms;

(2) the offer expressly limits acceptance to the terms of the offer; OR

(3) the offeror has already objected to the particular terms, OR objects within a reasonable time after receiving notice of them.

Front 20

If the parties behave as if there's a K, but their writings do not otherwise establish a K, (1) is there a K and (2) if so, how are the terms determined?

Back 20

(1) Conduct by both parties which recognizes the existence of K = sufficient to establish K although writings do not otherwise.

(2) In such a case, terms of K = terms on which parties' writings agree, plus UCC gap fillers.

Front 21

When does a K come within the SOF

Back 21

If K = $500 or more

Front 22

SOF Requirements---mnemonic

Back 22

SQS

Front 23

SOF Requirements---SQS?

Back 23

S--Sufficient writing.

Q--Quantity provided

S--Signed by party to be charged

Front 24

If K falls within SOF, what requirements must it meet to be enforceable?

Back 24

(1) some writing sufficient to indicate that a contract for sale has been made between the parties;

(2) signed by the party against whom enforcement is sought or by his authorized agent or broke; AND

(3) A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.

Front 25

SOF---Exceptions Mnemonic

Back 25

SWAP

Front 26

SOF----SWAP (exceptions)

Back 26

S--Specially manufactured goods

W---Written merchant's confirmation

A---Admissions in pleadings or court

P---Part Performance

Front 27

SOF---Specially manufactured goods exception

Back 27

(1) goods are to be specially manufactured for buyer

(2) and are not suitable for sale to others in ordinary course of seller's business; and

(3) seller, before notice of repudiation received and under circumstances which reasonably indicate goods are for buyer, has made either substantial beginning of their manufacture or commitments for their procurement.

Front 28

What constitutes a "sufficient writing" for SOF purposes?

Back 28

There must be some writing sufficient to evidence a contract.

***Need not contain all material terms and stated terms need not be precise.

Front 29

SOF---Written merchant's confirmation exception

Back 29

(1)Between merchants,

(2) a signed,

(3) written confirmation,

(4) sent within a reasonable time,

(5) is enforceable against the recipient

UNLESS written notice of objection to its contents is given within 10 days

Front 30

SOF--Admission Exception

Back 30

K enforceable IF:

(1) party to be charged

(2) admits in pleading, testimony, or otherwise in court that K was made.

BUT K not enforceable beyond quantity admitted

Front 31

SOF---Part Performance Exception

Back 31

K enforceable re: goods:

(1 )for which payment has been made and accepted OR

(2) which have been received and accepted.

BUT part performance only validates K for goods which have been accepted or paid for—i.e., only enforceable to that extent.

Front 32

Unconscionability----Elements

Back 32

(1) procedural and (2) substantive

Front 33

Substantive unconscionability

Back 33

grossly unfair and one-sided terms

Front 34

Procedural unconscionability

Back 34

problems that taint the bargaining process

*majority = adhesion K (take-it-or-leave it);

**minority = something more

Front 35

Do courts require both procedural and substantive unconscionability?

Back 35

some do...others focus mostly on substantive

Front 36

How is unconscionability determined?

Back 36

By the court, as a matter of law, and at the time of the contracting.

Front 37

Gap Filler--Obligation of Good Faith

Back 37

Every K or duty imposes an obligation of good faith in its enforcement and performance

Front 38

When does obligation of good faith arise?

Back 38

Not until there is an underlying K, so not to pre-K negotiations

Front 39

good faith elements

Back 39

(1) honesty in fact; AND

(2) commercial reasonableness

Front 40

good faith---honesty in fact

Back 40

subjective standard

Front 41

good faith----commercial reasonableness

Back 41

objective standard----fair dealing

Front 42

What is required to modify a K?

Back 42

no consideration needed, but must be in good faith

Front 43

what is a breach of good faith in K modification?

Back 43

extortion of modification without legitimate commercial reason is bad faith and not enforceable

Front 44

do modified Ks have to meet the SOF?

Back 44

Yes if within the SOF as modified

Front 45

are no-modification clauses effective?

Back 45

yes, but if any party is a nonmerchant, the clause must be separately signed

Front 46

what if attempted modification fails (either because of SOF or no-modification clause)?

Back 46

might can operate as a waiver

***UNLESS retracted

Front 47

Can a waiver (failed modification) be retracted? If so, how?

Back 47

Yes. By reasonable notification that strict compliance of waiver terms is required.

UNLESS it would be unjust b/c other party materially and detrimentally relied.