Although many of the legal rules for a sale of goods contract under the UCC are similar to those of the common law, it is important to be aware of the differences. The basic requirements of offer, acceptance, consideration, capacity, and legality are the same. But in such matters as the rules for firm offers, differing or additional terms in the acceptance, and modifications of sales of goods contracts, the UCC rules are exceptions to the general rule of the common law. The UCC also provides more detail in such matters as a seller’s acceptance of a buyer’s offer by shipment of goods. The UCC covers the topics of contracts in writing under the statute of frauds and the availability of parol evidence with additional clarifications applicable to goods contracts, such as the specially manufactured goods exception that may allow an oral contract over $500 to be enforced.
Although sometimes the UCC rules seem vastly more complicated, they are intended to reflect the way people actually do business, and in practice can help simplify transactions. As so often in the law, the UCC gives the parties a great deal of flexibility to decide on the terms of their bargain. But when the parties don’t provide for common terms, the UCC is ready to step in and plug the gap.
Focus on Ethics
AceHeating and cooling sells air conditioners. One unit, the Freezy, has a fair market value of $300. During a heat wave, Ace sells a Freezy air conditioner for $500 to each of the following:
Breanna, single mom with poor credit, who can’t afford to pay cash for an AC unit. Breanna signs a contract to pay $500 on a credit plan, with an additional $300 in interest and financing fees.
Barry Bigshot, investment banker, who knows the price is way too high but who is far too important to waste his time driving around town trying to get a better deal.
Glamour Café, a fancy restaurant with an upscale clientele, whose AC went out in the middle of the lunch rush. The manager is desperate to get the place cooled down before people like Barry Bigshot come in for the evening happy hour.
Shady Rest Nursing Home, a business that barely makes a profit. The manager isn’t happy about the price, but old people are very vulnerable to heat, and she’s afraid that her patients’ health could be compromised by any delay in getting AC.
ANSWER THESE QUESTIONS IN THE PAPER—>
Under UCC 2-302, who has the best chance of getting out of the contract due to unconscionability?
The symbol for justice features a woman wearing a blindfold illustrating that the law should be applied the same way regardless of who the parties are. Does the UCC rule seem to contradict this?
Which approach do you think is more ethical?
Note that both Glamour and Shady Rest are businesses, and courts rarely find that contracts between two businesses are unconscionable. The rationale is that a business is a sophisticated entity, familiar with transactions, and able to protect itself. Do you think Glamour and Shady Rest are in a comparable position in regard to this contract? Why or why not?