Ucc Article 2 Sales Mnemonics

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If BOTH PARTIES ARE MERCHANTS the additional terms in an acceptance become part of the contract unless “O-CAN”

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 O: offeror OBJECTS to the original terms within a reasonable time
 C: original offer expressly CONDITIONED agreement exclusively to those terms contained in the offer

 A: when the additional terms materially ALTER the contract terms, then those terms do not become party of the contract
• a term contained in the acceptance MATERIALLY ALTERS the contract offer if it would cause surprise or hardship if the offeror were not made aware of its existence.
Materially altering terms are "J-STRAW"

 NON-MERCHANTS: where one or both parties are non-merchants, then offeror can remain silent and is not bound to accept either material or non-material additional terms that have been added to the acceptance
• The UCC considers them mere proposals that do not become part of the contract.

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Materially altering k terms are J-STRAW

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Materially Altering k terms are (J-STRAW)
o J – clause bestowing JURISDICTION upon a particular court; or, requiring offeror to consent to jurisdiction in a particular court
o S- SHORTENING the SoL to sue for non-conforming goods
o T – limiting TORT liability or limiting the seller’s liability for a buyer’s consequential damages (3 R Clause)
o R – altering the UCC rules for RISK of loss
oA –adding an ARBITRATION clause (unless arbitration was the customary practice in that trade)
oW – a clause disclaiming the 'M-FEET' WARRANTIES (i.e. merchantibility, fitness for a particular purpose, express warranty, etc...)•
Note: ‘J-STRAW’ is not an excusive list. Materially altering k terms can also include other terms that would materially alter a contract’s offer.
•Additional terms added to an acceptance that DO NOT MATERIALLY ALTER the offer become part of the contract UNLESS objection is timely made by the offeror.

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What are the 5 exceptions to the SoF? Hint: Be careful of the Statute of Frauds in a real 'SWAMP'.

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• 5 Exceptions to UCC SoF Requirements [SWAMP]
o SPECIALLY MANUFACTURED GOODS.
Specifically Manufactured Goods can be identified by:
• (1) circumstances indicating that the good was made for the buyer
• (2) seller has completed performance or has made commitment for their procurement
• (3) goods are not suitable for resale to others in the ordinary course of the seller’s business
 Example: specially manufactured mens that said “Damian Piper’s Pens” –no writing required – the specially designed pens are evidence
oWAIVER
 SoF is an affirmative defense that defendant must assert in the Answer.
• Note: Remember, if you fail to include the affirmative defense, you waive it. You could try to amend the answer.
oADMISSION – a judicial admission of the contract
 If the party against whom enforcement is sought, judicially admits the existence of the oral contract, in her pleadings, her EBT or her trial testimony, then this waives the Statute of Frauds, but only to the extent

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Sales contracts imply CIDER terms.

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• If a contract is silent, the UCC implied the following CIDER rules
o C – Seller is not obligated to extend CREDIT
 Thus, buyer must tender payment when goods are tendered UNLESS the buyer has bargained for credit.
o I - Buyer has the right to INSPECT the seller’s tendered goods
 Unless, the contract expressly provides otherwise.
o D – seller’s tender of DELIVERY is implied to be at the seller’s place of business
 Unless, both parties knew the goods were elsewhere
 Thus, a seller is not obligated to ship goods absent express delivery terms in the contract
 Unless otherwise agreed, all goods called for in a contract must be tendered in a single lot delivery. Payment is due only on such a tender.
• However, where the circumstances impliedly give a party to make/demand delivery in lots (e.g. 200 train carts of coal, etc…), then the price may be apportioned for each lot.
o E – Buyer and seller EXCHANGE performances concurrently.
 Thus, for the buyer to put a seller

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What is a Sale or Return k (a.k.a. SORE V = sale or return early vesting)

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Sale or Return Contract (SoRc): this is usually made by manufacturer/wholesaler for goods delivered to merchants primarily for resale.
 The goods are delivered with the understanding that the buyer can resell them, retain them or can elect to return the goods to the seller – even though the goods are conforming.
 Under a sale or return contract, risk of loss and title vests immediately in the buyer even though the buyer has the right to rescind the contract (SORE V = sale or return early vesting)
 In a SORE V the seller cannot avoid the claims of the buyer’s creditors by expressly reserving title until payment or by using such terms as consignment.
 In order for a seller to protect itself from the buyer’s creditors, the seller should comply with UCC Article 9, by filing a financing statement.

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What is a Sale on Approval contract?

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Sale on Approval Contract (SoAc)
 A SoAc is used when goods are used primarily for use and not for resale.
 Risk of Loss and Title do not pass to the buyer until the buyer accepts title either in:
• Writing
• Buyer failing to timely return the goods under the contract terms
 Example: Xerox copier not working. So, a Canon sales rep comes by and says hey try a Cannon copier – it will work very well. Rep says “I will give you a test run” – you can use it for 3 months. If you want it, its yours. If you don’t want it, you send it back to us.  SoAc
 Goods held by the buyer on a SoAc are not subject to the claims of the buyer’s creditor.

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Seller's SPARKLE when buyer's breach.

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• The UCC gives the seller the following SPARKLE remedies against the buyer.
Note: Not necessary to mention every SPARKLE remedy on essay but merely the relevant one.
o the following ‘SPARKLE’ remedies against the buyer.
 STOPPING goods in transit
• When a buyer wrongfully repudiates the contract (anticipatory breach) or fails to make a timely required payment, then the seller can refuse further delivery of the goods in the seller’s possession.
• If the seller has shipped the goods to the buyer, and the shipment is in bulk or large quantity (car load or truck load), then the seller can stop that shipment in transit.
• If the breaching buyer is insolvent, then any goods in transit can be stopped, no matter what quantity or amount.
• This seller’s remedy is lost once the carrier acknowledges the buyer’s right to those goods.
• If the goods were shipped under a negotiable Bill of Lading, then the seller can stop the goods in transit, only if the seller still possesses the negoti

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What is a buyer's remedy if a seller breaches the k?
Hint: CID'S WAR is a buyer's remedy.

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When a Seller breaches the contract, either because the seller repudiates the contract, fails to timely deliver or where delivered goods fail to conform to the contract, then the BUYER has the following CID’S WAR remedies:
C: COVER can be sought by buyer
I: INCIDENTAL and consequential damages can be recovered
D: DAMAGES for lost bargain or the price paid can be recovered
S: SPECIFIC performance
W: breach of WARRANTY
A: ACCEPTANCE can be revoked
R: REJECTION of non-conforming goods

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A sales contract may contain the following express or implied warranties. [M-FEET]

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• MERCHANIBILITY
o Unless, expressly excluded, a merchant impliedly warrants, that the goods sold are “fit for their ordinary purpose”.
o The goods must pass without objection in the trade under the description in the contract – not the best, not the worst – but fair and average quality.
o The implied warranty of Merchantability is given by only a limited class of merchants – namely, merchants with respect to goods of that kind.
 This restricts the merchantability warranty that is narrower than just those who engage in business.
o Thus, a merchant, making only an isolated sale of this type of good, is not considered a merchant and gives no implied warranty of merchantability.
 Ex: I go to barber shop. They try to sell hair tonic. I buy hair tonic. It takes my hair out. I can go after them for breach of implied warranty of merchantability.
 Ex: I go to barber shop. They sell me a tv. TV fails at home. I can’t go after barber for implied warranty of merchantability becaus

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Express Warranties are SAD

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o Express Warranties (EW) can be given by both merchants and non-merchants.
o But, in order to sue on an EW, the EW must have been the “basis of the bargain”. That is, the buyer must have seen/heard the EW and relied on the Express Warranty.
o Express Warranties derive from the SAD
 SAMPLE
• Any sample/model that was the basis of the bargain
o Ex: The “Shamwow” sample that influenced your decision that allegedly absorbs 12x its weight and soaks up to 3 gallons of water.
 AFFIRMATION
• Any written/oral affirmation of fact/promise made by the seller to the buyer relating to the goods that becomes part of the basis of the bargain which induced the buyer to purchase the goods.
• Statements made by the seller during contract negotiations are considered affirmations of fact
• UNLESS that statement would be construed by a reasonably prudent person (RPP) only as a seller’s opinion or puffery.
 DESCRIPTION
• Any description of the goods in an advertisement/brochure/catalog.
o Any S

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Plaintiff’s claim against Seller for defective good can be based upon one or more overlapping PINE theories of liability.
Hint: I PINE for defective product liability

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o Products liability
o Implied warranty breach – contract theory implied warranty
o Negligence tort theory
o Express Wararnty – contract theory for breach of ‘SAD’ Express Warranty

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G.P.PALMS is not liable for breach of warranty.

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• In a breach of warranty claim, the Seller Can Raise the Following Defense to Breach of Warranty
oG-PPALMS
 1) GOVERNMENT Contractor Defense
• A manufacturer cannot be held liable for a defectively designed military product, if the (1) defect was caused by the government’s own design specifications AND (2) the manufacturer warned the government of any known dangers.
2)P - Lack of PRIVITY of Contract
• Breach of warranty claims arising from sale of goods require some form of privity of contract with the seller who has expressly/impliedly warranted the performance of that product.
• Parties who have entered a contract with each other (i.e. buyer and seller) are in direct privity.
o At common law, only buyers in direct privity could recover for the harm caused by the defective/unsafe product.
• Extension of PRIVITY
oo Household Privity: Under UCC Article 2, a seller express/implied warranties extend horizontally beyond the buyer to any natural person who suffers a physical injury (per

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a DIM product is defective

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• A manufacturer (or regular seller) of a DUD (defective and unreasonably dangerous) product is strictly liable for physical harm proximately caused by the product’s dangerously defective DIM conditions (DEFECTIVE design, INADEQUATE warning, MISTAKE in manufacture)