Case: UCC 2-207 (Uniform Commercial Code, Section 2-207)
IRAC Summary:
Issue: The issue in UCC 2-207 centers around the “battle of the forms,” which occurs when two parties to a contract exchange forms (such as purchase orders and invoices) with varying terms, and it must be determined which terms govern the contract between them.
Rule: UCC 2-207 establishes a legal framework for determining the terms of a contract when there is an exchange of forms with additional or different terms. It outlines the conditions under which a contract is formed and which terms are included in the contract.
Application: UCC 2-207 applies when a written confirmation of a contract is sent within a reasonable time, and the forms exchanged by the parties contain conflicting terms. In such cases, the terms of the original offer govern, and the additional terms are treated as proposals for addition to the contract. If the parties are both merchants, the additional terms become part of the contract unless the offer expressly limits acceptance to its terms, the additional terms materially alter the original contract, or notification of objection to the additional terms has already been given or is given within a reasonable time.
Conclusion: Under UCC 2-207, a contract is formed according to the terms of the initial offer unless the acceptance is expressly conditional on the offeror’s agreement to the additional or different terms. If both parties are merchants, the additional terms will often become part of the contract unless they materially alter the deal or objection is timely made.
Detailed IRAC Outline:
I. Issue: The main issue in applying UCC 2-207 is determining the terms of a contract when the acceptance form issued by one party includes terms that are additional to or different from those in the offer or the initial form provided by the other party.
II. Rule: UCC 2-207 provides guidance on how to treat additional or different terms in contract formation between merchants. The key provisions of this rule are as follows:
A. A contract can be formed even when acceptance includes terms additional to or different from those offered.
B. Additional terms in an acceptance become part of the contract between merchants unless:
1. The offer expressly limits acceptance to the terms of the offer.
2. The additional terms materially alter the contract.
3. The offeror objects to the additional terms within a reasonable time.
C. Different terms will be subject to a “knockout rule” where conflicting terms in the offer and acceptance cancel each other out, and the UCC gap-filler provisions apply.
III. Application: When applying UCC 2-207 to a particular case, the following steps should be taken:
A. Identify whether the contract involves the sale of goods, making UCC 2-207 applicable.
B. Determine whether both parties are merchants, as this affects how additional terms are treated.
C. Analyze whether an expression of acceptance or a written confirmation has been provided within a reasonable time.
D. Examine the terms of the offer to see if acceptance is expressly limited to those terms.
E. Evaluate any additional terms to determine if they materially alter the original contract.
F. Assess any objections to additional terms, considering the timing and manner of the objection.
G. Apply the “knockout rule” to different terms, resulting in UCC gap-fillers being used where applicable.
IV. Conclusion: The conclusion will depend on the specific application of UCC 2-207 to the facts of the case. It will resolve whether a contract has been formed and which terms are included. The analysis may result in a finding that additional terms have become part of the contract, have been proposed as additions but not accepted, or have been expressly rejected by the original offeror.