UCC Article 2 Overview

Overview of UCC Article 2

• Governs the sale of tangible, movable goods
• Does not apply to services or real estate

Sale/Lease

• Sale involves transferring the title of goods from the seller to the buyer for a price
• Lease involves transferring the right to possess and use goods for a specified period in exchange for payment

UCC in Transactions

• Provides a consistent framework for commercial transactions across different states
• Addresses and reduces variations in state law

Elements of a Lease Agreement (UCC Article 2A)

• Parties involved include the lessor, who owns the goods, and the lessee, who obtains the right to use them
• The goods must be tangible and movable
• The lease term must specify the duration of the lease period
• Payment terms must include when and how payments will be made
• The lease agreement grants the lessee the right to possess and use the goods during the lease term

Contract Voidance in the UCC

• A contract might be void in the UCC if there is no intent to be bound, or mutual assent
• The contract might be void if there is no specified quantity of the item

Principles for Lease Contracts

• Contracts with open terms are allowed if there is intent to create a contract and a reasonable basis for a remedy exists
• Contracts can be formed even if some terms are left open if key elements are adhered to

Lease Contract Formation

• Parties can agree on specific terms; the UCC provides terms where there are gaps
• Acceptance can occur through a written lease agreement, or conduct that recognizes the existence of a lease, like taking possession of goods

Modifications to Lease Agreements

• Modifications must be made in good faith and do not require new consideration
• Changes can be made to payment terms, duration of the lease, or condition of the goods

Additional Considerations for Lease Agreements

• For nonconforming goods, the lessee must be informed that acceptance is limited to the accommodation if they are accepted despite not meeting specifications
• Depending on whether parties are merchants, different rules may apply, impacting how additional or different lease terms are treated

Contracts for Sale and Lease of Goods

• Governed by the Uniform Commercial Code (UCC), adopted by all states except Louisiana (Articles 2 and 2A), signaling a transition from common to statuatory law

Formation of Sales and Lease Contracts

• A binding contract forms when unqualified acceptance meets a definite offer
• The UCC allows for contracts even if the exact moment of formation has not been determined

Modifications by UCC

• Articles 2 and 2A modify common law contract rules
• Parties can establish their terms, and UCC applies when terms are missing or need modification

Open Terms in UCC Contracts

• Contracts with open terms are allowed if parties intended to make a contract
• Contracts with open terms are allowed if there is a reasonably certain basis for a remedy
• The UCC provides provisions to fill gaps in contracts, with the quantity of goods typically stated

Illusory Promises and Requirements Contracts

• Promises by the buyer based on desire or reserving the right to buy from others is unenforceable
• In output contracts, the seller agrees to sell all or a stated amount of their production
• Good faith limitation means the quantity is based on the normal production period, and cannot be unreasonably disproportionate

Firm Offer Requirements

• Must be in written or electronically recorded form, signed by the offeror

Revocation of Offers

• Regular contract principles allow revocation before acceptance
• UCC exceptions make firm offers by merchants irrevocable without consideration

Acceptance

• General acceptance can be made in "any reasonable manner"
• The UCC permits acceptance by prompt promise to ship or shipment of goods under UCC 2–206(1)(b)
• Shipment of nonconforming goods constitutes acceptance and breach of contract unless the seller notifies the buyer of an accommodation
• The UCC requires notification of acceptance by performance
• Failure to notify within a reasonable time allows the offeror to treat the offer as lapsed per UCC 2–206(2), 2A–206(2)

Effect of Additional Terms

• The UCC allows contracts to form even with additional or different terms
• Applicability depends on whether parties are merchants per UCC 2–207(1)

Jones v. Star Credit Corp Background

• The Joneses agreed to purchase a home freezer for $900 from a door-to-door salesperson
• Including financing charges and sales tax, the total cost rose to $1,234.80
• The Joneses made payments totaling $619.88 before bringing a lawsuit in a New York state court
• They argued that the purchase contract was unconscionable under Section 2-302 of the Uniform Commercial Code (UCC)
• The freezer's maximum retail value was determined to be approximately $300, significantly less than what was agreed upon

Legal Issues and Key Statutes in Jones v Star Credit Corp

• Courts can refuse to enforce contracts or contract clauses that are deemed unconscionable at the time they were made according to Unconscionability (UCC § 2-302)
• Courts consider both procedural and substantive unconscionability
• Procedural considerations include whether the weaker party lacked meaningful choice due to power imbalance
• Substantive considerations include whether the contract terms were excessively one-sided or oppressive
• Instead of voiding a contract completely, courts may modify it to prevent unfairness under contract reformation

Jones v. Star Credit Corp - Arguments

• Joneses argued the price was excessive as the freezer was worth only $300 but sold for $900
• The finance charges of $1,439.69 total exceeded the freezer’s actual value
• Joneses argued they were low-income buyers, and the seller knowingly took advantage of their financial vulnerability
• There was a gross disparity in bargaining power, making the contract unfair
• Star Credit Corp argued the Joneses agreed to the contract and should be held to their obligations
• The contract was legally binding, and price alone should not determine unconscionability
• They provided a credit-based transaction, which justified higher costs

Court’s Ruling in Jones v. Star Credit Corp

• The court found the contract unconscionable under UCC § 2-302 due to the excessive price disparity, unfair financial burden, and lack of meaningful choice and bargaining power for the plaintiffs
• The contract was reformed, meaning the Joneses were not required to make any further payments
• The court limited enforcement to the amount the plaintiffs had already paid ($619.88)

Significance and Impact of Jones v. Star Credit Corp

• The case set a precedent for evaluating unconscionability in consumer contracts
• Courts continue to use UCC § 2-302 to assess whether a contract is grossly unfair due to excessive pricing or unequal bargaining power
• This case remains influential in consumer protection law, preventing businesses from exploiting financially vulnerable customers

Obligations of the Seller or Lessor

• The basic duty of the seller or lessor is to deliver goods called for under the contract to the buyer or lessee
• The goods must conform to the contract description in every way, meaning they must be conforming goods

Tender of Delivery

• Occurs when the seller or lessor makes conforming goods available and notifies the buyer or lessee
• The seller or lessor must ship or tender conforming goods
• Must occur at a reasonable hour and in a reasonable manner
• Goods must be tendered in a single delivery unless agreed otherwise

Rights of the Buyer

• The buyer must accept and pay for the goods according to the contract terms
• If goods fail to conform, the buyer may accept, reject, or accept part and reject part
• If the goods conform, the buyer must accept and pay for them

Place of Delivery

• Goods can be delivered at the specific destination
• If not specified the location is the seller's place of business, the seller's residence, or the location of the goods known to both parties in contracting

Delivery via Carrier

• The seller must place goods into the hands of the carrier
• Make a reasonable contract for transportation
• Seller must obtain and deliver necessary documents to the buyer
• The seller must notify the buyer of the shipment
• Destination contracts dictate that the seller agrees to deliver goods to a specific destination

Perfect Tender Rule

• The seller must ship or tender the buyer conforming goods
• The buyer must accept and pay for the goods according to the contract terms
• If goods fail to conform, the buyer may accept, reject, or accept part and reject part
• If the goods conform, the buyer must accept and pay for them

Exceptions to the Perfect Tender Rule

Exceptions by Agreement

• Parties may agree that defective goods or parts will not be rejected if the seller or lessor can repair or replace them within a reasonable period

Cure

• The right of the seller or lessor to repair, adjust, or replace defective or nonconforming goods
• The delivery is rejected because the goods were nonconforming
• The time for performance has not yet expired
• The seller or lessor provides timely notice of intention to cure
• A cure can be made within the contract time for performance
• The seller or lessor can cure even after the performance time has expired if there were reasonable grounds to believe the nonconforming tender would be acceptable

Limits on the Right to Reject Goods

• The buyer or lessee must inform the seller or lessor of the particular defect
• The buyer or lessee cannot later assert the defect as a defense if it could have been cured
• Buyers and lessees must act in good faith and state specific reasons for refusing to accept goods

Substitution of Carriers

• If the agreed-on manner of delivery becomes impracticable or unavailable, a commercially reasonable substitute must be used
• The seller or lessor is responsible for arranging a substitute carrier and any additional shipping costs

Installment Contract

• A single contract requiring or authorizing delivery in two or more separate lots
• Buyer or lessee can reject an installment only if the nonconformity substantially impairs the value of the installment and cannot be cured
• The entire installment contract is breached only when one or more nonconforming installments substantially impair the value of the whole contract

Commercial Impracticability

• Definition of commercial impracticability is unforeseen occurrences that make performance commercially impracticable
• For sellers or lessors notification to the buyer or lessee as soon as practicable about the delay or nondelivery is a condition
• Commercial impracticability does not extend to foreseeable problems, such as cost increases due to inflation

Definition Partial Performance

• Definition of Partial performance is when an unforeseen event partially affects the seller's or lessor's capacity to perform
• For Part Performancerequirement is the seller or lessor must distribute the remaining goods or deliveries fairly among the parties
• Buyer or lessee must receive notice of the allocation and can accept or reject it.

Destruction of Identified Goods

• Unexpected events, like a fire, that destroy goods before the risk passes to the buyer or lessee
• If goods are identified at the time of contract formation, performance is excused
• If partially destroyed, the buyer or lessee can inspect and either void the contract or accept the damaged goods with a price reduction

Example - Destruction of Identified Goods

• Atlas Sporting Equipment leases bicycles that are destroyed by fire before delivery.
• Atlas is not liable, and the contract is void.

Assurance and Cooperation

• If one party has reasonable grounds to believe the other will not perform, they can demand adequate assurance in writing per assurance
• Performance can be suspended until assurance is received
• Failure to assure within a reasonable time can be treated as a repudiation
• The cooperation is if one party's performance depends on the other's cooperation, lack of cooperation can excuse performance or hold the uncooperative party in breach

Remedies for Buyer/Lessee When Seller/Lessor Refuses to Deliver Goods

Right to Cancel the Contract

• The buyer or lessee can cancel the contract if the seller or lessor fails to deliver or repudiates the contract
• Canceling relieves the buyer or lessee of further obligations but retains rights to other remedies

Right to Obtain Goods upon Insolvency

• If the seller or lessor becomes insolvent within ten days after receiving the first payment, the buyer or lessee can obtain the goods
• Goods must be identified in the contract, and the buyer or lessee must pay any unpaid balance

Right to Obtain Specific Performance

• Specific performance is available if the goods are unique or monetary damages are inadequate
• Requires the seller or lessor to deliver the specific goods identified in the contract

Right of Cover

• Buyer or lessee can buy or lease substitute goods if the seller or lessor repudiates or fails to deliver
• Buyer or lessee can recover the difference between the cost of cover and the contract price, incidental damages, and consequential damages

Right to Replevy Goods

• This is an action to recover identified goods unlawfully withheld by the seller or lessor
• The buyer or lessee must show they were unable to cover for the goods after making a reasonable effort

Right to Recover Damages

• Buyer or lessee can sue for damages if the seller or lessor repudiates or fails to deliver
• Recovery includes the difference between contract and market prices, incidental and consequential damages

Mirror Image Rule (Common Law)

• An acceptance must exactly match the terms of the offer for a valid contract to be created
• If the acceptance includes any changes or additional terms, it is considered a counteroffer rather than acceptance
• No contract is formed unless all terms are identical

UCC Acceptance - No Mirror Image Rule

• Under the UCC, the mirror image rule is not strictly applied, particularly in Article 2 which governs the sale of goods

Acceptance Without Exact Match

• An acceptance can still be valid even if it includes different or additional terms, as long as it is definite and unconditional
• This allows for greater flexibility in commercial transactions compared to common law

Parties Are Merchants

• If both parties to the transaction are merchants, then additional terms proposed in the acceptance may automatically become part of the contract unless:
  • The original offer expressly limits acceptance to its terms
• The new terms materially alter the agreement (i.e., they would cause hardship or surprise)
  • The other party objects to the new terms within a reasonable time

Non-Merchant Situations

• If at least one party to the contract is not a merchant, the acceptance acts as a mirror image of the offer
• Any additional or different terms do not become part of the contract

Mirror Image Rule Differences

• Common Law requires strict adherence to the mirror image rule, any deviation results in a counteroffer
• UCC allows flexibility in acceptance for additional or different terms dependent on the status of the parties (merchant or not)

UCC Acceptance Example with Merchants

• If an individual offers to sell 100 desks for $1,000 each and the acceptance states “I accept, but I want you to include 10 chairs for the same price," this is a valid acceptance.
• The additional terms (the chairs) might be incorporated into the contract unless the original offer specifically limited acceptance or the terms materially changed the agreement

Example - Shipment Contract Responsibilities

• The goods need to be delivered to a carrier, meaning they must be packaged properly and handed over to a shipping carrier (e.g., USPS, FedEx, UPS).
• Make a reasonable contract for transportation meaning, the seller must arrange for a reasonable shipping method that ensures the goods reach the buyer in a timely manner.
• Shipment details need to be provided to the buyer including tracking information and any necessary shipping documentation.

Obligations with a Shipment Contract

• Making a reasonable contract for transportation is covered by UCC Article 2 (§2-504) as it requires the seller to choose an appropriate shipping method.
• Providing shipment details to the buyer is under UCC Article 2 (§2-504) as it mandates sellers to notify buyers of the shipment.
• Bearing the risk of loss only until delivery to the carrier is governed by UCC Article 2 (§2-509(1)(a)), which states that in a shipment contract, risk transfers to the buyer once the carrier receives the goods.

Shipment contracts for selling products like phone covers

• With a shipment contract, the seller’s duty ends when the goods are handed over to the carrier
• In general, the risk of loss transfers to the buyer
• Since the seller is only responsible for reasonable shipping arrangements and notifying the buyer, it is easy and common for e-commerce businesses, lowers liability and is relatively cheap

Destination contracts for selling products like phone covers

• The seller is responsible for delivering the goods to the buyer's specified location
• Since the of loss remains with the seller until the buyer receives the product, and includes lots of logistics, it increases liability and is more difficult for businesses

UCC Article 2 Exceptions to Statute of Frauds

• A contract for goods priced at $500 or more or leases for $1,000+ must be in writing. Exceptions include
• Specially Manufactured Goods meaning that if the goods are specially made for the buyer and a manufacturer begins work, then contract is valid without written contract -If a party admits in court/proceeding that a UCC 2 contract was made, this substitutes as writing -If partial performance has occurred, the contract is enforceable

Open Terms in UCC ART 2

• UCC Article 2 allows contracts to be enforceable with only a few details spelled out
  • If price terms are not determined then it is a reasonable price at time of delivery
  • If delivery terms are not addressed then goods must be delivered in a reasonable time and sensible place

Modification without Consideration

• Common-law needs consideration for modification, but UCC only requires good faith.

Unconscionability in UCC ART 2

UCC Article 2 provides that contracts may be found unconscionable if they are extremely one-sided or exploitative and Courts may:

• Refuse to enforce the contract entirely
• Modify or sever unconscionable terms to make the contract more balanced

Consumer Protections

• Goods must meet certain warranties that can be disclaimed but must be clear and conspicuous, typically, UCC may apply

Risk of Loss Guidelines

• What happens when goods are damaged during delivery according to the UFC, the factors that affect it are if seller is merchant, what are the terms regarding risk of loss in writing, and is there clear identification in the contract?

Product Liability Law Overview

• A product creator, seller, or lessor is liable due to damages caused by the product such as negligence, and strict liability.

Negligence

• Is the lack of reasonable care in many forms such as design, materials, product process, assembly, and/or warnings
• Note that privity of contact is not needed, but the plantiff must prove proximate and in-fact causes.

Elements of Strict Product Liability

• Product was defective when leaving creator hands
• Was the seller or manufacturer business
• How dangerous is the product?
• Any physical harm to plantiff, were damages from defect, was it changed from time of sale?
  • Was so dangerous that it exceeded consumer protection, or was safer alternative avaible?

Product Defect Categories

• Manufacturing - Deviates from designed assembly.
• Design - Was a safer design availble versus the product utility? Failed industry consumer expectation?
• Lack of proper warning to use/foresee misuse

Product Liability Questions

• Any world app will have a few key questions regarding the facts of the case, the theory of how it applies, the current defense, or remedies for the situation.

Market Share Liability

• Used to describe when plantiff has negligible evidence.
  • Courts assign damages weighted upon market share.

Compensation for Product Liability

• One may see compensation for medicals, wages, suffering, or, injuctive relief from acting, while punative exist for extreme negligence .

Defenses for Product Liability

• A company's defense has many components such as elements of situation, the Feds preempts laws, plantiff took risk to product, plantiff is comparatively negligent, user may have known dangers, statutes to protect user.

Understanding Fiduciary Duty

• To be a fudiciary it must originate out of trust, requiring care, honesty, loyalty and be enforced with legal implications
  • The 3 main duties involved are
  • The role is to loyal and avoid conflicting and acting ethically regarding beneficiaries who benefit
  • Care should be done to disclose all information.

Fiduciary Example Roles

• Finanical advisor, corporate director, trutee, agent of real estate. Financial advisor have a required duty to have best cost effective decision's which operate at lesser standards of others.

Advisor Duty Comparison

• Fidiciuary always prioritized and do not work in suits that's are not beneficial's like non-fidu's that follow a standard. Commission based roles have many conflicts unlike fees set as fiduciary

Agency Relationships; In Depths: Agent & Employees and Fiduciary

• Agency relies on one (agent) operating on behalf of another (principal), such as employees that represent employers while being a role that also operates a fidicuary.
• These relationships require consent from both parties for the former and added responsibilities for the latter, in a contract, ratified, or implication
• Duties can vary in good faith, performance, loyality and etc.

Agency Remedies

• Duties of principal are pay agent, cover expenses' and provide safe environment
• Rights of agent include torts and contracts remedies, while principle has ability of consructive trust, or avoid agreement, or harm done.

Employment Law Overview

Works in a role under an employers control which has legal protection vs an independent, self employed individual

Employment Relationship Highlights

• Employment: Ability to end when you like unless a contract says other wise.
• Knowledge : Whistleblower Protection for illegal action, federal workers comp, firing with discrmination.

Employment Compensation

Has wages via Davis Bacon or minimum and overtime pay for +14 non hazard roles, to ensure a worker is treated fairly.

FMLA Requirements

To protect from financial burdens regarding health, employers with 50+ to allow 12wks unpaid, job security or, healthcare + military leave of care. OSHA - Occupation Safety and Health Act to force a safe environment with 8hr rep on deaths from +11 employers

Title VII Highlights

• Job related injuries or illnesses covers worker"comp.
• Title VII prohibits various stage discriminate.
• EEOC monitors and investigates firms.

Intentional Discrimation and Retaliation

• These forms has plaintiff (who is qualified), which forces the employers to not take legitimiate measures, such as when that said plaintiff wins or, for reverse ones.

ADA overview and Application

• Employers have the government protection, which force a reasonable setting under this provision.
• To show claims against the ADA, employers must have disability that was excluded.
• A disability covers all aspects in order to be in a reasonable setting in healthcare etc.

Military Discrmination

• It is unlawful to deny some one via military status.
• This can be by:
• Adverse action
• Connection to service vs others

Defense

• There is not need for discrimination versus business.

Law

To be aware under the code is that all action is in good faith to what is protected:

• Be clear about written policies
• Have proper accommodation s for those with disabilities and provide frequent training

Employment Discrimination

• Title VII prohibits race, color, religion, sex, pregnancy, or sexual harassment and applies to employers with 15+ employees
• ADEA (Age Discrimination) protects those 40+ and covers firms with 20+ employees
• ADA (Disabilities) applies to disabilities (physical/mental) if a company has 15+ employers USERRA's law against military service discrimination, applies to all employers regardless of head count

Real and Personal Property Compared

• Land and anything pemenatly in place is real while pesonal are not.
• They both are taxed in different fashions and has transfers associated with either deed or written process

Legal Conversions

• One can change from "real tp timber or, pesronal to a tile as a"fixtutre""

Trademark Definition

• To help companies identify goods and origins these tradmarkers can get various protections from unauthorized used of their mark logo with state, fed.

Trademark Registration/Proof

• One has the options to be registered at office, or in the state of use to prove

Trademark Restrictions

• One has to prove similar product or intent to harm the owner with a 5->6th registration and every 10 year after.
• One needs to create the idea of ""confusion"" to be harmful

Types of Action

• They typically strong and have "® symbol and fanciful -""Made in the ""USA,"" ""UL Certified'

Intellectual Property-Trademark

-  Stop in a manufacturing product with a counterfeit to go around
-  Services are related to people rather than physical, with trade dress looking at unique aspect

• One needs a licence with licensing , grant to the government of sale, with a patent to determine if is original"

Licensing

• A licence is needed in many trademark settings to allow use to a different third-party when necessary. Typically royalties are involved."

Patents

• With Patemnt rights there needs to be a grant under this system to find any use in the court as it is difficult with an intent to try make something like copy right.

Copyrights

• " For works fixed so it protects what creator makes, only so much. The copyright and infringement has to be used in some form for a sub with what makes it great

Real and Presonal Estate; Converted

• You can transfer an item depending on its form (Ipad as a example)", in the means with gift/will-inheritance/possession but only what is made can you own.

Questions Pervading real vs pesronal estate and possession

• Fee simple, contract vs a deed, all of the above,fixture, personal , or "asement in gross"" is typically expected."