CISG vs. UCC Art.2 RSMO Chapter 400, Art.2 THE OFFER Art. 14 (1): A communication between the parties is considered an offer when: a. it is a proposal for concluding a contract, AND b. it is sufficiently definite and indicates the intention of the offeror to be bound. Sufficiently definite is an offer that: a. indicates or describes the goods, b. expressly or implicitly specifies the quantity, and c. expressly or implicitly specifies the price for the goods. For price, read in conjunction with Art. 55. Public offers Art. 14 (2): A proposal other than one addressed to one or more specific persons is to be considered merely an as invitation to make offers, unless the contrary is clearly indicated by the person making the offer. Effectiveness Art.15: An offer becomes effective when it reaches the offeree. UCC§ 2‐204: (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. Challenge! Knowledge: Objective manifestation by the offeree to be bound by the terms of the offer. FIRM OFFER Art. 16 (2) (a) (b): Firm offers are valid even if are they not in writing. Irrevocable during the time stated in the offer for acceptance and irrevocable if offeree reasonably relied that the offer was irrevocable and the offeree has acted in reliance on the offer. UCC § 2‐205: An offer is irrevocable if the offeror is a merchant; there are assurances that the offer is to remain open; and the assurance is contained in an authenticate writing from the offeror, but in no event such period should exceed three months, unless the offeree gives consideration to validate it beyond three months. RSMO § 400.2‐205 WRITING 2
UCC § 2‐201 (1): U$ 500.00 or more (SOF) Any memorandum indicating that a contract has been made; identify the parties; contains a quantity term; and is signed by the party to be charged will suffice. RSMO § 400.2‐201 (1) Page
Art. 11: A contract "need not to be concluded in or evidence by writing and is not subject to any other requirement as to form. It may be proven by any means, including witness." * Some countries require contracts governed by the CISG to be in writing. Check notes on the Convention. THE ACCEPTANCE Art. 18: Acceptance may take the form of a statement or conduct by the offeree that indicates offeree's intention to be bound to the contract. Silence or inactivity: generally are not acceptance, unless the parties have agreed that silence or inactivity will constitute acceptance, OR when parties previous dealings require them to speak up rather than be silent. Time of acceptance Art. 18 (2): Acceptance is effective when the assent reaches the offeror, including electronic transmission. Art. 16 (1): The dispatch of an acceptance by the offeree cuts of the offeror's right to revoke the offer. Mirror Image Rule Art. 19 (1): Additional, limitations or other modifications is a rejection and constitutes a counteroffer. Acceptance of the counteroffer may arise by assent or by performance Art. 19 (2): Additional or different terms that do not materially alter the form constitute acceptance, unless the offeror rejects without undue delay. Materially alters: price, payment, quantity, quality, place for delivery, extension of liability, or regards to settlement of dispute. Silence does not operate as acceptance under the UCC, even if offer states that silence qualify as acceptance, unless the offeree has reason to believe that the offer could be accepted by silence; OR because of previous dealings. The mailbox rule: Upon dispatch by the offeree CL: Modification of or addition to the offer is a counteroffer UCC § 2‐207 (2): Does not follow the mirror image rule. Exception: when acceptance is expressly conditioned on assent to Additional or Different Terms BOTH MERCHANTS ‐ BATTLE OF FORMS Additional terms: "LAST SHOT" rule (additional terms automatically included, unless the term materially alters the contract; the offer expressly limits acceptance to the terms of the offer; the offeror has already objected to the additional terms, or objects within a reasonable time after notice of them was received. RSMO § 400.2‐207(1) PAROL EVIDENCE RULE 3
UCC § 2‐202: Only applies to communication reached before or contemporaneously with the execution of the contract Extrinsic evidence cannot contradict the contract, but they can explain or supplement it. Same to Trade Usage and Course of Dealing. RSMO § 400.2‐202 Page
Art. 8: A court, when considering the intent of the parties to a contract, may consider "all relevant circumstances of the case, including negotiations, any practices which the parties have established between themselves, usages, and any subsequent conduct of the parties." CUSTOMS, PRACTICES AND TRADE USAGES Art. 9: The trade usages that can be used to interpret or fill in the gaps in a contract are: 1. Those to which the parties have agreed or that they have established between themselves; and 2. Those usage of which the parties knew or ought to have known, and that are widely known in international trade, or at least in the countries in which buyer and seller are located, and regularly observed in the industry or trade involved. UCC § 2‐202: Even if the terms of a written contract for the sale of goods appear to be unambiguous, a party may explain or supplement the terms by evidence of trade usage or course of dealings of performance. RSMO § 400.2‐202 (a); course of dealing or usage of trade RSMO § 400.1‐205; course of performance RSMO § 400.2‐208 PERFORMANCE RSMO § 400.2‐301 Buyer: to accept and pay for the goods. Seller: to transfer ownership, including proper documents, good title. UCC § 2‐314: Implied warranty of merchantability. RSMO § 400.2‐314 UCC § 2‐315: Implied warranty of fitness for a particular purpose. RSMO § 400.2‐315 UCC § 2‐313: Express warranty. RSMO § 400.2‐313 4
WARRANTIES Art. 35 (2): Seller warrants that the goods: a. Are fit for the ordinary purpose; b. Are fit for any particular purpose expressly or impliedly; c. Possess the quality that the seller has held out to the buyer as a sample or model; and d. Are contained or packaged in a manner usual for such goods. ANY AND ALL DISCLAIMERS ARE VALID UCC § 2‐301: General Obligations of Parties. The obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance with the contract. Page
Buyer's Obligation Art. 53: Pay the price for the goods and take delivery as required by the contract and the CISG. Art. 38: Examine the goods within a short period as is practicable in the circumstances. Art: 39: Give notice of nonconforming goods within a reasonable time after he has discovered the nonconformity. Seller's Obligation Art. 35: Unless agreed otherwise by the parties, the seller must deliver goods that are of the quantity, quality, and description required by the contract and which are contained or packaged as required. BREACH DAMAGES Art. 74: Money Damages "Sum equal to the loss", including lost profit. Consequential Damages: only those foreseen by the party in breach at the time of the conclusion of the contract. UCC § 2‐508: If a buyer rejects nonconforming goods and time still remains to perform under the contract, the seller has the right to cure and tender conforming goods. RSMO § 400.2‐508. (1) UCC § 2‐612: The buyer can reject only if the nonconformity: a) substantially impairs the value of that shipment; AND b) Cannot be cured. If the seller makes adequate assurance that he can cure the nonconformity, then the buyer must accept the installment. The contact can be cancelled only if the nonconformity impairs the value of the entire contract. RSMO § 400.2‐612 UCC § 2‐700's Expectation (cost of cover) Defective performance (discount) Consequential (lost profits) Incidental (expenses incurred) RSMO § 499. 2‐700's 5
SELLER'S RIGHT TO REMEDY Art. 47: Allows the seller to cure, or remedy, a nonconforming good if it can be done within the time for performance. MISE EN DEMEURE: Grace period. Except when the breach is fundamental and a cure seems impossible. If the seller does not perform during the granted extension, the buyer is released from the contract, regardless minor or fundamental breach. Breach avoids the contract. Installment Contracts: a breach affects only to the nonconforming shipment. If there are strong grounds that the party will breach future installments, the nonbreaching party may call the contract avoided, if done within a reasonable time. A breach of two or more installments usually constitute reason to avoid the remainder of the contract. UCC § 2‐601: Adopts the PERFECT TENDER rule. The doctrine of substantial performance only applies to installment contracts and where the parties agree that it applies. Page
Types of Breach Art. 25: Fundamental "results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such result." "Minor breaches" SPECIFIC PERFORMANCE Art. 46: A court may grant specific performance if: 1. The buyer has not resorted another remedy, i.e., price reduction or avoidance of the contract; 2. The seller failed to deliver or, in case of nonconforming goods, the nonconformance constituted a fundamental breach; 3. The buyer gave timely notice that the goods were nonconforming; and 4. The buyer timely requested substitution of the goods SPECIFIC PERFORMANCE MAY BE GRANTED EVEN WHEN MONEY DAMAGES ARE AVAILABLE IMPOSSIBILITY OF PERFORMANCE Impediments Beyond Control Art. 79: A party is not liable for a failure to perform obligation under a contract if: a. It was to an impediment beyond control; b. The impediment was not foreseeable at the time of the conclusion of the contract; c. The impediment was unavoidable and could not be overcome; and d. Notice was given to the other party of the impediment and its effects on the contract THE EXEMPTION OF PERFORMANCE HAS EFFECT ONLY FOR THE PERIOD THAT THE IMPEDIMENT EXISTS ***Throw in Art. 6!*** UCC § 2‐716: A court may grant specific performance only when the goods are rare or unique, or when there is not another convenient supplier. RSMO §400.2‐716. (1) UCC § 2‐615: Excuse by failure of presupposed conditions. Impossibility of performance Supervening illegality Frustrations of purpose Commercial impracticability Extreme hardship Force Majeure RSMO §400.2‐615 Page
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