Elements of U.C.C. Article 2 Sales Contract Formation
A sales contract refers to a written agreement existing between a purchaser of products and a seller that governs the terms of the sale and delivery of products. In the U.S., a sales contract is governed and stipulated by the Uniform Commercial Code (U.C.C). A sales contract, according to the U.C.C, should be formed when the need arises for the sale. A sales contract should define the parties involved, the subject matter under sale, and any other material disclosure that needs to be understood clearly by the two parties bound by the agreement. There must be an offer (from the seller of goods), and an acceptance (from the buyer of goods).
Potential Bars (Problems) to U.C.C Contract Formation
The sale of an item or a product that is moveable at the time of sale is a transaction that meant to double benefit the buyer and the seller at the same time. Nevertheless, sales transactions can turn out to be complex, and may not always proceed in a smooth, expected way. Problems and challenges are bound to arise at various stages of a sale, prompting one of the parties to fall in danger of suffering unexpected loss. In admittance of these realities and the primary significance of determining an orderly sequence of events, it is upon the courts to consider possible scenarios when such undesirable events can arise, and consequently set up a body that embodies rules that govern the same.
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Difference between the Formation of U.C.C. Article 2 Sales Contract and Common Law
The Common Law provides a stipulation and governance of contracts of services and other contracts that are not UCC-governable. Recognition of the components of Common Law contract formation is crucial since these elements are stricter as compared to the requirements for forming a sales contract under the UCC. For instance, if all elements of formation of Common Law fail to exist, then the contract is termed as voidable (void). One major difference between the Common Law and the UCC under the umbrella of formation is that the Common Law stringently follows the “Mirror Image Rule,” thus it requires an acceptance to be a precise mirror image of the terms given in the offer. This implies that there can never be any form of acceptance even when the need for changes to the offer arise. In contrast, under the UCC, the only changes that have an impact on the contract and the parties to the contract are the ones that affect the contract “materially.” (Roger, 2010).
Circumstances under which a Merchant Needs to Provide Consideration
If both parties to the contract sale are merchants, then the additional terms are accepted as part of the contract, except when: (1) the offeror fails to agree to the terms of the sales agreement in a reasonable time; (2) in situations where the additional changes to the terms to the agreement are “material” to the offer; (3) in situations where the original offer tends to limit acceptance to the terms of the original offer.
If the above conditions exist, the two parties to the sales contract then possess mutual assent to the major components of the bargain. The policy of the UCC sales contract encourages both enforceability and the capability to contract reliably and quickly; it also allows the sales contract to become enforceable without necessarily having any agreement on all crucial terms (Allan, 2009).
Cases of Contract Sales Formation
An ideal extracted case of a contract sales is the one for Hillas versus Arcos (1932, HL). A contract was formed, allowing one of the parties, the seller, to supply wood for one year. There was an option that permitted the purchaser of wood to purchase more wood the following year, but the contract failed to clearly specify the terms on which the supply was to be made. The ruling that was held prove that this was a valid offer. Thus, the clarification from this arising “vague, unrecognized” option could readily be garnered from previous transaction between the two parties (Amy, 2012).
References
Amy H, Kastely. (2012). The Right to Require Performance in International Sales: Towards an International Interruption of the Vienna Convention. Washington Law Review, 63.
Allan Farnworth. (2009). Damages and Specified Relief. American Journal of Comparative Law , 247-253.
Roger Halson. (2010). Contract Law. London: Pearson Education .
