UCC

1-201(10) Conspicuous With reference to a term: o Means so written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed. o The court (judges decision matter of law) whether or not conspicuous. Ex: headings in capitals, equal to or greater in size than the surrounding text or in contrasting font, color etc. 1-201(20) Good Faith Except as provided in Art 5 means honesty in fact; & observing reasonable commercial standards of fair dealing. 1-201(37) Signed Any symbol with present intention to adopt/accept a writing. 1-303 Course Performance, Course Dealings, UOT CP: sequence of conduct btwn parties to particular transaction exists if: o Agrmt involves repeated occasions for performance and: o Other party, w/knowledge of perf & opp. To object accepts w/o obj. CD: sequence of conduct re: a prior transaction that is fairly re: as creating common basis of understanding. UOT: Existence and scope must be proved as facts. If shown to be embodied in trade code/similar record, interpretation of the record is question of law. (d) any of the above is relevant in determining the meaning of the parties agrmt, and may supplement/qualify terms of K. (f) express terms prevail over CP, CD, UOT CP > CD > UOT, CP that might otherwise establish a defense to an obligation of a party to a negotiable K is not available as a defense against a holder in due course who took the instrument without notice of that CP. 2-102 Need not be a merchant for Art 2 to apply.

2-104: Definitions Merchant; Btwn Merchants; Financing Agency (I) Merchants: for 2-201(2)SOF, 2-205 Firm Offers, 2-207 Confirmatory Memo and 2-209 Modification ALL rest on norm bus practices which ought to be familiar to any person in business. ALL persons for 2-201(2); 2-205; 2-207; 2-209 o (II) Specialized Merchants: 2-314: applies only if the seller is a merchant with respect to goods of that kind. o Requires a professional status as to particular kinds of goods. (III) 2-105 (1)(2)(3)Goods movable things at the time of identification to the for sale other than the money[however, except for dealings for example in ancient coins.] in which the price is to be paid, investment securities (art 8)[not stocks; those are treated as a right to x,y,z], and things in action[an example would be an insurance policy because the paper represents the right those people listed have at the time of death] . Vs. for example a ticket to a bball game. That ticket is not under art 2. That ticket merely represents the right to occupy that space. o Think you order a book from shoedazzle.com. until those shoes are I.D.d they are not under art 2. o P.6 Prob1(e): Defective spinal plate given a patient in a hospital operating room? judges are hesitant to rule on whether or not health care items are goods for the purpose of art 2. When undergoing surgery does the injection of aenesthia constitute a good? Generally courts have found them not to be goods. However, see[Anthony v. Pools] o Sale of membership in a health spa no just the right to use the spa o Entire assets of clothing store? (see 6-103) exam Trick question because the company could have trademarks and things intangible property which is not covered. o MA holds electricity not to be a good. P12 Software No consensus between courts. o Some say not transactions in goods and use common law. o Others hold that software in a package is goods but development of software is service. o Some parties assume it to be the sale of goods and thus courts apply art 2. UCC 2003 version defines goods so as specifically to exclude the sale of information. information is not defined. 2-201: Statute of Frauds In Writing (1)section one o (i) require writing to specify quantity o (ii) Must be signed by the party whom enforcement is sought (2) If between merchants (2-104 almost all sellers) a writing in confirmation of the contract and sufficient against the sender is received (w/in a reasonable time) and the party has reason to know the contents this satisfies section (1) against such party unless written notice of objection to its ocontents is given within 10 days after receipt. (3) not satisfying (1) but is valid in other resects is enforceable if:

(a) specially made goods not sellable to others and b4 repudiation is received and circumstances reaosnbly indicate goods for buyer, seller has made either a substantially start on making the goods or committed for their procurement; (goods unique to buyer) OR (b) PWEAON smira in plwsinf rhR EXISTED. (NOTE: a 12(b)(6) motion might admit the existence of contract and thus negate ability to argue statute of frauds. 2-202. Final Written Expression: Parol or Extrinsic Evidence. Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented (a) by course of dealing or usage of trade (Section 1-205) or by course of performance (Section 2-208); and (b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement . 2-204 Formation in General (1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. (2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. (3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. Very rarely in American contracts are the seller the offeror. More often than not the buyer is the offeror. 2-205 Firm Offers 2-206. Offer and Acceptance in Formation of Contract. (1) Unless otherwise unambiguously indicated by the language or circumstances (a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances: (b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods, but the shipment of nonconforming goods is not an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer. (2) If the beginning of a requested performance is a reasonable mode of acceptance, an offeror that is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance. (3) A definite and seasonable expression of acceptance in a record operates as an acceptance even if it contains terms additional to or different from the offer. 2-313: Express warranty 2-314: Implied Warranty of Merchantability o Narrow Test Need be a merchant in that specialized area. Anthony Pools v. Sheehan 2-315: Implied warranty of Fitness for Particular Purpose Need not be a merchant. o (1) Seller knows purpose buyer needs goods. (Objective Prong) o (2) That the buyer rely on sellers skill or judgment in selecting the product. o Siemen v. Alden (1) knew s purpose for buying saw make pallets (2) Plaintiff claims that D. Alden (merchant in saws) referred customers to D. Korleski and that D. Korleski had expertise. (however, plaintiff brought son for one example showing they relied on his sons judgment and not skill, expertise etc, of defendant) 2-316: Exclusion or Modification of Warranties

P13 ANALYSTS INTERN CORP v RECYCLED PAPER PROD INC. FACTS: RPP publishes/supplies greeting cards/gifts to retail stores nationwide. (IL) AIC (MI) with an office in Chitown creates computer software systems. RPP wanted to computerize their reordering of stuff thought of Computer Assisted Merchandising Program CAMP o CAMP would determine a customers need and whether or not to ship stuff or ship different stuff or reject order altogether. RPP paid AIC $16k to design, develop and implement CAMP. The material terms are all in dispute. o modified to include more at additional cost but date remained same was partly written and partly oral o Jan 17 84: AIC RPP stating would take 36 weeeks at $278,000. AIC contends was rough $$ and RPP agreed to pay hourly. RPP states AIC assured price was fixed and done October. AIC finished in December. System was not tested and no one was trained. CAMP did NOT perform ANY of the intended functions. Between Jan and June 85 RPP suffered sever business prob. AIC tried to fix. RPP paid them roughly ONE million.

o RPP hired someone else. o Remaining moneys around 300,000 o AIC sued breach of and fraud Moved Mot Sum J. & to dismiss RPPS counts chargin common law and statutyr fraud, neg misrep, malpract and RICO. o RPP sued alleging breach of and warranty, fraud and others. SUM JUDGE: o RPP contends breach of contract and breach of an express warranty, implied warranty of merchantability and warranty of fitness for particular ppurpose. o 2-314(merchant) & 2-315(fitness) Implied warranties. Issue: whether the UCC applies to the purchase of CAMP which depends on the issue of whether the involved is one for a transaction in goods. o Programmers knowledge, skill and ability was the subject of the and is important but only insofar as it enables him to produce the software according to the . AIC Arg: that where a transaction involves creative efforts resulting in a unique work product, the is service. Nitrin v. Bethlehem Steel Corp: 41 clearly indicating that the general contractor was responsible only for design and engineering work. Held that because the did not concern the sale of goods UCC not apply. o Here: both oral and written Boddie v Litton Unit: postal worker injured by machine made for postal service. Held: that UCC governed . o Here declined to see how case extended Illinois: uses dominant purpose test. o Whether the essence or dominant factor in formation of the was 4goods HERE: RPP via depositions showed that the essence was for GOODS, and the service aspect merely incidental. o Any specially designed item must necessarily perform whatever work is req to create or produce the item but this does NOT make it a service. HOLD: for goods. RPP entitled to put on proof at trial of breach of , warranties etc. Milau Assc Inc. v. N. Ave Development Corp. H2O pipe broke. H2O hammer sudden unpredictable break in flow. It flooded the cloth. - Hoop tension caused cracks, travelling along pipe. Q. for jury found for D. D. arg rupture in V notch pipe was suf. to find defect in "goods" under hybrid sales-service . o Court admits hybrid P. arg defect made pipe unfit for intent use and thus, they were entitled to have jury decide if implied warranty was breached. Implied warranty of merchantability: need reliance on merchants expertise, skills, etc that the goods will be made according to that specific area of goods expected performance. Implied warranty of fitness for particular purpose ISSUE: whether the was for the sale of goods or the services and installation. -

o Held for D. Installment . Need not be perfect. RULES Warranty: p8 Unless the parties have contractually bound themselves to a higher standard of performance, reasonable care and competence owed generally by practioners in the particular trade or profession defines the limits of an injured partys justifiable demands. Aegis Prod v. Arriflex: holding that in cases where service is performed negligenty the cause of action is for negligence & if it constitutes a breach of contract the action is for that breach. o Here: Job was to design and put together sprinkler system for commercial tenants sub was to furnish and install a wet pipe sprinkler system in accordance with NY Fire ins. o By putting their corp. logo to the sub agrmt, the fire specialist expressly warranted that all materials and equipment 9which they furnished) would be new and work under the sub to be of good quality free from faults and defects and in conformance with the . 2-313: requires that a sellers affirmation of fact to a buyer be made as part of the basis of the bargain, that is the contract for the sle of goods. The express warranty section would therefore be no more applicable to a service contract than the Codes implied warranty provision. However, where the party rendering services can be shown to have expressly bound itself to the accomplishment of particular result, the courts will enforce. HERE: had opp. To test the construction of written warranty in the sub at trial level. Opted to prove fault and if failed, seek to enforce a warranty imposed by law for the sale of goods unfit for their intended purpose. (implied warranty merch) o Judge did NOT find Higgins (sub) negligent in perf. o AND found the sub was an agrmt outlining the materials to be employed and the perf obl to be assumed by a construction specialist hired to install. o AND found to be for services thus, the implied warranty of merchantability only applies to service contracts insofar as it imposes an obligation not to do the work negligently. However, in products liability cases [rather than arising out of the will or intention of the parties] the liability imposed on the manufacturer is predicated on considerations of social policy including consumer reliance, marketing responsibility and the reasonableness of imposing loss redistribution. Yet, tort based cases should NOT be understood as in any way referring to the liability of a manufacturer [or tradesman] under similar laws of contracts for injuries by customer. did NOT raise any of these arguments.

Class 1/9 - Remember UCC is but one possibility. Tort claims, equity which will have dif. Governing laws, statutes, statutes of limitations etc. Art 2 does not require the / agrmt to be in writing. o But if it is in writing this triggers certain other things (FILL IN LATER EXAM) What kinds of damages are we looking for? o If goods are ruined as opposed to someone drowning (which could result from the same defect or problem) Milau Assc Inc. v. N. Ave Development Corp. Class 1/9

Predominant Purpose Test: Majority Rule o When you get your oil changed then the receipt will include a separated billing system into services and parts. Thus, if the part was $40 and the work installation services amounts to $400 the lawyer will argue that this is evidence that the contract was predominantly for services.

Anthony Pools v. Sheehan I: any time product causes injury (personal/injury) theory goes to 402(a) res torts product liability cases In MA there is no 402(a) and they use breach of warranty of merchantability. II: Could also be a breach of warranty MD has a law that does not allow 2-316exclusion of warranties in there rule 2-316.1 in that you cannot away warranties of merchantability for the sales of consumer goods, services, or both and that any language used by a seller of consumer goods and services, which attempts to exclude or modify any implied warranties is unfenforceable. FACTS: sustained bodily injuries when he fell from the side of the diving board. D. designed, built both the diving board and the pool as part of the swimming pool transaction. - arg two theories of liability 1) that the skid resistant material built into top of diving board did not extend to the edge of board stopping one inch short. o claims this breached implied warranty of merchantability 2) That the use of this defective good was unreasonably dangerous. PH: trial ct for D as to liability founded on warranty because the provided that the express warranties were in lieu of any other express/implied warranties. (Theory is based on the contractual limitation) Jury returned verdict for defendant on the issue of strict liability in tort theory. o AP CT: reversed saying The swimming pool package purchased was a consumer good. ISSUES: 1) Whether this is an Art 2 transaction giving the purchaser implied warranties. TESTS: Majority employs the predominant purpose test. More labor/more goods? P23 Worrell v. Barnes (nev): warranty of fitness for particular purpose under 2-315. Contractor doing carpentry work to connect appliances to plaintiffs home to an existing gas system. Appliances not supplied by contractor. P produced evidence that fire caused by defective fitting installed by D gas leak. o Held: that because it had held that the contractor had sold a product so as to bring into operation the doctrine of strict liability, so also must we deem this case to involve goods within the purview of the UCC. Gravaman Test: (MINORITY) If the gas escaped because of defective fitting/connector, the case might be said to be for goods. If gas escaped because of poor work by D the case might be services and outside the UCC. HOLD: Where, as part of a commercial transaction, consumer goods are sold which retain their commercial character as consumer goods after completion of the performance promised to the consumer, and where monetory/pers injury is claimed to

have resulted from a defect in the consumer goods, 2-314 applies to consumer goods, even if the transaction is one primarily for the rendering of consumer services. SHORT: For swimming pool construction carried implied warranty 2-314 and disclaimer of warranty was innefective under 2-316.1. SIEMEN v ALDEN Ill App Ct 75 FACTS: sued.1970 Injured while operating automated milti-rip saw bought from defendant in 1968. Saw was made in 1962. Plaintiff showed the new one working 1965. Old one was fixer upper. Plaintiff proceeds only against the guy who he ultimately bought the saw from. This Defendant is NOT in business selling saws. 1) Stirct tort liability sale of defective product; 2) Breach Warranties; 3 )Neg. o appeals against Korleski on the trial ct granting mot sum judge on 1) Tort. Owned sawmill. Bought auto saw to increase pallet production. P ARG: that the defendant had suff relationship to the saw causing injury to subj him to strict liability for sasle of defective product P ARG: under UCC ch 26 2-314 and 2-215 defendant liable for implied warranty. - Arguing that because the defendant was in the business of saws and because he had modified the machine to suit his own purposes thereby putting it in the condition leading to injury. Illinois Law: special liability of seller of product that harms. o One who sells any product in defective condition unreasonably dangerous to the user or consumer or to property is sub to liability for inry caused by the product to the ultimate user or consuer or their protery IF: The is engaged in selling such a product And: It is expected to and does reach the user or consumer without substantial change in the coniction which was sold. o The rules above apply although: Seller exercises all care in preparation and sale user has not bough product from or entered into K w seller. P. ARG TEST: whether the seller holds himself out as having knowledge or skill 2-314 Committee Comments: Make clear that it only applies to a person who, in a professional status, sells the particular kinds of goods giving rise to the warranty. 2-315: when seller at time of K has reason to know any particual purpose for which the goods are required and that the buyer is relying on their skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section and implied warranty P.29 Notes: 2-104: merchant = not only those who deal in goods but those who deal in the practice of those goods i.e. banker, lawyer 2-314: defines merchants as only those where the seller is a merchant with repsect to goods of that kind III. SCOPE OF ARTICLE 2A Leases: gives rise to problem. Many courts apply Art 2 by anology to goods stating that the commentators alluded to this in their comments to 2-102 whereby they said transactions in goods

leases under article 2A o Must pass Test if not governed by Art 2 and 9. 1-203: Lease Distinguished From Security Interest Security interest created if consideration that the lessee is to pay lessor for right to possession and use of goods is an obligation for said term not subj to termination & o Term of lease > economic life of goods o If lessee must renew till end of economic life. o Lessee hs an option to renew lease for remaining life of goods for NO extra consideration upon compliance with lease K or can become owner for NO cons. Security interest NOT created merely because: o Present value of cons lessee obl to pay lessor is substantially equal to or > than fair mrkt at time lease K entered o Lessee assumes risk of loss of goods o Lessee agrees to pay taxes, insu filing, recording or registration fees etc for goods o Lessee has option to renew lease or to become owner o Lessee can renew lease for fixed rent equal to or greater than the reasonably predicted fair market rent for term of renewal at the time of the option or. o Consideration is nominal IF less than reasonably predicted cost of perf lease K if the option is NOT exercised o NOT NOMINAL IF: When option to renew lease is granted the rent is stated to be fair mrkt rent for use for term of renew determined at time option is to be performed; or When option to become owner of goods granted the priceis stated to be mrkt $ at time option is to be perf. CHAPTER 2 CONTRACT FORMATION 2-201 STAUTE OF FRAUDS: terms sufficient (1) quantity (Revised 2003 raises minimum amount from $500-$5,00) o use $500. (2) signed by party against whom enforcement is sought

St. Ansgar Mills, Inc v. Streit Sup Ct Iowa 2000 P36 FACTS: appeal from d court granting sum judge in action to enforce oral based on written info. D court held NOT enforceable because written confirmation not delivered w/in reasonable time Buys corn from locals and sells to livestock farmers for feed. Price based on Chicago Board of Trade for delivery with reference to five.

Calls and gets quate then farmer either accepts or not if accepted protects $ through brokerage house. and entered into multiple together. IF oral woule prepare written then send it to sign and return. o July 1, 1996 called and placed two orders for the purchase of 60,000. Delivery in December 1996 at $3.53/ & May 1997 at $3,73 o then drafted but set it aside for to sign when he was expected to stop by the business. did not stop in until August and at that time he orally refused delivery of corn orally agreed to Price fell well below agreed to price and bought on open market. RULES: S.O.F. enacted to ensure perjury was not used to enforce s Under Iowas S.O.F. writing req considered satisfied if, w/in reasonable time, writing confirming , which is sufficient against the sender (i.e. quantity) is received and the merchant receiving it has reason to know ocontents unless written notice of objecton to contents is given with 10 days after receipt. o UCC defines reasonable time for taking action in realtion to the nature, purpose and circumstances of the action (i.e. UOT, COD, COP) Generally a question of fact for the jury Precedent: says that sum judge should only be used when the evidence is so one-sided that a party must prevail at trial as a matter of law. o Other Jurisdictions have held different times as to what is reasonable. Five month delay reasonable in ligh of merchants relationships and parties Three month delay reasonable in ligh of parties interaction in the interim and non fluctuating prices, thus no prejudice. One month delay unreasonable despite misdirection of confirmation due to mistaken addresss Six month delay for confirmation of modictation order for additional materials unreasonable as a matter of law in light of gulf war, thus increased prices and demand. Eight months delay for two year continuity unreasonable in light of lack of evidence Six month delay delivered one day prior to last day of delivery unreasonable Ten week delay reasonable in lght of immediate perf by both parties following oral HERE: fluctuating prices are but one consideration o Others: include the fact that the parties had maintained a long time custom/practice to delay delivery confirmation. o Long time business relationship o Engaged in many other similar business transactions without incident. HOLD: because lack of an explanation by the is not determinative. Because evidence exists that did not believe a problem exists just becaue did not follow normal custom of business and stop in. To Jury. Parole Evidence Rule: Official Cmts.
1. This section definitely rejects:

(a) Any assumption that because a writing has been worked out which is final on some matters, it is to be taken as including all the matters agreed upon; (b) The premise that the language used has the meaning attributable to such language by rules of construction existing in the law rather than the meaning which arises out of the commercial context in which it was used; and (c) The requirement that a condition precedent to the admissibility of the type of evidence specified in paragraph (a) is an original determination by the court that the language used is ambiguous. 2. Paragraph (a) makes admissible evidence of course of dealing, usage of trade and course of performance to explain or supplement the terms of any writing stating the agreement of the parties in order that the true understanding of the parties as to the agreement may be reached. Such writings are to be read on the assumption that the course of prior dealings between the parties and the usages of trade were taken for granted when the document was phrased. Unless carefully negated they have become an element of the meaning of the words used. Similarly, the course of actual performance by the parties is considered the best indication of what they intended the writing to mean. 3. Under paragraph (b) consistent additional terms, not reduced to writing, may be proved unless the court finds that the writing was intended by both parties as a complete and exclusive statement of all the terms. If the additional terms are such that, if agreed upon, they would certainly have been included in the document in the view of the court, then evidence of their alleged making must be kept from the trier of fact.

Nanakuli v Shell Oil: Holding and Rule Trade usage and course of performance will be implied into contracts if there is evidence that it is not inconsistent with the terms of the contract, and they are so prevalent that the parties would have intended to incorporate them. Colombia Nitrogen Corp v. Royster Co. Ct App 5th 1971 FACTS: ; min 31,000 tons of phosphate each year for three years TO . Price = per ton. stated that the price was subject to an escalation clause dependent on production costs. o Phosphate prices dropped. o Sold for three months at lower price indicating that after the price would go back to the original. Colombia refused to complete Royster forced to sell at price substantially below $ PH: Colombia says lower court erred excluding evidence UOT & COD between the two. offered expert testimony. also offered proof that the between the two (i.e. Colombia selling rosyter nitrogen) all had patterns that demonstrated a substantial deviation from stated amounts or price. RULES: 2-202 authorizes the use of UOT, COD to explain or supplement the . CMT 2. Paragraph (a) makes admissible evidence of COD, UOT, and COP to explain or supplement terms of any and are to be read on the assumption that prior dealings between the parties and UOT were taken for granted when the was drafted. Unless carefully negated they have become an element of the meaning of the words used. Similarly, the course of actual performance by the parties is considered the best indication of what they intended the writing to mean. Minor Hold: a finding of ambiguity in an agreement is not necessary for the admission of extrinsic evidence about the usage of trade and the parties course of dealings. ARG: breached because of UOT and COD factors. And they offer evidence of such. ARG: properly excluded because it contradicts the express terms of the BUT the test of UOT and CODs admissibility is:

TEST whether the proffered evidence of COD and UOT reasonably can be construed as consistent with the express terms of the agreement HERE: the evidence sought to show that because of changing weather, farming, etc (p49) that dealers changed prices, quantities and delivery times to reflect the declining market conditions. [See below and cmt to UCC] The does not expressly state that COD and UOT cannot be used to explain or supplement the written o Min. tons and more phosphate are expressed in terms of products supplied under and NOT as just products or purchased under these contracts this is consistent with the proffered testimony. o The contract refers only to the failure of the buyer to pay for delivered goods and not what occurs upon and if buyer defaults and refuses RULE: the court must reject evidence of additional terms when the writing is found to have been intended also as a complete and exclusive statement of the terms of the agreement. The official comment notes to the code states that course of dealing and usage of trade, unless carefully negated, are admissible to supplement the terms of any writing and that contracts are to be read on the assumption that these elements were taken for granted when the was drafted. QUESTION p51: If you want COP, UOT, COD kept out the drafter must be specific and express about the agreement between the parties to leave those aspects of the transaction out. Offer and Acceptance
Gen Rule:

2-206. Offer and Acceptance in Formation of Contract.

Battle of the Forms 2-207: Conduct demonstrating offer and acceptance is sufficient to form a contract. P68: Proviso clause o 2-207 Unless acceptance is expressly made conditional on assent to the additional or differing terms. Putting different terms does not negate acceptance. Whereas putting in express conditional terms, i.e. proviso clause negates

Diamond Fruit Growers v. Krack PROF: p55 Proviso clause. Once Proviso Clause is used.. i.e. terms and yada yada are made expressly conditional exam then: o 1) Express assent to the clause? Here the seller argues that because the buyer brought up their discomfort with the clause they assented. Court did not agree. o 2) If not THEN does the conduct of the parties show an intent and recognition of a contract even though the writings do not make one? Here parties do not agree about consequential damages. Thus, here where the two writings do agree form

AND: supplementary terms provided for by the UCC. Warranties etc. AND: supplementary terms if needed. o For example if the time or place is not set forth the UCC provides such. Exam. FACTS: Metal Co. supplies for past ten years with steel tubing w/ same COD start of year Krack sent order to metal stating # tubing would need for year. Throughout the year as Krack needed tubing send release purchase order. Metal would send acknowledgment order then ship tube. o Acknowledgement disclaimed liability and limited liability for defects to refund orer or replaice or repair. At end of 10 year. Krack talked with metal about the disclaimers and objected to them. Metal retained the disclaimer. 1981: sells cooling unit to , built with Metals steel tubing. Defect in coil tubing. Leaking Ammonia. ISSUE 1: Whether the disclaimer of liabilities was effective. RULES: 2-207 cmmt1: because printed purchase order and acknowledgment forms are oriented to the thinking of the respective drafting parties, the terms contained therein often to do not correspond. COMMON LAW: an acceptance that varies the terms of the offer is a counteroffer and operates as a rejection of the original offer. If offerror accepts after receiving counteroffer, his performance is an acceptance of the terms of the counteroffer. UCC RULE: 2-207(1) requires that the responding form contain a definite and seasonable expression of acceptance. The terms of the corresponding of responding form that correspond to the offer = the contract. UNLESS: a definite and seasonable expression of acceptance expressly conditions acceptance on offerors assent to additional/different terms therein The parties differing forms do not = unless offeror assents. Proviso Clause. IF PROCEED AS IF : results in under 2-207(3) terms contained in both forms & terms supplied by UCC 2-207(3): Conduct by both parties which recognizes the existence of a is sufficient to establish a for sale although the writings of the parties do not otherwise establish a . In such a case the terms of the consist of those terms on which the writings of the parites agree, together with any supplementary terms incorporated under other provisions of the UCC 2-207(2) additional terms of responding form become proposals for additions to the contracts. Merchants: additional terms become part of the unless: 1) offer is specifically limited to its terms; 2) offeror objects to additional terms; or 3) Response terms materially alter terms of the offer. HERE: Metal-Matics acceptance is hereby experessly made conditional to purchasers acceptance of the terms and provisions of the acknowledgement form. Proviso Clause p55 PROF: If proviso was not in the contract? The proviso makes the contact void because ISSUE 2: Whether Krack assented to Metal-Matics limitation of liability term.

What constitutes assent under 2-207? First: neutrality so as neither party has an advantage because it happened to send the first or last form. 2-703(3) states that all of the terms on which the parties forms do not agree drop out and the UCC supplies missing terms. C.LAW: different in that the offeree/counterofferor gets all terms because it fired off last with form. Metal ARG: Krack assented by objecting to and continuing to do business w/terms. COURT: we find their argument outweighed by the public policy reflected by Oregons enactment of the UCC REASON: here both parties are responsible for introducing ambiguituy into the . These terms would require the seller to assume more liability than it intends. IF SELLER does NOT want to be bound unless buyer assents it can simply NOT SHIP HOLD: because Krack did not indicate unequivocally their intent to assent the conduct did not amount to assent under 2-207(1) BAYWAY REFINING CO. v. OXYGENATED MARKETING & TRADING US CT APP 2ND 2000 PP60 FACTS: Req 2 pay tax for sale to party not procured tax exemption to sell 60,000 barrells. Feb 12, 1998 faxed confirmation letter offer; o pleased to confirm purchase.. This confirmation is the entire and represents our understanding of terms and conditions.. Any discrepancies or ommisions should be brought to our notice within next two working weeks. faxed confirmation letter next day; This doc cancels & supersedes any correspondence in relation to this set price, amount, delivery and incorporated companies standard terms: notwithstanding any other provision, where not in conflict with the foregoing, the terms and conditions as set fort in Bayway General terms etc are hereby incorporated in full by reference. Buyer shall pay seller amount of any federa, state etc taxes.. other than taxes on income pad or incurred by seller directly or indirectly with respect to oil. o did not object to the above. refused to pay tax denying assumption of tax liability and refused to pay that invoice item ISSUE: whether under NY UCC 2-207(2)(b) a contract term allocating liability to the buyer for an execise tax is an additional term presumed accepted (as seller contends) or (as buyer contends) a material alteration and thus, rejected. HOLD: i) the party opposing inclusion of an additional term bears burden of proving that it materially alters the ii) the district court properly granted sum judge in favlor of seller because additional term did not materially alter . iii) Evidence of custom and practice was properly admitted.

ANALYSIS: s confirmation fax was effective to form (acceptance) The additional terms were not made expressly conditional on s assent. o Thus, 2-207(2) Tax Clause was a proposal for an addition to the Merchants: both are merchants and thus, the Tax Clause becomes apart of the unless: 1) Sffer is specifically limited to its terms; 2) offeror objects to additional terms; or 3) Response terms materially alter terms of the offer RULE: under NY UCC 2-207(2)(b) party opposing additional terms bears burden. II) Material Alteration: one that would result in surprise or hardship if incorporated without express awareness by the other party BUT prof, exam, said you the court here required both BUT the UCC reads or. Abitration Clause: as a matter of law is a per se material alteration in NY o [Union Carbide v. Oscar Mayer: court distinguished between open ended tax liability material alter o and responsibility taxes for taxes on specific invoice not material alter. III) Surprise: Standard: under the circumstanctes, it cannot be presumed that a reasonable merchant would have consented to the additional terms. Even if a party is surprised A) Subjective what party knew here: complete surprise to B) Objective should have known. Here: no facts/evidence showing merchant would be surprised. Here: introduced evidence of custom and practice o 2 industry experts. o claims only 3/5 of other s have Tax Clause COURT: 1/4 had them tax added into the price RULING: because the tax imposed here is upon fuels sold to any unregistered buyer it is rational that the allocation of the tax price would be placed on the party in the position to obviate it. PROF: Cmmt 4 gives examples. HYPO of what terms that materially alter. Disclaiming warranties o Need both SURPRISE and hardship KLOCEK v. GATEWAY US D.CT KAN 2000 PP74 FACTS: 1) class action alleging they induced parties to buy computers and special support packages by making false promises of technical support. 2) individually alleges breach of and breach of warranty because stated its computer would be compatable with standard peripherals and internet services. Whenever they sell a computer Gateway includes a copy of the Standard Terms in the box. had ARBITRATION CLAUSE:

Standard: is simply a matter of between the parties but only those disputes that the parties have agreed to submit to rbitration. IF parties dispute making an arbitration agreement, a jury trial on the existence an arbitration agreement is warranted if record reveals issues of facts. BURDEN: TO SHOW ENFORCEABLE AGREEMENT TO ARBITRATE. Then shifts to RULES: Kansas and Missouri case law turn on whether court finds the parties formed their before or after seller communicated terms to buyer [Hill: sale of computer which contained within the box a license agreement enabling return within 30 days valid.] Conditional nature of acceptance must be clearly expressed in a manner sufficient to notify the offeror that the offeree is unwilling to proceed with the transaction unless the additional or different terms are included in the contract. HERE: PLAINTIFF IS NOT MERCHANT additional or different terms did not become part of the contract unless expressly agreed to. ARG: that plaintiff keeping the computer longer than five (5) days served and demonstrated acceptance of arbitration provision. HOLD: no evidence produced to show that express acceptance was given. see [Brown Machine where express consent cannot be presumed by silence or mere failure to object] PROF: where both parties are merchants power goes back into hands of seller. Here buyers, consumers, are NOT merchants and thus the additional terms, the dispensing of the warranty etc after five days of use is merely a proposal. o HYPO: IF they were both merchants, for example if the buyer was a school or larger entity, the terms would be included in the contract unless they materially altered the contract, the buyer gave timely objection to them or the terms expressly limited acceptance upon the inclusion of the new terms.

2-207(2): There is distinction between additional terms and differing terms. 2-207(2) only mentions additional terms. MASS: Does mention both. First sentence applies to everyone o Additional and/or differing terms are taken as proposals. Second sentence applies to merchants o Additional and/or differing terms DO become apart of contract unless: 2-207(2)(a) HYPO: how could shield sellers liability in confirmatory writing? Buyer accepts the terms and conditions contained therein. 2-207(2)(b) Materially altering terms SEE pp67 exam. Problem 15

CHAPTER 3: WARRANTIES CLASS: Need not intend to create warranty.

 Any fact that goes to the basis of the bargain Different from HYPO21: drawing lines between sales adverts i.e. this is better than before vs a description of the goods that creates a warranty. Chicken in tip top shape and will fly right (C) great car going to love it Not: affirmation of fact and promise creating warranty. HYPO 22: It's the finest wallpaper in the store Prof: not necessarily make it a warranty BUT makes argument stronger. o Reason is that merchant should know the items they sell and is different from simply stating that it is the finest however, the argument is strengthened by the fact that the language describing the quality of the goods is more specific. HYPO: Wallpaper goes up easily: ARG: It is an affirmation of fact in that it is a description of fact that becomes a basis of the bargain and thus rises above mere puffing language. Exam. HYPO: Eddie stole a car. sold it for $500 to sealed lips. Sealed lips got a clean title and sold it to a bona fide purchaser Duty for $2,000 Duty sold it to Pirate. Pirate had the car taken from him and returned to original. Pirate sued Duty for breach of warranty of good title.

MOORE v. Pro Team Ohio Ct. App 2002p87 PH: Moore brings this appeal arguing that 2-312 warranties not waived. Lower Ct Held: the language of the contract was sufficiently specific to permit exclusion of the warranty of title under UCC 2-312. FACTS: Moore drove from MI OH to buy car. Oct 17, 94 signed to buy and a to trade his car in. Found new car was stolen in Texas thus, no registration. o Next day filed suit. o third party complaint against prior seller to them. RULES Oh: a seller warrants 2 convey good title of which the buyer is without knowledge when the contract is made UCC2-312(1): Adds to OH warranty provisions that a seller conveys a warranty that shall be good and transfer rightful may be excluded or modified by specific lang: . To respect a buyers basic needs the buyer is presumed to receive good title unless otherwise specified. o Sunresi v Warner Theaters: seller shall in nowise be liable upon or under guaranties/warranties including of title held: to lack sufficient specificity to disclaim warranty of title. The court reasoned that it merely was couched in negative terminology not expressing what the buyer is or is not receiving merely what the seller was not liable for. EX GOOD LANG: Seller makes no warranty as to title and Buyer assumes all risks.

HERE: All warranties pursuant to UCC 2-312 are hereby excluded from the contract. HOLD: Court finds language to express how the sellers liability is limited rather than what title the seller purports to transfer. NOTE: If buyer makes specified goods per buyers order and for them is the only time a warranty of patent infringement is made automatically without it being expressed. AND only time under UCC where BUYER is warrantor. Section: WARRANTIES OF QUALITY Express Warranties: Seller acts and buyer thus, expects based on action. 1) Words must relate to the goods 2) Become part of basis for bargain. o Basis-bargain: if a statements natural tendency is to induce buyer to purchase goods (need not be sole reason) Burden: on seller to prove otherwise. Implied Warranties: Merchantability: SHAFFER v. VICTORIA STATION, INC FACTSL bought glass of wine; glass broke in s hand sued. D ARG: He is not merchant with respect to wine glass HOLD/RULE: cmt H to Res 402 The container cannot logically be separated from the contents when the two are sold as a unit. And the liability stated aruses not only when the consumer drinks the beverage and is poisoned but also when handling it in its preparatory consumption. MASS: has not adopted Res 402 and uses UCC 2-314 NOTE: Would def be able to argue were not negligent handling glass UCC 2-314 cmt 13. In an action based on breach of warranty, it is of course necessary to show not only the existence of
the warranty but the fact that the warranty was broken and that the breach of the warranty was the proximate cause of the loss sustained. In such an action an affirmative showing by the seller that the loss resulted from some action or event following his own delivery of the goods can operate as a defense. Equally, evidence indicating that the seller exercised care in the manufacture, processing or selection of the goods is relevant to the issue of whether the warranty was in fact broken. Action by the buyer following an examination of the goods which ought to have indicated the defect complained of can be shown as matter bearing on whether the breach itself was the cause of the injury.

Defense: Affirmative showing by seller that injury/loss/etc following their delivery of goods to suer operates as an affirmative defense. AND: Evidence that seller used all care handling of goods is relevant in showing of whether warranty was broken; AND: that the buyer following the buyers examination of the goods ought to have found/known etc the defect bears on whether a breach actually CLASS: DANIELL v. FORD P98 FACTS: plaintiff stuck in trunk RULES: Product defect: condition of product is unreasonably dangerous to user. Duty: to consider only those risks, which are reasonably foreseeable. o Exception: when product is used in a manner, which could not reasonably be anticipated by the manufacture, and that use caused injury. Purpose: essential determining whether or not a product is used in a manner 4see. HERE: Purpose of trunk is to transport, stow and secure goods. PROF/CLASS:

WEBSTER v. BLUE SHIP TEA ROOM SJC 1964 FACTS: Fish Bone in soup D ARG: Because plaintiff was native New Englander eating at a quaint new England establishment she should have known that some soups contain COURT: relies on an Ohio case where the court held: The possible presence of a piece of oyster shell in or attached to an oyster is so well known to anyone who eats oysters that we can say as a matter of law that one who eats oysters can reasonably anticipate and guard against eating such a piece of shell. HOLD/RULE: When the danger is reasonably foreseeable that the user/consumer should be aware of the risks in using the product the foreseeable injuries sustained cannot be said to be a breach of warranty of fitness, quality etc. CLASS: 2-314(2): (exam) Does this fish soup pass without objection in the trade? TO determine this initial issue one must examine what would pass without objection in the trade with regards to the product/good in question. Here the court goes into the literature surrounding the trade of fish soup. Their analysis and research leads them to believe that fish soup with bones in it would pass without objection in the trade of fish soup. The trade of fish soup tends to always entail large bones etc as a hazard. Because the tade is the trade it would not matter whether the person ordering fish soup at a restaurant such as here the expectations of fish chowder include the danger of a bone. However, it would be different if the soup was from a can because that would change the trade. HYPO 26: Hotblast heater for basement room. Went to appliance store. Seller knew the room the heater was for well because he helped build it. BUT heater did not have capacity to heat room. ISSUE: buyer said he wanted specific heater and thereby there is no more reliance. Because there is no reliance there is warranty for a particular purpose. HYPO 27: Plaintiff started painting room with paint. Ran out. Went back and asked for same one. The seller knew the buyer had a particular purpose namely that the buyer needed the same paint as the other day. Further the second element is that the buyer is relying on the skill of the seller to mix a paint that is the same color. P107: Disclaiming Express Warranties Bell Sports, Inc v. Yarusso Del Sup Ct 2000 2-316(1) FACTS: Defendant using dirt bike wearing full safety gear. Flipped over handlebars. Injured severely, quadriplegic. claimed helmet was predicated on claim that the helmet enhanced his injuries o Express warranty: Five year limited warranty If found defective in five years will be replaced Any implied warranties of merchantability or fitness for a particular purpose created hereby, are limited in duration to

the same duration as the express warranty. And Bell shall not be liable for any incidental or consequential damage. o NO HELMET CAN PROTECT AGAINST ALL 4SEABLE IMPACTS Expert testimony was presented that a helmit could be dsieged with a softer liner that would in theory limit the force placed on the user thereby reducing the probability of partial-load direct downward neck injuries particular yiwht impact on harder surfaces. USER ARG: relied on assertion that the primary function of a helmet is to reduce harmful effects of a blow to the head. Argues that the helmet was sold as an off-road helmet but was designed to function as an on-road helmet. BELL ARG: that even if an express warranty was created and not effectively disclaimed the manuals textual representations only promise to prevent injuries to HEAD not neck. Thus, Bell contends that because its product was not defective a verditct for the user on warranty and negligence claims were precluded. RULES: ranties rest on dickered aspects of the individual bargain and go so clearly to the essence of that bargain that words of a disclaimer in a form are repugnant to the basic dickered terms. Affirmations of fact made by a seller about goods during a bargain are regarded as part of the description of those goods; hence no particular reliance on such statements need be shown to weave them into the fabric of the agreement HERE: Bells arg that the express warranty terms in the manual are strictly limited to the five year limited warranty section, which also contained a purportedly effective disclaimer, is unfounded. Terms found in the manuals stating.. that the primary function of a helmet is to reduce the harmful effects of a blow to the head etc etc Are pre-textual representations constiting affirmations of fact upon Jury reached logical conclusion that an express warranty was made and that the warranty was breached. RULE: Negligence manufacturers conduct - Breach of warranty product itself. PROF: Primary function of a helmet is to reduce harmful effects of a blow to the head Professor This could in the courts view create an express warranty. o While manual contains disclaimers warning potential users that the helmet cannot prevent all injuries It also makes representations that assure the user that the helmets liner was designed and will reduce harmful effects of a blow to the head. These promises were essential aspects of the bargain and thus, are valid express warranties and may not be effectively disclaimed. o The producer would have been in a better position if it had stated that the helmet is designed according to current standards etc etc and. When drafting contract a seller would be advised to tie in 2-316 into 2-719. However, 2-719(3) bars disclaiming and limitation of liability for consequential damages for injury to persons in the case of consumer goods because according to the rule is prima facie unconscionable. Thus, a disclaimer or limitation any limit things by limiting to return and repayment of price or repair and replacement. 2-719(2) & 2-302 prof. The two are

If something is unconscionable i.e. that it is trying to limit consequential damages under 2-719(2) the danger and reason it is reffered to as a wild card section the judge determines as a matter of law pursuant to 2-302 whereby the judge has an almost unlimited defference to modify or do otherwise as they please with the unconscionable term

CATE v DOVER CORP TX S.CT 1990 P115 FACTS: Sept 1984 bought three lifts manufactured/designed by . Lifts never functioned properly. claims that the action for breach of implied warranty of merchantability (2314) was barred by a disclaimer contained within a written, express warranty. Knowledge: Q. Do you know, or remember what kinds of warranties you received when you bought the lifts? A. I may be wrong, but I think it was a five year warranty Q. What was your understanding of the warranty? A. Any problems would be taken care of within five year period. Q. Do you know if the warranty was from Dover or Other? A. Dover Q. Did you receive any written documentation regarding warranty? A. Yes. RULES: Whether a particular disclaimer is conspicuous is a question of law: A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printing in capitals is conspicuous. Language in a body of a form is conspicuous if it is larger or of other contrasting type or color. In telegram, any stated term is conspicuous. TEST: Whether attention can reasonably be expected to be called to it. HERE: Top 40% of written warranty extolls products virtues. Warranty is within double blue lines, and is then set out in five paragraphs in normal black type under the heading WARRANTY o While the warranty in its entirety may be conspicuous, the disclaimer is hidden among attention getting language purporting to grant the best warranty available. Massey-Ferguson v Utley: Held similar language to NOT be conspicuous because the words of the heading indicated a making of warranties rather than a disclaimer. PURPOSE: ***protect buyer from surprise and an unknowing waiver of their rights inconspicuous language is immaterial when the buyer has actual knowledge of the disclaimer. Knowledge: can result from prior dealings COD or; Knowledge: can result w/seller bringing inconspicuous waiver to buyers attention. o Thus, knowledge of implied warranty of merchantability is relevant to a determination of its enforcement. Burden: is on seller to prove buyers knowledge. ISSUE: whether DOVER met its burden establishing that there are no issues of fact. HOLD:

I. A written disclaimer of 2-316 made in connection with the sale of goods must be conspicuous to a reasonable person. II. Such a disclaimer contained in text undistinguished in typeface, sixe or color within a form purporting to grant a warranty is not conspicuous and is unenforceable unless the buyer has actual knowledge. PROF: Because these are not a consumer goods. It is not a consumer good. It is not a product that is regularly used and thus, the specialized rules for consumer goods are inapplicable. P117: We then turn to an application Exclusionary language = language seller used in order to disclaim implied warranties. Whether something is conspicuous is a question of law. HERE the disclaimer was meshed within other language praising how this was the best warranty around. It was language PROBLEM 31: What changes could be made to make the disclaimer effective? Easiest means of doing this would be to change the font to be bigger than surrounding texts, changing the color, adding line and notices pointing to the disclaimer. HERE: Regarding the issue of actual knowledge when the disclaimer is hidden the majority here found that while actual knowledge can be effective in disclaiming the warranty the court found that the party here di not have actual knowledge. The means in which actual knowledge serves to effect the disclaimer is found under 2-316(3)(c) whereby COD,COP,UOT establish effective disclaimer. While the rule does not express whether actual knowledge falls within course of performance it leaves open the arguable possibility that of course it does. DISSENT: 2-316: ignores the fact that governmental interference of protective terms in private contracts is commonplace (implied warranties) and rests on the faulty assumption that contractual disclaimers are generally freely bargained for elements of the contract. One need only look to internet purchasers whereby the million pages of terms and conditions are simply clicked over. Thus, the realities of the marketplace today advocate the repealing of 2-316 because it enables disclaimers to be slipped into those terms and conditions and they are conspicuous. Exam. That is also why many state legislatures have enacted statutes that these disclaiming practices are ineffective with regards to consumer practice. In Massachusetts this is found in 193A Revised 2003 2R-316 (2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it in a consumer contract the language must be in a record, be conspicuous, and state "The seller undertakes no responsibility for the quality of the goods except as otherwise provided in this contract," and in any other contract the language must mention merchantability and in case of a record must be conspicuous. Subject to subsection (3), to exclude or modify the implied warranty of fitness, the exclusion must be in a record and be conspicuous. Language to exclude all implied warranties of fitness in a consumer contract must state "The seller assumes no responsibility that the goods will be fit for any particular purpose for which you may be buying these goods, except as otherwise provided in the contract," and in any other contract the language is sufficient if it states, for example, that "There are no

warranties that extend beyond the description on the face hereof." Language that satisfies the requirements of this subsection for the exclusion or modification of a warranty in a consumer contract also satisfies the requirements for any other contract.

BOWDOIN v. SHOWELL GROWERS CT APP 11th 1987 P123 PROF INTRO: Disclaimer arrives Post-Sale. In the box. NOT basis of Bargain. 2-318 gets to standing. ISSUE: Whether defendants effectively disclaimed the implied warranties of fitness & merchantability with respect to a high-pressure spray rig that injured plaintiffs. PH: District CT held that a disclaimer found in instruction manual accompanying spray rig when it was delivered was conspicuous and thus, effective. HELD: Disagree. RULE: Post-sale disclaimer not effective because not form part of basis of the bargain. o 125 Manufacturer may disclaim implied warranties provided that disclaimer: o (1) Is in writing (2) is conspicuous and (3) is part of the parties bargain. o If disclaimer not presented to buyer before sale innefective. FACTS: raised chickens for . 1/year cleaning chicken house and coop pallets. To help clean Showell was to provide Bowdoin with spray rig. o Spray manufactured by FMC (Illinois corp) Delivered to and bought by SHOWELL Instruction manual: o The forgoing warranty is expressly in lieu of any and all other warranties o Safety Shield made by NEAPCO (PA corp) for FMC. Usually FMC required its dealers and buyers to complete and agriculture delivery report before sale. has disclaimers. NO report completed here. P ARG: disclaimer was not part of bargain thus, ineffective Disclaimer was not conspicuous Rig consumer good thus, manufacturer cannot disclaim implied warranties. D. ARG: that the parties COD established the disclaimer of the implied warranty. (exam) However, the fact that only one transaction had occurred between the parties leaves this argument without any legs. If multiple transactions had occurred and with enough frequency then yes 2-316(3)(c) comes into play to effectively disclaim the implied warranties based on COD. ANALYSIS: Defendants rely on disclaimer that was in instruction manual. By definition a disclaimer that appears for the first time after the sale in something supplied by the seller is not part of the basis of the bargain and therefore is not binding. Thus the buyer is not bound by the disclaimer to which they had never agreed at the time of the sale and which first appears in the manufactures manual delivered to the buyer with the goods or manufacturers printed material brochure, warranty booklet that accompanies the goods PRROF: While the disclaiming language of the warranty was in writing, expressly disclaimed and was conspicuous as contained on the instruction manual it was printed on and shipped to the buyer. Thus, the disclaimer became known the

seller post sale and upon receipt of the products. The court found that a post sale disclaimer of implied warranties is per-se unconscionable. For something to be conspicuous the test is whether a reasonable person at the time of sale ought to have noticed at the time the contract was made and because the disclaimer could only have been known to the seller post sale is not effective as to conspicuous.

CLASS 2/13/13 Inconsistent disclaimers are unreasonable and knock each other out. o See 2-317 Exam If verbal warranties are made the parties still must overcome the parol evidence rule in order to enable evidence of the oral agreement in order to be effective. Implied Warranty of Fitness (2-315): (1) Written and (2) Conspicuous. NEED BOTH FOR WARRANTY OF FITNESS Whereas 2-314 and warranties of merchantability need not necessarily be in writing. CLASS: o Bottom p126 [Hadley baxendale]bakery case where the grind did not get back in time. o Example of limiting consequential damages. PROB 31: Hidden in car purchase agreement is disclaimer. Obviously not effective because one it is not conspicuous and secondly the only way to disclaim warranty of merchantability is to expressly state merchantability. The way of disclaiming warranties of fitness for a particular purpose is to merely add language that states buyer purchases as is or with all faults and the like. o See (4)(B) professor exam says that it would be effective to disclaim.

WILSON TRADING CORP. DAVID Ferguson, LTD NY Ct AP 1968 p133 2-607(3) o Cases rests on the tension between 2-719(2) FACTS: sold yarn to . washed found defect in coloring; Seller seeks $. D ARG: Plaintiff has failed to perform all of the conditions of the contract on its part required to be performed, and has delivered..defective unworkmanlike goods Contract read: o No claims relating to quality or shade shall be allowed if after weaving, knitting or processing, or > ten days after receipt The buyer shall within 10 days of receipt examine for any and all defects o This constitutes the entire agreement between the parties superseding all past communications, oral or written, and no changes hereto will be recognized unless in writing signed by both IT is expressly agreed that no representations or warranties, express or implied have been made and seller makes no warranties, express or implied as to fitness for buyers

purpose sellers obligations are limited to the deliver of good merchantable yarn of the description stated herein. Defendant on appeal argues that the time limitation provision on claims in the contract was unreasonable since the defect was latent and could not be found until after processing. P ARG: because defendant failed to give notice of breach of warranty within the times limits prescribed by contract they are entitled to summary judgment. PH: sum judge for Plaintiff; contact price on ground that notice of the alleged breach of warranty for defect was not given within the time expressly limited and is not now available as a defense or counterclaim. RULES: 2- (3)(a) expressly provides that a buyer who accepts goods has a reasonable time after they discover or should discover breach to notify the seller of breach. HERE: says they notified immediately but earliest time defects could be discovered was after they washed in the normal manufacturing process. ISSUE: The time limitation provision in paragraph two of the contract: - Whether it is a valid limitation on remedies for breach of warranty (2-316(4) & 2-719 its effect as a valid. - Whether its effect as a modification of the express warranty of merchantability was valid.. RULES: 2-719: makes it clear that if the parties intend to conclude a contract for sale they must accept the legal consequence of there be at least a fair quantum of remedy for breach of the obligations outlined in the contract. Any clause modifying or limiting remedial provisions in an unconscionable manner is subject to deletion as if it never existed. HERE: Where an apparently fair and reasonable clause limiting the time that buyer has to notify and inspect and goods fails because of circumstances in its purpose or operates to deprive either of substantial value of the bargain it must be supplanted by the general UCC remedy provisions. ANALYSIS: The creates unlimited express warranty of merchantability and simultaneously modifies that warranty Hold: that language creating unlimited express warranty must prevail over time limitation insofar as the time limitation modifies the unlimited warranty. PROF: There must be minimum adequate remedies available to buyer. If limitations are such that buyer is deprived of all reasonable remedies the Act may supply minimum remedies. That is if a limitation on remedies fails for its particular purpose the Act shall provide such terms. I.e. it is a the court using the 2-719(2) as a wild card whereby the supply the terms for remedies on their own. Paragraph two creates express warranty of merchantability. This express warranty of merchantability cannot be disclaimed by other language limiting or attempting to disclaim the warranty, that is the clause limiting claims post washing of the product fails because (1) of the express warranty created here and (2) the limitation itself fails to provide the buyer with any reasonable remedy i.e. they cannot bring any claim for breach upon discovery of the defect. That is it deprives the buyer of the ability to discover the remedy because the limitation attempts to negate this possibility while simultaneously the express warranty itself cannot be disclaimed with conflicting language.

o Lang: fails of essential purpose. PROBLEM 33: Seller of snowmobile in event of breach buyers remedies limited to only repair or replacement Also seller not responsible for any consequential damages. Collins v. Uniroyal Seller should be held to realize that the purchaser of a tire buying it because so warranted is far more likely to have made the purchase decision in order to protect themselves from personal injury in a blowout accident That is the natural reliance and reasonable expectation and Held us patently unconscionable for the manufacturer to limit damages for breach of warranty resulting in purchasers death to a price return or replacement. Gladden v. Cadillac Motor: held that where the warranty limitation was seriously lacking clarity and applied 2-719(3) PROF What kind of damages does 2-719 limit? That is the contract limits remedies to repair or replacement and also disclaims liability for any consequential damages. The loss/destruction of the snowmobile would be direct damages and the remedy limited to repair or replacement. The hospital bills and the like are consequential damages. o The personal injuries are prima facie unconscionable to disclaim. o Loss of pay is arguably personal injury and not just economic loss. o The camera that was also destroyed would be a consequential damage that was reasonably disclaimed.

D. Defenses in Warrnty Actions 1. NOTICE Reasonable period after breach should be found. 2-607(3)(a) comment 4: 4. The time of notification is to be determined by applying commercial standards to a merchant buyer. "A reasonable time" for notification from a retail consumer is to be judged by different standards so that in his case it will be extended, for the rule of requiring notification is designed to defeat commercial bad faith, not to deprive a good faith consumer of his remedy. The content of the notification need merely be sufficient to let the seller know that the transaction is still troublesome and must be watched. There is no reason to require that the notification which saves the buyer's rights under this section must include a clear statement of all the objections that will be relied on by the buyer, as under the section covering statements of defects upon rejection (Section 2-605). Nor is there reason for requiring the notification to be a claim for damages or of any threatened litigation or other resort to a remedy. The notification which saves the buyer's rights under this Article [Chapter] need only be such as informs the seller that the transaction is claimed to involve a breach, and thus opens the way for normal settlement through negotiation. 2-607: Breach, Repudiation and Excuses: Where a tender has been accepted: (3)(a) the buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy; and (b) if the claim is one for infringement or the like (subsection (3) of Section 2312) and the buyer is sued as a result of such a breach he must so notify the

seller within a reasonable time after he receives notice of the litigation or be barred from any remedy over for liability established by the litigation. (4) The burden is on the buyer to establish any breach with respect to the goods accepted. (5) Where the buyer is sued for breach of a warranty or other obligation for which his seller is answerable over (a) he may give his seller written notice of the litigation. If the notice states that the seller may come in and defend and that if the seller does not do so he will be bound in any action against him by his buyer by any determination of fact common to the two litigations, then unless the seller after seasonable receipt of the notice does come in and defend he is so bound. (b) if the claim is one for infringement or the like (subsection (3) of Section 2312) the original seller may demand in writing that his buyer turn over to him control of the litigation including settlement or else be barred from any remedy over and if he also agrees to bear all expense and to satisfy any adverse judgment, then unless the buyer after seasonable receipt of the demand does turn over control the buyer is so barred. (6) The provisions of subsections (3), (4) and (5) apply to any obligation of a buyer to hold the seller harmless against infringement or the like (subsection (3) of Section 2312).

Problem 34 P showed D samples of apples. Told D builk had less color and1/5 smaller. D said bring apples to me; such size as are $3 a bushel and Ill pay you for them. P delivered 150 bushls net day. Were not as good, as samples. 1/3 smaller. D without inspecting delivered them ten days later to his merchant who sold them the same day bringing only $1.50 a bushel. o D waited until P billed him. o Sixty days later P billed D and D refused to pay. Problem 36 Guest at dinner; Wine was poisoned; Put him in hospital 2-607 CMT 5. Under this Article [Chapter] various beneficiaries are given rights for injuries sustained by them because of the seller's breach of warranty. Such a beneficiary does not fall within the reason of the present section in regard to discovery of defects and the giving of notice within a reasonable time after acceptance, since he has nothing to do with acceptance. However, the reason of this section does extend to requiring the beneficiary to notify the seller that an injury has occurred. What is said above, with regard to the extended time for reasonable notification from the lay consumer after the injury is also applicable here; but even a beneficiary can be properly held to the use of good faith in notifying, once he has had time to become aware of the legal situation. RULE 2-318: Three alternatives. Mass doesn't use any. A: Sellers warranty (express or implied) extends to any natural person who is in the family or household of his buyer or who is a guest in their home if it is reasonable to expect such person may use the goods and who is injured. Seller may not exclude or limit the operation of this section. Natural Personnot Corp etc.

Person on sidewalk hit by tire that came off? NO not household B: Sellers warranty (express or implied) extends to any natural person who may reasonable be extended to use, consume or be affected by the good and who is injured in person by breach of the warranty. Person on sidewalk hit by tire ?? YES arguably. NOT the camera that was also damaged. Personal Injury C: Sellers warranty extends to any person who may reasonably be expected to use, consume or be affected by the goods and who is injured by breach of warranty. Seller may not exclude or limit the operation of this section with respect to injury to the person of an individual to whom the warranty extends. NOT natural person just person Need not be injured in person argument can be made that can be purely economic loss and the camera. The puppy, Corp. FITL v. STREK Sup Ct Nebraska 2005 p146 FACTS: In 1995 P went to sports card show. Bought Mickey Mantel for $7,750 from D. Fitle says Strek represented card to be near mint condition. 1997 Fitle sent card to PSA for grading who said it was upgradable due to discoloration and being doctored. Second opinion confirmed. Frites then writes Strek indicating plans to litigate to resolve. o Strek says Fitl should have returned card in timely manner. o Strek says typical UOT for returning cards is 7days 1 month. D ARG: that lower court erred in finding that notification of defect 2 years after date of purchase was timely. 2-607(3)(a) RULES: (3) Where a tender has been accepted (a)The buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy - Whats reasonable for action depends on nature, purpose & circumstances of action. Tender/Latin: to hold out NOTICE PURPOSE of 2-607(3)(a) 1. Provides seller opportunity to correct defect. 2. Prepare for negation and litigation 3. Protect against stale claims. POLICY PURPOSE: 1. To enable seller to make efforts to cure breach by making adjustments or replacements in order to minimize buyers damagers and sellers liability. 2. same as above. - Cross 2-607 2-5 CAO v. NGYUEN: Court stated that a party is justified in relying upon a representation made to the party as a positive statement of fact when an investigation would be required to ascertain its falsity, HERE Fitl relying on Streks representation placed card in safe deposit box. COURT: Fitl was not required to investigate falsities. HERE: notice requirement to protect seller and allow to adjust was not unfairly prejudiced by lack of earlier notice. HOLD: Courts finding was not clearly erroneous. Courts have held that under circumstances where there is no precise rule of law, which governs, what a reasonable time is usually a question for the jury. PROF: calculating damages.

Take value good paid for and subtract actual appraised worth.

PRIVITY Vertical Privity: Distribution chain Horizontal Privity: Who retail seller is liable other than immediate purchaser. PROBLEM 37: Calculator problem REED v. CITY OF CHICAGO D.CT N. ILL 2003 p153 FATCS: administer of deceased estate; dead in Cop Cell; Feared suicide; Put gown on; P. ARG: cops failed to provide proper medical care Gown failed to tear away breached implied and express warranties. ISSUE: Whether a non-purchaser can recover from manufacturer AND designer for breach of warranty. ILL LAW: Requires showing both types of privity for breach of warranty UCC 2-318: Provides a non exhaustive list of exceptions to the privity requirement o Most have been extended to third-party beneficiaries or employees. For example an employee was injured while using a saw purchased by employer. The court found that Employee could bring suit. o HERE: Defendants had detainees like the deceased in mind. o Further their safety was a necessary part of the bargain whether eplicit or implicit between seller and buyer. HOLD: enforceable against manufacturer and designer. CLASS: Illinois uses 2-318 A Here the product was designed for a person that foreseeably might attempt to hurt himself or herself and in doing so the product would rip away. Its essential function was to prevent persons from causing harm to themselves. A product breaches the warranty of merchantability for a particular purpose 2-315 when (1) The seller knows the purpose for which the buyer will be using the product And (2) the buyer relies on the expertise of the seller. Thus, when the particular purpose that the product was purchased fails to function in the manner warranted by the seller under 2-315 a breach of an implied warranty has failed. The law of Illinois has expanded breach of warranty actions 2-318 beyond employees and the reason the product was purchased here and the injured here was specifically contemplated in the transaction.

NOTES: Close to UCC implied warranty of merchantability fitness for ordinary purpose very similar to unreasonably dangerous defects Res 402A: Strict Products Liability Any product sold in a defective condition unreasonably dangerous to the suer or consumer is subject to liability for physical harm thereby caused to the ultimate user or consumer if: o Seller is engaged in the busess of selling such a product and: o It is expected to reach the injured user or consumer o Reaches user without substantial change in condition in which it was sold.

Exam only number need to know is 2-318

EAST RIVER STEAMSHIP v TRANSAMERICA DELAVAL 1986 USC P156 ISSUE: whether a cause of action in tort is stated when a defective commercial product malfunctions injuring only the product the product itself thus, causing purely economic loss. Whether a commercial product injuring itself is the kind of harm against which public policy requires manufactures to protect, ind. of contractual obligation. FACTS: Shipbuilding, subsid of Seatrain, build supertanker in issue. o Shipbuilding contracted with Defendant to design, manufacture and supervise installation of turbines Ships title held by trustee who chartered ships to Plaintiff. Take control of ships for 22 years as though owned it. Turbines caused problems for all four ships. Each turbine supplied as an integrated package and thus, considered a single unit. ARG: 1-4 allege strict liability for design defect; Fifth defendants negligently supervised ANALYSIS: Statute of Limitations ran on contract claim. Majority: did not extend tort liability for a defective product if pure $ harm Minority/Land-based: reject above finding it arbitrary that $ losses are recoverable if plaintiff is injured. No difference between economic loss and personal injury or property because all caused by defendants conduct. Middle: Allow a tort action if defective product creates a situation potentially dangerous to persons or other property and loss occurs as a proximate result of that danger and under dangerous circumstances HERE: manufacturer in commercial relationship has no duty under either a negligence or strict products-liability theory to prevent a product from injuring itself. REASON: The nature of the responsibility a manufacturer must undertake in distributing his products. It would be difficult for a manufacturer to take into account the expectations of persons downstream who may encounter its product and if permitted to recover for all foreseeable claims purely of economic loss would subject Here The supervising Deval to the ship charters then subsequently Deval to the sup producer and so on. Injury that purely injures itself the user stands to lose the value of the product and society need not presume that a customer needs special protection. Such damange is most naturally understood as a warranty claim because the product has not met the customers expectationts. The maintenance of product value and quality are the purposes under 2-313 - 2-315 CLASS: Swartz v General Motors Mass case how mass does not use Res 402A The failure of the product to function properly is the essence of a warranty action. Statute of Limitations had run on contract claim. o When product functions defectively and only causes exonomic harmthe aggrieved person may only seek claims in contract and not tort.

NOTES: Where injury is not only to the product but to other propry as well, Majority allow tort theories to go forward.

I: 402A not require notice; 2-607(3)(a) Requires notice. II. 402A damages limited to those for physical injury 2-715 not limited. III: 402A state law SOL 2-725 Four years IV: 402A not affected by disclaimers or remedy limitations 2-316/2-719 allows limitation. V: 402A privity not an issue UCC may be an issue. VI: 402A requires product to have a defect UCC warranties may be breached without a defect if it neither fulfills its express warranties or werent fit for the particular purpose which buyer needed goods. EXAM Know distinctions between 2-318 alternatives A, B & C. Class 2/27/13 Tort S.O.L. three years whereas Contracts generally six years. o Reason Tort SOL is shorter is that injuries are not always readily apparent and my not be discovered until much later after the cause of the injury Magnus and Moss warranty Act. o not UCC. o UCC is one tool People reading bar exam wont have read Magnus and Moss So make you look good.

VENTURA v. FORD MOTOR CORP NJ SUP CT APP 1981 p168 FACTS: plaintiff bought car from dealership (marino) defects caused damages o Car had engine problems. o Marino couldnt figure/solve the problem o FORD looked at it.. Couldn't find anything wrong with it o Tried to take car back to marino and was refused. Marino cross-claimed against Ford. 2-711 & 2-712 There was evidence that plaintiff was financially compelled to continue to use car in defected state. Upon sellers breach the buyer has the right to cover by purchasing substituted goods but is not barred from any other remedy if they fail to do so. 2-711(3) give the buyer a security interest in and the right to retain or resell the goods after revocartion of acceptance. There was no proof that the defect would have been discovered but for MARINOs lack of reasonable care in attempting to repair the car. o Marino CANNOT be denied indemnification becasuye it failed to successfully discover defect. FORDS expert could find nothing wront. DISCLAIMER: Paragraph 7 Selliung dealer agrees to promptly perform and fulfill all terms and conditions of the owner sevice policy (i.e. Fords warranty)
LIMITED WARRANTY (12MONTHS OR 12,000MILES) 1978 NEW CAR & LIGHT TRUCK

o Ford warrants 4 X cars/light trucks that SELLING DEALER will repair, replace free any parts except tires found under normal use to be defective in factory materials or workmanship w/in above COURT: p175: that this is a warranty within the meaning of 2301(6)(B) o Thus, having made a 2301(6)(B) warranty the supplier may not disclaim or modify implied warranty Frequently asked warranty Questions
Dealership where car bought has responsibility 4 doing warranty repairs; thus, take car to that dealer. If service problem, refer to service assistance of Owners Guide for suggested action

FORD ARG:There was no basis for rescission and thus, no need for indeminifaction Second: Ford argued the lack of sufficient notice of plaintiffs complaints re:car Trial judge improperly invoked 2304 of the MAGNUS act as basis for rescission because the warranty given by FORD was a limited warranty and not full warranty. Rule warranties that do not meet federal min standards for warranties within 2304 shall be conspicuously designated as Limited Warranties o Limited warranties protect consumers by barring dislcaimers of implied warranties. HOLD: (1) Despite MARINOs attempt to disclaim all warranties the plaintiffs can recover from MARINO for breach of implied warranty of merch. (2) Pursuant to the Magnuson-Moss Warranty Act court upholds awarding of counsel fees against FORD. Henningsen v. Bloomfield Motors: Case contained identical oblications held: the attempt to limit liability to the replacement of defective parts was contrary to public policy and void with respect to a claim for personal injuries resulting from an accident caused by defects in a car. RULES: o reject contention that expert proof is needed to prove defect. 2-316(1): words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of Parol Evidence 2-202, negation or limitation is inoperative if unreasonable. MAGNUSON-MOSS WARRANTY: Purpose: to enhance consumers position by allowing recovery under a warranty without regard to privity of contract btwn consumer and warrantor RULE: Prohibits the disclaiming of implied warranties in a written warranty, and enlarges remedies available to consumers for breaches (atty fees) Written Warranty: Any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time or Any undertaking in writing in connection with the sale by a supplier of a consumer product to refund, repair or replace

or take other remedial action with respect to such product in the event that such product fails to meet the specifications set forth in the undertaking. o 2 Types of Warranties Limited 2308 (a) no supplier may disclaim or modify except as in subsection (b) any implied warranty to a consumer with respect to such product if: (1) such supplier makes any wrirrten warranty to the consumer with respect to the product or (2) at the time of the sale or within 90 days thereafter such supplier enters into a serice contract with the consumer which applies to such consumer product. (b) for purposes of this chapter, implied warranties may be limited in duration to the duration of a written warranty of reasonable duration, if it is conscionable and conspicuous (c) a disclaimer, mod, or limitation made in violation of this section shall be ineffective for purposes of this chapter and state law. o Limited Warranties Remedies: Rely on state law/UCC to determine because Magnuson-Moss does not provide remedies. Here: State law allowed for recission of the contract and return of purchase price which thus, is a remedy that looks like a full warranty remedy. Full 2304(a)(4): provides that a consumer must be given the election to receive a refund or replacement without charge of a product or part which is defective or malfunctions after a reasonable number of attempts by warrantor to solve problem. Here Ford furnished a limited written warranty to the consumer, the dealer (as supplier) may not disclaim or modify [except as to duration] any implied warranty Disclaimer = invalid; bound by implied warranties 2-315&314 Plaintiff could timely revoke acceptance and claim refund of purchase price. RULES: A consumer damaged due to warrantors failure to comply with obligations under MAGNUS or under written warranty or implied warranty or service contract may sue for damages and other legal and equitable relief Refund: is the return of purchase price less reasonable depreciation based on actual use where permitted by regulations. ISSUE: Whether recovery of the purchase price from the manufactuerer was available to plaintiff for breach of manufactueres warranty RULE: If warranty was a full warranty plaintiff would have been entitled to a refund price under Mag-Moss HERE: FORDS warranty was limited warranty thus look to state law to determine plaintiffs damagaes or other equitable relief. 2310(d)(1) ATTY FEES: No action based upon breach of a written or implied warranty or service contract may be prosecuted unless a person obligated under the warranty

or service contact Is afforded a reasonable opportunity to cure such failure to comply. RULES: In absence of proof of actual damages, plaintiff was entitled to a judgment against FORD for nominal damages. P177 Here FORD intended to limit remedy to repair & replacement of defective parts, the failure to remedy [2-719(2)] and consequential breach of the implied warranty of merchantability [2-314] which accompanied the limited warranty by virtue of MAG-MOSS make recission-type remedy appropriate when revocation was justified

If written warranty is such that it triggers Mag. Moss any attempt to disclaim Implied warranties (of merchantability and fitness for a particular purpose) are not effective. If each of the following five statements is true about your warranty's terms and conditions, it is a "full" warranty: 1. You do not limit the duration of implied warranties. 2. You provide warranty service to anyone who owns the product during the warranty period; that is, you do not limit coverage to first purchasers. 3. You provide warranty service free of charge, including such costs as returning the product or removing and reinstalling the product when necessary. 4. You provide, at the consumer's choice, either a replacement or a full refund if, after a reasonable number of tries, you are unable to repair the product. 5. You do not require consumers to perform any duty as a precondition for receiving service, except notifying you that service is needed, unless you can demonstrate that the duty is reasonable. - If any of these statements is not true, then your warranty is "limited". You are not required to make your entire warranty "full" or "limited" If the statements above are true about the coverage on only some parts of your product, or if the statements are true about the coverage during only one part of the warranty period, then your warranty is a multiple warranty that is part full and part limited. If warranty not specified limited or full the court generally holds the warranties as limited warranties Ventura v. Ford Class; The state court of NJ having found an implied warranty were without a remedy as provided by the Mag-Moss act. The court thus, in determing what the remedies available are looked to State law and found that the consumer was entitled to refund of the purchase price. Refund of the purchase price is a full warranty despite being only a limited warranty. PROF/EXAM/LANG 168 Rescission: Term is a common law term. It is an equitable remedy. Term is often used as meaning the same as revocation 2-608: Substantial Impairment ----------- DELIVERY ------------ 2-601 2-508

 2-601 2-602 CHAPTER 4: TERMS OF THE CONTRACT 2-305-2-311 LANDRUM v. DAVENPORT TX Ap 1981 p188 FACTS: 1978 Plaintiff contacted Defendant by phone to buy three Corvettes Price left blank Plaintiff testified sticker price would be contract price. Btwn $14,000-$18,000. o P gave D $100.00 deposit. Cars arrived carrying sticker price of $14,688.21 D demanded $22,000. o Ps offered sticker price. Subsequently bought under protest at 22. PH: found parties renegotiated higher price and thus, P waived breach of contract claim. RULES: Breach of Contract. 1. existence of valid contract 2. P performs or tenders performance. 3. D breaches the agreement. 4. P suffers damages as result of breach ISSUE: Whether valid contract existed. RULES: If both parties agree on price, and fail to insert agreed price in writing does not negate or invalidate contract under certain circumstances. 2-204 Parole: when a writing appears obviously incomplete, as when it is silent on a point which would normally be expressed, it may be completed by extrinsic proof of the omitted term. o Even if price is not agreed upon the contract may still be a valid binding contract if both parties intended to be bound and there is a reasonably certain basis for granting an appropriate remedy. In such a case the law will imply that a reasonable price was intended 2-305(1)(a) Possible Prices: 1. Sticker Price 2. Market 3. No Contract HERE: Fact that both parties signed the contract and it was complete in all respects except for specification of price, is evidence that they intended to be bound. Novation is a voluntary replacement of an old obligation with a new one. o Intent: is required by both parties. Waiver: is the voluntary relinquishment of a known right, and its existence is largely dependent upon intention of party possessing the right. ANALYSIS: When a person who, with full knowledge of a fraud perpetrated on him, voluntarily renegotiates or renews their obligations will be held to have ratified the fraud. HERE DIF: There existed a disagreement as to what the contractual price was. PROF: Jury is to decidethe reasonable price and not the court as a matter of law. Because the evidence demonstrates the existence of a disagreement between Buyer and Seller regarding what the price was to be. Buyer arguing sticker price and Seller arguing market price and because the Jury could have found for either, the PH with the court granting an instructed verdict was wrong.

- Page Five NOTE: R1-308: Performance or Acceptance Under Reservation of Rights. (a) A party that with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as "without prejudice," "under protest," or the like are sufficient. (b) Subsection (a) does not apply to an accord and satisfaction. UNCONSCIONABILITY 2-302: an unconscionability principle is one that is an emotionally satisfying incantation having no reality referent. o Two Types 1. Procedural Unconscionability: unfair conduct in formation 2. Substantive Unconscionability: unfair terms resulting from - Is a question of law. Not left to the Jury - Bayway: - Comment 1: In general background of commercial context is so one sided at the time of the contract. Principle is prevent unfair surprise and oppression. IDENTIFICATION OF THE GOODS - 2-501 2-501. Insurable Interest in Goods; Manner of Identification of Goods. (1) The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even though the goods so identified are non-conforming and he has an option to return or reject them. Such identification can be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs (a) When contract is made if for the sale of goods already existing and identified; (b) If the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers; (c) When the crops are planted or otherwise become growing crops or the young are conceived if the contract is for the sale of unborn young to be born within twelve months after contracting or for the sale of crops to be harvested within twelve months or the next normal harvest reason after contracting whichever is longer. (2) The seller retains an insurable interest in goods so long as title to or any security interest in the goods remains in him and where the identification is by the seller alone he may until default or insolvency or notification to the buyer that the identification is final substitute other goods for those identified. (3) Nothing in this section impairs any insurable interest recognized under any other statute or rule of law.

RISK OF LOSS: NO BREACH - 2-401(1)

Prof, CLASS 3/18 2-311: If no price court will impose reasonable price.

 Delivery Terms EXAM EXAM Shipment Contract: Seller need only get the goods to the carrier and then buyer takes risk of loss Destination Contract: Parties agree that carrier must deliver goods (to a specified destination) before risk passes from seller to buyer 2-503 cmt 2: Presumption is in favor of shipment contract o FOB: Free on Board BOTH Must indicate either shipment or destination contract. Risk of loss passes at the named destination. 2-319 (a) when the term is F.O.B. the place of shipment, the seller must at that place ship the goods in the manner provided in this Article (Section 2-504) and bear the expense and risk of putting them into the possession of the carrier; or (b) when the term is F.O.B. the place of destination, the seller must at his own expense and risk transport the goods to that place and there tender delivery of them in the manner provided in this Article (Section 2-503); (c) when under either (a) or (b) the term is also F.O.B. vessel, car or other vehicle, the seller must in addition at his own expense and risk load the goods on board. If the term is F.O.B. vessel the buyer must name the vessel and in an appropriate case the seller must comply with the provisions of this Article on the form of bill of lading (Section 2-323). Thus, if FOB (and) DESTINATION of SHIPMENT = SHIPMENT Thus, if FOB (and) DESTINATION of DELIVERY = DELIVERY Thus, if FOB (and) NAME OF VESSEL CARRY = SHIPMENT o FAS: Free along-side Shipment Contract 2-319(2) Unless otherwise agreed the term F.A.S. vessel (which means "free alongside") at a named port, even though used only in connection with the stated price, is a delivery term under which the seller must

(a) at his own expense and risk deliver the goods alongside the vessel in the manner usual in that port or on a dock designated and provided by the buyer; and (b) obtain and tender a receipt for the goods in exchange for which the carrier is under a duty to issue a bill of lading. 2-322 o CIF: Cost, insurance freight Shipment contract o C&F: Cost and freight Shipment Contract o Ex-ship: From the Ship Destination Contract Risk of loss passes from seller to buyer when the goods leave the ships tackle or are otherwise properly unloaded Must be unloaded. PROF: If they name FAS/CIS/C&F those terms are always shipment contracts. Even if the contract names a destination point. Same with 2-509 Problem 47 Offer to sell piano. I will pick it up tomorrow with others. o 2-709(1)(a) Action for the Price. (1) When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under the next section, the price (a) of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and HERE: Because seller is not a merchant so under 2-509 tender occurs upon perfection of delivery or tender of delivery. Thus, after looking to Manner of Sellers tender under 2-503 the hour must be reasonable and kept available and unless the parties agree otherwise the buyer must store the goods in a place suited for keeping it. 2-503. Manner of Seller's Tender of Delivery. (1) Tender of delivery requires that the seller put and hold conforming goods at the buyer's disposition and give the buyer any notification reasonably necessary to enable him to take delivery. The manner, time and place for tender are determined by the agreement and this Article, and in particular (a) tender must be at a reasonable hour, and if it is of goods they must be kept available for the period reasonably necessary to enable the buyer to take possession; but (b) unless otherwise agreed the buyer must furnish facilities reasonably suited to the receipt of the goods. 2-509. Risk of Loss in the Absence of Breach. (1) Where the contract requires or authorizes the seller to ship the goods by carrier (a) if it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation (Section 2-505); but (b) if it does require him to deliver them at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery. (2) Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer

- Prof: Title passes when goods are still in warehouse in the following: (a) On his receipt of a negotiable document of title covering the goods; or (b) On acknowledgment by bailee (to buyer) of buyer's right to possession; or (c) after his receipt of a non-negotiable document of title or other written direction to deliver, as provided in subsection (4)(b) of Section 2-503. (3) In any case not within subsection (1) or (2), the risk of loss passes to the buyer on his receipt of the goods if the seller is a merchant; otherwise (If seller is not a merchant tender on delivery ;prob 47) the risk passes to the buyer on tender of delivery. Prof: General Rule. (4) The provisions of this section are subject to contrary agreement of the parties and to the provisions of this Article on sale on approval (Section 2-327) and on effect of breach on risk of loss (Section 2-510). Problem 48: Seller in NY contracts to sell 80 boxes to Buyer in Georgia Deliver term = $1,800 FAS S.S. Seaworthy. N.Y.C. o Seller delivers to dock alongside SS Seaworthy and a bill of lading from ship as receipt. o Before shipped Dock collapses Must buyer pay the $1,800 under 2-319(2)? I don't think buyer must pay because it says Sellers risk. o Prof: Buyer only had to get goods to carrier because it said FAS If Ex-Ship SS Seaworthy? under 2-322 No (b) the risk of loss does not pass to the buyer until the goods leave the ship's tackle or are otherwise properly unloaded. PROBLEM 49: (A) FOB Detroit names where goods are being shipped from SHIPMENT B. FOB railroad cars detroit Cook Speciality Co. V Schrock US East Dst PA 1991 P 199 Facts: D (MSI) to sell P a machine known as a Dries & Krump Hydraulic Press brake. Lost in transit. P sued Ds to recover loss. o Terms of contract were FOB Ds warehouse in Illinois. Prof: All that seller had to do was get the goods to the warehouse. At that point the risk of loss would pass the buyer. RTL = carrier. To deliver brake from warehouse to Pa. MSI obtained cert. of insurance from carrier. Carrier cited by COPS for not properly securing load. RULES: FOB 2-310(1)(a): means that the seller must at that place ship the goods in the manner provided by 2-504 AND bear the expense and risk of putting them into possession of the carrier. At the time the carrier takes possession the risk of loss shifts to the buyer. P ARG: because D failed to ensure that carrier had sufficient insurance coverage to compensate P for loss that the deliver was not reasonable. HERE: Not unreasonable.

Whether or not the shipment is at the buyers expense the seller must see to any arrangments, reasonable in the circumstances, such as refrigeration, watering of live stock, protection against cold and the like. HOLD: MSIs conduct was not unreasonable. o They obtained cert of insurance from carrier. o Did nothing to impair Ps right to recover for an y loss from the carrier. Accidents happened and FOB is a symbol that delineates the risk of loss passed when the carrier picked up the boxes at the warehouse. PROF/Class: Risk of loss occurred when the seller. Because risk of loss was transferred to the carrier and buyers only recourse is to bring suit against Randys Truck service. They stand to recover under the amount purchased because Randys insurance does not provide for enough recovery. Thus, the buyers attorney looked the reasonable transport language which requires taking into regards the nature of the goods. For example perishable goods etc. 2-504(b) : (b) obtain and promptly deliver or tender in due form any document necessary to enable the buyer to obtain possession of the goods or otherwise required by the agreement or by usage of trade; and (c) promptly notify buyer of shipment. Rheinberg-Kellerei GmbH v. Vineyard PROF: Just because you have a destination named it does not mean it falls within 2-509 requiring or authorizing delivery to a specified location It needs to be required under the contract. If it is merely named it does not rise to the level of a destination contract and still can be a shipment contract. Thus, if it does not require it to be delivered o Whenever it is a shipment contract 2-504 adds extra requirements. Making sure they put the goods in possession of a carrier and make sure transport is reasonable in regard to the goods. The SELLER must obtain and pormplty deliver any document that the BUYER will need to obtain possession of the goods and lastly prompltly notify the BUYER of the shipment. o HERE: The BUYER argues that the means of transportation were unreasonable in the circumstances. The court however disagrees.

Failure to notify the buyer under Paragraph (c) or to make a proper contract under Paragraph (a) is a ground for rejection only if material delay or loss ensues. Rheinberg-Kellerei GmbH v. Vineyard wine NC Ap CT 1981 P202 FACTS: P, German wine producer and exporter. P seeks to recover purchase $ of shipment of wine sold and lost en route to US. D is a NC distributor of wine. o Switzer and Sutton contracted between P and D for the shipment D got written confirmation of order and gave no written notice of objection that the TWO shipments of wine were to shipped together. As of then the BUYER had not paid. November 1978 Defendant notified Issue: Whether the trial court was correct in its conclusion that the risk of loss for the wine never passed from plaintiff to defendant due to the failure of plaintiff to give prompt notice of the shipment to defendant? YES Rule: Where the contract requires or authorizes the seller to ship the goods by carrier (a)

if it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation.- 2-504 Where the buyer, upon shipment by seller, assumes the perils involved in carriage, he must have a reasonable opportunity to guard against these risks by independent arrangements with the carrier. The requirement of prompt notification by the seller, as used in 2-504(c), must be construed as taking into consideration the need of a buyer to be informed of the shipment in sufficient time for him to take action to protect himself from the risk of damage to or loss of the goods while in transit.ISSUE: whether notification has been prompt within the meaning of UCC will have to be determined on a case by case basis, under all the circumstances.when the seller is in breach because the goods do not conform to the warranties made in the contract), 2-509 does not apply and the relevant risk of loss section is 2-510. 2-510 provides that where a tender of goods so fails to conform to the contract as to give a right of rejection, the risk of their loss remains on the seller until cure or acceptance. Where the buyer rightfully revokes acceptance he may to the extent of any deficiency in his effective insurance treat the risk of loss as having rested on the seller from the beginning. Where the buyer as to conforming goods already identified to the contract for sale, repudiates or is otherwise in breach before risk of their loss has passed to him, the seller may to the extent of any deficiency in his effective insurance coverage treat the risk of loss as resting on the buyer for a commercially reasonable time. PROF: (slides) contract for wine. Seller Netherlands, Buyer US; o Shipment contract. o Risk of loss shifts once seller puts goods on carrier. o Seller never notified buyer when goods were to ship. ISSUE: Whether risk of loss passed from seller to buyer where seller doesn't give prompt notice of the shipment? Seller must notify buyer promptly of shipment and failure to notify buyer or to make proper shipment accommodations under 2-504(a) as grounds for rejection ONLY if material delay or loss ensues. See Cmt 6. RULE: When BUYER fails to notify SELLER about shipment the risk of loss remains on the SELLER despite shipment. HERE: The middle man, Sutton, failed to notify the buyers regarding prompt shipment, and thus while the SELLER was in Germany they were represented by Sutton and authorized as the SELLER. SELLER notified Sutton SELLER but Sutton Seller never notified Buyer. o Thus, the Seller here will sue their agent Sutton for breach of his fiduciary duties and other duties Sutton owed to the Seller and breached when he failed to notify the Buyer. - p205-206: Perfect Tender Problem 54 Stella contract buy five new cars. Delivery Oct 1. o Stella test drove returned two of five. Rejected two audio system bad and carpet ripped.

REJECTION and ACCEPTANCE RAMIREZ v. AUTOSPORT NJ Sup Ct 1982 219 ISSUE: Whether a buyer may reject a tender of goods with minor defects ISSUE: Whether a seller may cure defects FACTS: Plaintiff signed simple contract for RV $14,100 with trade in $4,700. Net price was $9,902. Defendant needed two weeks to prepare new van. o After two weeks inspection disclosed several defects o Paint scratched, both electric and sewer hookups were missing and hubcaps missing. o Mr. White advised plaintiff not to accept it because camper was not ready. Weeks later went and still shit wasnt ready Plaintiff counter offered to accept van if withhold $2,000 refused On August 15th (two weeks after date of contract) defendant transferred title to plaintiff. o September 1st went to pick up van & left in disgust October 5 plaintiff claimed rejected new van and requested return of trade in. Then a week alter defendant sold trade in to Bona fide purchaser at $4,995. Autosport claimed profit of $600 from van. RULES: Whether a seller has the duty to deliver goods that conform precisely to contrct Take-away: After expiration of that time the Seller has a further reasonable time to Cure if he believed reasonably the Goods would be Acceptable with or without a money allowance. After Acceptance, Buyer may Revoke ONLY if the Non-Conformity Substantially Impairs the Value of the Goods to him. Because a Buyer may Reject Goods with insubstantial defects, he may also cancel the contract if those defects remain uncured. Otherwise a Sellers failure to Cure minor defects would compel a Buyer to Accept imperfect Goods and collect for any loss caused by the Non-Conformity Here: There wasnt ever an acceptance. Two instances point to effective rejection or nonacceptance under 2-601. First when the dealer tells them not to accept it and that the vehicle wasn't ready. Or when they dont attempt to counteroffer and walk out. 2-601: States that goods conform to a contract when they are in accordance with the obligations under the contact: o Authorizes: a buyer to reject goods if they or the tender of delivery fail in any respect to conform to the contract Before Acceptance: buyer may reject goods for any nonconformity and seller has the unconditional right o cure within the time set for the performance of the contract. Must give notice to Buyer. After expiration of that time the seller has a further reasonable time to cure if he believed reasonably that the goods would be acceptable with or without a money allowance. o Factors: legth of time need by seller to correct; ablity to salvage the goods by resale After acceptance: buyer may revoke only if nonconformity substantially impairs the value of the goods to them.

o A buyer may reject goodswith insubstantial defects they may also cancel a contract if those defects remain uncured. Otherwise sellers failure to cure minor defects would compel a buyer to accept imperfect goods and collect for any loss caused by the nonconformity. o P 226: UCC preserves the perfect tender rule to the extent that it permits a buyer to reject goods for any noncomformity. - a seller may still effect a cure and preclude unfair rejection and cancellation by the buyer. 2-606. What Constitutes Acceptance of Goods. (1) Acceptance of goods occurs when the buyer (a) After a reasonable opportunity to inspect the goods signifies [ok, I accept, etc] to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity [despite the scratch its great, etc]; or o Prof: direct communication Rejection: would be failing to signify (b) Fails to make an effective rejection (subsection (1) of Section 2-602), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or o Prof: When a reasonable buyer ought to have told seller. o Rejection: would be making an effective communication. (c) Does any act inconsistent with the seller's ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him. (2) Acceptance of a part of any commercial unit is acceptance of that entire unit. T1- Contract T2-Delivery: Time when Rejection can Occur 2-602 2-606 Perfect Tender 2-601 opportunity to cure 2-508

**ACCEPTNCE** T3- Reasonable Time after Delivery: 2-608: Form of acceptance/Form of Rejection Substantial impairment of value: is a much higher than any non conformity as under Perfect Tender and 2-601. But Perfect Tender: occurs at threshold of delivery. o Code does not state whether or not after acceptance has occurred and 2-608 is being employed whether or not Seller can Cure o Majority: Hold that Seller can Cure under 2-508

WADDELL v L.V.R.V. INC Nevada SupCt 2006 p232 FACTS: D sold a 1996 motor home to P. Ps were joint presidents of Las Vegas Coachment Ass Camping Club. o Tom Pender Coachmens sales manager.

Before Ps took possession Waddels requested Ds perform various repairs including service of engine cooling system; new batteries; and allighnment of front door. Septer 9 told repairs done and took delivery o During first drive from Vegas-Cali 1. Entry door popped open 2. Engine overheated Return from cali took to dealer to repair. o Between Sep 1997 March 1999 RV spent 7 months of repair. P noticed numerous problems and continually returned it to Ds service dept. Eventually filed complaint seeking to revoke acceptance or money damages. o D filed third=party complaint seeking indemnification from Coachmen. PH: granted judgment in favor of Waddells and Coachmen. APPEAL D ARG: o 1. Lower ct erred in allowing Waddels to revoke their acceptance. o Reason: because they failed to prove that the RV uffered nonconformities that substantially impaired its value. HERE COURT: disagree. Despite good faith attempts to repair the nonconformities persisted and rendered the R unfit for its intended use. o 2. Abused discretion by admitting two docs into evidence o 3. Erred in denying Ds motion for attorney fees o 4. Erred in denying indemnification of Coachmen. APPEAL P. ARG: o 1. Erred denying them computerized research costs o 2. Post-judgment interest on their attorney fees award. ISSUE: How to determine when a nonconformity substantially impairs value. RULES: Oregon Two Part-Test 1. Subjective Consideration of the needs and circumstances of the plaintiff who seeks to revoke; NOT NEEDS OF AVERAGE BUYER HERE: Intended to sell house and spend 2-3 years travelling Spoke with Tom Pender about those needs. 2. Objective Whether nonconformity substantially impairs the value of the goods to the buyer having in mind his particular needs calling for evidence of something more than Plaintiffs assertion that it substantially impairs value to them requiring evidence from which it can be inferred that their needs were not met because of the non conformity. HERE: Overheat within ten miles 7 months getting repaired. OHIO SC: A nonconformity effects a substantial impairment of value if it shakes the buyers faith or undermines his confidence in the reliability and integrity of the purchased item. MASS SJC: Even cosmetic or minor defects that go unrepaired or defects which do not totally prevent buyer from using goods but circumscribe that use can substantially impair goods. US DIST CT NEVADA: Sellers inability to correct defects in vehicles creates a major hardship & an unacceptable $$$ burden on the consumer. ISSUE: Whether the Waddlls did not timely revoke after purchasing

RULE: Depends upon the nature, purpose and circumstances of the transaction and is generally considered an issue of fact for the trial court. - Time for repair does not count in tolling reasonable time. PROBLEM 60 p241 A orders computer X B ships model Y, (newer and better verson of X at same price) o A receives and writes letter of acceptance with payment. Using noticed turns on same way his father lost his finger. A sends letter of revocation stating X had switch that was unlike Y. 2-608 LEMON LAWS CLASS 4/3 ----------- DELIVERY ------------ 2-601 2-508 2-601 2-602

2-612: Establishes a rule of substantial performance for installment sales contracts. 2-612(1): Installment contracts are ones whcich require or authorize the delivery of separate goods in separate lots to be separately accepted. Buyer Rights: To reject only if defect in tender substantially impairs value of installment To Cancel: Only if the defects substantially impair the whole contract. UCC Permits Sellers: to recover for performance rendered, even where would be breach of other contract. - If buyer discovers something seriously wrong with the goods after acceptance the buyer may rescind the contract Remedy = Revocation of Acceptance (2-608) 2-612. "Installment contract"; Breach. (1) An "installment contract" is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause "each delivery is a separate contract" or its equivalent. (2) The buyer may reject any installment which is non-conforming if the nonconformity substantially impairs the value of that installment and cannot be cured or if the non-conformity is a defect in the required documents; but if the non-conformity does not fall within subsection (3) and the seller gives adequate assurance of its cure the buyer must accept that installment. (3) Whenever non-conformity or default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole. But the aggrieved party reinstates the contract if he accepts a nonconforming installment without seasonably notifying of cancellation or if he

brings an action with respect only to past installments or demands performance as to future installments. RISK OF LOSS: BREACH - General rule When neither party breaches contract 2-509 - Rule if a breach occurs 2-510 JAKOWSKI v. CAROLE CHEVY NJ SUP CT 1981 p243 FACTS: March 8, 1980/ to buy brand new Camaro. Parties agreed car would be undercoated and finish would have polymer coating. Seller agreed to deliver car to buyer o Car was actually delivered without coatings May 19. May 20 seller informs buyer car delivered did not have coatings May 22 buyer returns car for application of coatings. Car stolen. o Seller refuses to replace or refund. ISSUE: Whether seller or buyer is liable for loss of car. D ARG: Risk of loss passed upon delivery of tender. Arguing it is consistent with 2-509(3) RULES: 2-510(1): Where tender or delivery of goods so fails to conform to the contract as to give a right o rejection the risk of loss remains on the seller until cure or acceptance. TEST: (1) Did goods (car) so fail to conform as to give buyer a right to reject? HERE: Contract provided for delivery with undercoating (Was delivered without) o Degree of nonconformity is irrelevant assessing buyers right to reject 2-106 o Would be different if was an installment contract 2-612 (2) Did buyer accept the goods (car) by taking possession of it? Zabriskie: Court held that mere taking of possession by buyer is not equivalent to acceptance. Before buyer can accept they must be afforded a reasonable opportunity to inspect. 2-606 HERE: Buyer had no time to inspect because seller acknowledged the non-conformity and obviated need for formal rejection. (3) Whether seller effected a cure. HERE: There is no evidence that the cure was ever effected. HOLD: The goods failed to conform; Buyer never accepted them; defect never cured. Pursuant to 2-711 buyer is entitled to a refund of purchase price paid to seller. ALSO included in cost of car are the finance charges incurred by buyer who secured financing pursuant to a retail installment contract. o Since time has passed since case was entered the current payment figure should be included in final judgment.

IMPOSSIBILITY OF PERFORMANCE

2-613 - 2-616

ARABIAN SCORE v. LASMA ARABIAN 8th CIR CT APP 1987 p248 FACTS: Contract P to buy colt named Score for $1 million : For purchase & performance of various services performed by D in promotion of Score

Contract to be governed with Arizona law. Required D to spend $250,000 for adverts Describing Score as a 2 Star Stallion o Paragraph 4: in five (5) years from date of purchase Score would be 2Star IF NOT at Arabians option would replace Score with an eligible one or refund to P the unused $$$ D would otherwise spend on Score. o Paragraph 5: Each year for the five years D would implement a complete program and plan to promote Score as a 2Star. D was to pay $70,000 for program and $45,000 other four years o Paragraph 6: D guaranteed Score was not infertile. Paragraph 9: Except as provided in pragraphs 4 and 6, the Parthership accepts SCORE AS IS, all implied warranties being excluded. Risk of loss passes upon closing. All incidental and consequential damages are excluded. RULE: Commercial Frustration: Circumstances beyond the control of the parties, which render performance of the contract impossible and exonerate the party failing to perform. Supervening Frustration: Must not be reasonably foreseeable. Mohave County v King Estates: Doctrine of commercial frustration held not applicable where intervening event was a change in zoning ordinances because it was something reasonably foreseeable and the parties would have contracted against. Kintner v. Wolfe: Where parties to a contract agreed in express or implied terms that the risk of loss shall fall upon one or the other of the parties, full effect is given to such a provision and thus, court held doctrine of commercial frustration not applicable. HERE: Horses death was foreseeable. Evidence it was Foreseeable: Arabian (Plaintiff)s purchase of mortality insurance on the horse. AND: Defendant never contended that it was unable or unwilling to complete its duty to promote the horse. P ARG Promote Dead Arbitrary: However, evidence shows that D regularly promotes deceased horses in order to enhance the owning entities reputation. \ HOLD I: Because Scores death was foreseeable neither the doctrine of impossibility nor commercial frustration were applicable. HOLD II: Evidence demonstrated that promoting dead horse was not arbitrary PROF: If the event was not foreseeable the term is superseding Sed: to sit on top of LOUISIANA POWER & LIGHT v. ALLEGHENY INDUSTRIES D Ct 1981 p252 FACTS: D to supply condenser tubing to P for use at their power plant. D was to furnish, fabricate and deliver stainless steel tubing in accordance with Ps specifications. o Equal shipments to be made (1) June 1, (2) June 15, and (3) July 1

If shipment delayed 3% increase Price $1,127,387.82 May 19 D sent letter for more money and sought to have a meeting for additional compensation for performance o P argues is evidence that they would not perform contract as written Reason: post contract formation costs had risen at such a high rate. o Example: materials rose over 100% P never agreed to meet nor discuss the matter. October P tells D that the increases were business risks absorbed by D. o November P informs D that it was demanding written assurances under 2-609 that D would fully and properly perform contract. January P not receive assurance from D January P informs D that they considered contract repudiated by D Febuary D tells P willing to fulfill contract subject to full of cost of material P argues this provided a reasonable basis for insecurity o P rejects offer P solicited bids from others June P enters contract with Trent Tubes for a price of $1,729,278 o Difference: $600,000 P ARG: Seeks to recover cover and solicitation expenses. P argues that when D indicated D ARG: (1) impracticability 2-615 Excuse by Failure of Presupposed Conditions Except so far as seller may have assumed > obl & subj to preceeding on substituted perf: o Non-delivery part/whole is not breach of duty under contract if performance made impracticable by occurrence of contingency the non-occurrence of which was basic assumption which contract made. o 2-615 TEST: 1. Contingency must occur 2. Perf must thereby be made impracticable Here: D. stated it would sustain loss of $428,000 o That profits would be reduced to $589,000 Here: No facts D not profit under the contract as written Hold Here: Performance under contract not commercially impracticable. 3. The non-occurrence of the contingency basic assumption of (2) mutual mistake (3) unconscionability Contract Cancellation Clause: provides right of cancellation to P with no concomitant right given to D. 2-302 Hold Here: Because unconscionability is not something settled via summary judgment plaintiffs motion must be denied. (4) bad faith D Arg: Ps refusal to meet timely to discuss contract resulted in bad faith. Rules Here: Nothing in law requires P to have engaged in renegotiations. RULES: 2-610: When either party repudiates contract w/respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may resort to any remedy for breach.

2-615 Excuse by Failure of Presupposed Conditions Mere fact that performance would deprive party of anticipated $$$ and result in a loss on contract is not sufficient to show commercial impracticable. Party seeking to excuse perf must not only show that they can perform only at a loss but also that the loss will be especially severe and unreasonable. o The must be more of a varattion between expected cost and cost of performing by an available alternative Suez Canal: Court found an extra expense of 31% not sufficient Cost: must be extreme and unreasonable o Courts have found cost increases between 50-58% generally not sufficient. 2-615 Comment 1:

SELLERS REMEDIES Guiding Principle for Remedies 1-305: o Remedies are to be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neither consequential or special nor penal damages may be had except as specifically provided by this Act or other rules of law. Sellers Remedies 2-703 Buyers Remedies 2-711 II. A. Accepted Goods 2-709: measures sellers recovery if buyer has made a technical acceptance of the goods or if the goods are destroyed within a commercially reasonable period of time after the risk of loss shifts to the buyer. o Thus, section is a remedy of specific performance for the seller.