CLEP® Introductory Business Law Book + Online, 2nd Ed. by Fairfax Lisa M.;Berman Paul;

Author:Fairfax, Lisa M.;Berman, Paul;
Language: eng
Format: epub
Publisher: Research & Education Association
Published: 2018-08-15T00:00:00+00:00

8.2 FORMATION OF UCC CONTRACTS

Offer and Acceptance Under the UCC

When two parties have exchanged written communications related to a sale of goods, the UCC establishes rules for determining whether an offer and acceptance has occurred. Often, these written communications will be in the form of preprinted forms. Hence, the process of assessing whether an offer and acceptance has occurred is often referred to as battle of the forms.

The UCC does not define an offer and thus follows the common law’s definition (see Section 4.2 of Chapter 4). However, the UCC modifies the rule regarding option contracts. Under the common law, an offeror may revoke an offer unless she receives consideration to keep it open, creating an option contract. However, under the UCC, if a merchant signs a written offer agreeing to hold an offer open, the offer will be irrevocable for the period stated in the offer or for a reasonable amount time if no period is stated.

The UCC also provides guidance on the types of communications that constitute an acceptance. Consistent with current law, the UCC rejects the mirror image rule. Instead, a buyer’s definite and timely expression of acceptance will be construed as an acceptance, even if it contains terms that are different or in addition to those contained in the offer. However, if the acceptance is conditioned on the seller’s consent to the new terms, then there is no acceptance. Instead the buyer’s communication will be treated as a rejection and a counteroffer.

Buyer’s Acceptance

The UCC creates additional rules regarding the conduct that will constitute an acceptance. Thus, under the UCC, a buyer will be deemed to have accepted goods if

(a) after a reasonable opportunity to inspect the goods, the buyer indicates to the seller that (i) the goods are conforming, or (ii) she will take them even though they do not conform,

(b) after a reasonable opportunity to inspect the goods, the buyer fails to notify the seller that she objects to the goods within a reasonable time, or

(c) the buyer acts in a manner that is inconsistent with the seller’s ownership of the goods.

Buyer’s Rejection Right

With regard to most common law contracts, a minor defect in performance will be treated as substantial performance and hence a party cannot reject the performance. However, under the UCC, a buyer can reject goods that fail to conform in any respect to the contract terms. This is known as the “perfect tender” rule. Under that rule, unless the sale relates to an installment contract, when goods fail in any respect to conform to the contract, the buyer has the right to (a) reject all of them, (b) accept all of them, or (c) accept any commercial units and reject the rest. However, the buyer’s right of rejection changes when the sale relates to an installment contract, which is defined as a contract that allows goods to be delivered in separate installments or lots. With regard to such a contract, the buyer may reject goods only if the nonconformity substantially impairs the value of that installment and cannot be cured by the seller (see cure discussed below).

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