Top Differences Between the UCC and the Common Law of Contracts

“What are the top dozen (or so) differences between the common law of contracts and Article II of the Uniform Commercial Code?” The following is a reliable list.  (For more on this topic, especially the common law aspects in an entertaining treatment of disputes in the headlines, see Contracts in the Real World: Stories of Popular Contracts and Why They Matter).

1. Firm Offers: even without consideration, offers by merchants can be irrevocable for reasonable time periods. 2-205.

2. Battle of the Forms: an acceptance need not mirror an offer’s terms to form a contract, unless the offer says so, the variation is a big deal or is protested promptly by the other side.  2-207.

3.  Definiteness / Open Price Term: even without a stated price, a contract may be sufficiently definite so long as the parties manifest an intention to be bound and there is a basis to provide a remedy on breach.  UCC 2-204; 2-305; 2-311.

4. Warranties: (a) implied warranty of merchantability; (b) implied warranty of fitness when seller knows buyer is relying on seller’s expertise; and (c) express warranties based on promises or representations. 2-314; 2-315.

5. Perfect Tender Rule: buyers may insist on performance to a tee, no room for the substantial performance doctrine of common law (though there are complex and vital wrinkles, including giving time to cure before covering).  2-601.

6.  Acceptance by Shipment: buyer orders for “prompt shipment” can be accepted either by promise or prompt shipment, at the seller’s election. 2-206.

7.  Good Faith Modifications: no consideration required. 2-209.

8.  Time: absent contractual definiteness as to time, a reasonable good faith time is supplied

9.  Assurance of Due Performance: reasonable grounds for insecurity about the other side’s performance permit suspending performance and demanding assurance—absent which, the contract is deemed repudiated.  2-609

10.  Damages on Repudiation: buyer damages when seller repudiates are the difference between the contract price and the market price when buyer learned of the repudiation (plus incidental damages).  2-713.

11.  Statute of Frauds: Not so much a variation from common law as from non-goods statutory law, a memo of some sort is generally required for transactions in goods over $500, with exceptions for confirmations not protested and specially manufactured goods after serious work begins.  2-201.

12.  Parol Evidence Rule: bit more liberal concerning course of dealing.  2-202.

13.  Assignable Requirements Contracts: so long as assignee’s quantity is not unreasonably disproportionate to assignor’s quantity.  2-306.

14.  Lost Volume Seller: duty to mitigate obviated.  2-718.

Lists such as these abstract specific detail from the richer mix of differences in philosophy, history, purpose, application and context between the common law and commercial code.  This is the start of the discussion, not the end!  (Again: see Contracts in the Real World: Stories of Popular Contracts and Why They Matter).


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