UCC 2-207(2) / 2-201(2) / additional terms in a contract

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engineer
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UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby engineer » Mon Nov 30, 2009 10:24 pm

Is it correct to think that, between merchants, any additional term will become part of the contract (even if it falls under the exceptions in 2-207(2)) after a reasonable amount of time? If so, is that reasonable amount of time the same as the one prescribed under 2-201(2) (ten days)? And between non-merchants, the additional terms are always viewed as proposals that are not accepted unless expressly agreed to?

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Goal
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Re: UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby Goal » Mon Nov 30, 2009 11:03 pm

engineer wrote:Is it correct to think that, between merchants, any additional term will become part of the contract (even if it falls under the exceptions in 2-207(2)) after a reasonable amount of time? If so, is that reasonable amount of time the same as the one prescribed under 2-201(2) (ten days)? And between non-merchants, the additional terms are always viewed as proposals that are not accepted unless expressly agreed to?


Your question is answered in Note 6 of 2-207. Assuming that you differentiate between "additional" terms and "different" terms, the additional terms become part of the contract if no answer "is received within a reasonable time" after they were proposed. Furthermore, the additional terms cannot invoke either of the 3 exceptions (from Note 3). My professor didn't assign 2-201, but Note 6 says that it's applicable.

Yes, I believe between non-merchants, additional terms are considered as proposals unless "the acceptance is made conditional on the acceptance of the additional or different terms." (Note 2).

engineer
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Re: UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby engineer » Mon Nov 30, 2009 11:21 pm

Goal wrote:
engineer wrote:Is it correct to think that, between merchants, any additional term will become part of the contract (even if it falls under the exceptions in 2-207(2)) after a reasonable amount of time? If so, is that reasonable amount of time the same as the one prescribed under 2-201(2) (ten days)? And between non-merchants, the additional terms are always viewed as proposals that are not accepted unless expressly agreed to?


Your question is answered in Note 6 of 2-207. Assuming that you differentiate between "additional" terms and "different" terms, the additional terms become part of the contract if no answer "is received within a reasonable time" after they were proposed. Furthermore, the additional terms cannot invoke either of the 3 exceptions (from Note 3). My professor didn't assign 2-201, but Note 6 says that it's applicable.

Yes, I believe between non-merchants, additional terms are considered as proposals unless "the acceptance is made conditional on the acceptance of the additional or different terms." (Note 2).


Hm, I thought Comment 6 explained why proposals between merchants are automatically included (so long as they don't fall into the exceptions category). I didn't know that it allows for silence to constitute acceptance of a proposal, since that doesn't seem to comport with the restatement's view on silence (see §69). I guess if the silence is accompanied by one of the §69(1) cases, then perhaps it'll be accepted?

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Kohinoor
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Re: UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby Kohinoor » Mon Nov 30, 2009 11:27 pm

Goal wrote:
engineer wrote:Is it correct to think that, between merchants, any additional term will become part of the contract (even if it falls under the exceptions in 2-207(2)) after a reasonable amount of time? If so, is that reasonable amount of time the same as the one prescribed under 2-201(2) (ten days)? And between non-merchants, the additional terms are always viewed as proposals that are not accepted unless expressly agreed to?


Your question is answered in Note 6 of 2-207. Assuming that you differentiate between "additional" terms and "different" terms, the additional terms become part of the contract if no answer "is received within a reasonable time" after they were proposed. Furthermore, the additional terms cannot invoke either of the 3 exceptions (from Note 3). My professor didn't assign 2-201, but Note 6 says that it's applicable.

Yes, I believe between non-merchants, additional terms are considered as proposals unless "the acceptance is made conditional on the acceptance of the additional or different terms." (Note 2).

The wording of 2-207 clearing says 2(a)(b) and (c) are each sufficient to keep terms for defaulting in.

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Goal
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Re: UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby Goal » Mon Nov 30, 2009 11:48 pm

engineer wrote:
Goal wrote:
engineer wrote:Is it correct to think that, between merchants, any additional term will become part of the contract (even if it falls under the exceptions in 2-207(2)) after a reasonable amount of time? If so, is that reasonable amount of time the same as the one prescribed under 2-201(2) (ten days)? And between non-merchants, the additional terms are always viewed as proposals that are not accepted unless expressly agreed to?


Your question is answered in Note 6 of 2-207. Assuming that you differentiate between "additional" terms and "different" terms, the additional terms become part of the contract if no answer "is received within a reasonable time" after they were proposed. Furthermore, the additional terms cannot invoke either of the 3 exceptions (from Note 3). My professor didn't assign 2-201, but Note 6 says that it's applicable.

Yes, I believe between non-merchants, additional terms are considered as proposals unless "the acceptance is made conditional on the acceptance of the additional or different terms." (Note 2).


Hm, I thought Comment 6 explained why proposals between merchants are automatically included (so long as they don't fall into the exceptions category). I didn't know that it allows for silence to constitute acceptance of a proposal, since that doesn't seem to comport with the restatement's view on silence (see §69). I guess if the silence is accompanied by one of the §69(1) cases, then perhaps it'll be accepted?


That is because the assented additional terms do not materially alter the contract by resulting in hardship or surprise (Note 4). However, if the proposed terms do indeed materially alter the contract, they are considered "conflicting" terms. If that's the case, then the parties are assumed to reject those terms. (Note 6). Thus, the contract cannot contain those conflicting terms. If the parties start performing, only the agreed upon terms are in the contract. There is no need to invoke § 69.

Kohinoor wrote:The wording of 2-207 clearing says 2(a)(b) and (c) are each sufficient to keep terms for defaulting in.


Could you clarify?
Last edited by Goal on Mon Nov 30, 2009 11:54 pm, edited 2 times in total.

GZL
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Re: UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby GZL » Wed Apr 21, 2010 12:37 am

"Is it correct to think that, between merchants, any additional term will become part of the contract (even if it falls under the exceptions in 2-207(2)) after a reasonable amount of time? If so, is that reasonable amount of time the same as the one prescribed under 2-201(2) (ten days)? And between non-merchants, the additional terms are always viewed as proposals that are not accepted unless expressly agreed to?"

I know I'm late to this, but:

Most courts hold that additional terms that are material alterations do NOT become part of the contract when they are met with silence. Which makes sense, if even material alterations required objection to be kept out of the contract, there would be no need for the material alteration 'exception': every proposed additional term would become part of the contract unless it is objected to. Material alterations become part of the contract only if they are explicitly agreed to, generally. For the reasons described above, Comment 6 to 2-207 doesn't deal with the exceptions named in 2-207 (2) (that rationale would make two of the three exceptions meaningless: every proposed term would become part of the contract if there were no objection to them made.) Comment 6 deals with a failure to reply at all, and is applicable where there is a) silence, and b) the exceptions in (2) aren't relevant. Further, it differentiates the effects of silence under 2-207 from the effects of silence under 2-201.

Second, the ten-day rule applies to the SOF section, 2-201, only. A few cases have held otherwise, but most courts agree that failure to object to a written confirmation within 10 days, as described by 2-201 ONLY has the effect of removing the availability of a SOF defense. That's consistent with the comment (3) to 2-201 itself: regarding a failure to answer within 10 days, it says "the only effect, however, is to take away from the party who fails to answer the defense of the Statute of Frauds..."

lovelaw27
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Re: UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby lovelaw27 » Wed Apr 21, 2010 10:10 am

Simple version of 2-207(2):

Were the exchanged documents between merchants?

If yes the additional or different terms will automatically become part of the contract unless any one of the following 3 is present:

1 The additional or different term materially alters or 2 There is an objection within a reasonable time (remember reasonable time is just a question of fact so whatever was a reasonable time under the circumstances) or 3 The offer is limited to the offer terms (Like the offer says I will only accept and be bound by the precise terms of this offer).

If it was not exchanged between merchans the additional or different term is merely a proposal for an addition to the contract unless the offeror expressly agrees.

I hope this helps.

GZL
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Re: UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby GZL » Wed Apr 21, 2010 6:38 pm

lovelaw27 wrote:Simple version of 2-207(2):

Were the exchanged documents between merchants?

If yes the additional or different terms will automatically become part of the contract unless any one of the following 3 is present:

1 The additional or different term materially alters or 2 There is an objection within a reasonable time (remember reasonable time is just a question of fact so whatever was a reasonable time under the circumstances) or 3 The offer is limited to the offer terms (Like the offer says I will only accept and be bound by the precise terms of this offer).

If it was not exchanged between merchans the additional or different term is merely a proposal for an addition to the contract unless the offeror expressly agrees.

I hope this helps.


Nice and succinct. There's a meme out there though that 1) additional terms become part of the contract, even if they materially alter it, if there's no objection made and 2) that objection has to be made within 10 days (borrowing from the UCC statute of frauds.) I've even seen it on "model" answers to the bar.

I'm wondering where that's coming from... it seems clearly wrong.

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mikeytwoshoes
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Re: UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby mikeytwoshoes » Wed Apr 21, 2010 6:56 pm

Goal wrote:
engineer wrote:Is it correct to think that, between merchants, any additional term will become part of the contract (even if it falls under the exceptions in 2-207(2)) after a reasonable amount of time? If so, is that reasonable amount of time the same as the one prescribed under 2-201(2) (ten days)? And between non-merchants, the additional terms are always viewed as proposals that are not accepted unless expressly agreed to?


Your question is answered in Note 6 of 2-207. Assuming that you differentiate between "additional" terms and "different" terms, the additional terms become part of the contract if no answer "is received within a reasonable time" after they were proposed. Furthermore, the additional terms cannot invoke either of the 3 exceptions (from Note 3). My professor didn't assign 2-201, but Note 6 says that it's applicable.

Yes, I believe between non-merchants, additional terms are considered as proposals unless "the acceptance is made conditional on the acceptance of the additional or different terms." (Note 2).

Oh snap!

lovelaw27
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Re: UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby lovelaw27 » Wed Apr 21, 2010 7:35 pm

GZL wrote:
lovelaw27 wrote:Simple version of 2-207(2):

Were the exchanged documents between merchants?

If yes the additional or different terms will automatically become part of the contract unless any one of the following 3 is present:

1 The additional or different term materially alters or 2 There is an objection within a reasonable time (remember reasonable time is just a question of fact so whatever was a reasonable time under the circumstances) or 3 The offer is limited to the offer terms (Like the offer says I will only accept and be bound by the precise terms of this offer).

If it was not exchanged between merchans the additional or different term is merely a proposal for an addition to the contract unless the offeror expressly agrees.

I hope this helps.


Nice and succinct. There's a meme out there though that 1) additional terms become part of the contract, even if they materially alter it, if there's no objection made and 2) that objection has to be made within 10 days (borrowing from the UCC statute of frauds.) I've even seen it on "model" answers to the bar.

I'm wondering where that's coming from... it seems clearly wrong.


The only way I could see that hypothetically making sense is if there was a case of acceptance by silence. Remember the acceptance by silence rule is:
Restatement (2d) Contracts Sec. 69(1)Silence is NOT acceptance, unless:
– (a) The offeree “takes the benefit” with reasonable opportunity to reject and knows that payment is expected OR
– (b) When the offer specifically calls for (invites) acceptance by silence AND offeree intends to accept by silence OR
– (c) Course of Performance, Course of Dealing, Usage of Trade IMPLY acceptance.

Hypo example: Merchant A offers to buy 100 widgets from Merchant B for $50 each. Merchant B writes back and says he will sell them to Merchan A for $60 each. Merchant A never responds to Merchant B’s counter offer. Merchant B ships the 100 widgets to Merchant A. For this hypo assume Course of dealing (which means prior K’s between the same parties) implies there is an acceptance when one of the two parties doesn’t reject or make a counter offer.
Merchant A and B would have a contract for 100 widgets at $60 each because A’s silence implies there was an acceptance to B’s counter offer by A.
So this meets the requirement of your rule that additional terms become part of the contract, even if they materially alter it (change in widget price for $50 to $60) if there’s no objection made ( Merchant A never responded). I hope you do well on your exams.

GZL
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Re: UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby GZL » Wed Apr 21, 2010 8:06 pm

mikeytwoshoes wrote:
Goal wrote:
engineer wrote:Is it correct to think that, between merchants, any additional term will become part of the contract (even if it falls under the exceptions in 2-207(2)) after a reasonable amount of time? If so, is that reasonable amount of time the same as the one prescribed under 2-201(2) (ten days)? And between non-merchants, the additional terms are always viewed as proposals that are not accepted unless expressly agreed to?


Your question is answered in Note 6 of 2-207. Assuming that you differentiate between "additional" terms and "different" terms, the additional terms become part of the contract if no answer "is received within a reasonable time" after they were proposed. Furthermore, the additional terms cannot invoke either of the 3 exceptions (from Note 3). My professor didn't assign 2-201, but Note 6 says that it's applicable.

Yes, I believe between non-merchants, additional terms are considered as proposals unless "the acceptance is made conditional on the acceptance of the additional or different terms." (Note 2).

Oh snap!


Nah. Just a poor reading of comment 6.

"... additional terms contained in a written confirmation of an agreement between merchants become part of the contract if no objection is made within a reasonable time, unless they materially alter it" (We-Mac v. Midstate, from notes, don't have the citation)

"U.C.C. 2-207 provides that additional terms contained in a written confirmation of an agreement between merchants become part of the contract if no objection is made within a reasonable time “(2) . . . unless . . . they materially alter it.” (National machinery exchange v. peninsular equipment corp.) etc. etc.

Where courts have found silence to equal acceptance of terms that make material alterations it's consistently because 1) a well-established course of dealing between the parties (usually over years) is what has actually constituted the acceptance or 2) usage of trade established that the terms in question could be assumed in a contract between the parties, despite their absence on one of the forms.

It's also a misreading of comment 6's noted re: 2-201. Comment 6 distinguishes the effect of non-objection under 2-201 and 2-207. Finally, comment 3 to 2-207 lays it out explicitly: terms that materially alter the bargain do not become part of the contract unless they are explicitly agreed to.

GZL
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Re: UCC 2-207(2) / 2-201(2) / additional terms in a contract

Postby GZL » Wed Apr 21, 2010 8:11 pm

lovelaw27 wrote:
GZL wrote:
lovelaw27 wrote:Simple version of 2-207(2):

Were the exchanged documents between merchants?

If yes the additional or different terms will automatically become part of the contract unless any one of the following 3 is present:

1 The additional or different term materially alters or 2 There is an objection within a reasonable time (remember reasonable time is just a question of fact so whatever was a reasonable time under the circumstances) or 3 The offer is limited to the offer terms (Like the offer says I will only accept and be bound by the precise terms of this offer).

If it was not exchanged between merchans the additional or different term is merely a proposal for an addition to the contract unless the offeror expressly agrees.

I hope this helps.


Nice and succinct. There's a meme out there though that 1) additional terms become part of the contract, even if they materially alter it, if there's no objection made and 2) that objection has to be made within 10 days (borrowing from the UCC statute of frauds.) I've even seen it on "model" answers to the bar.

I'm wondering where that's coming from... it seems clearly wrong.


The only way I could see that hypothetically making sense is if there was a case of acceptance by silence. Remember the acceptance by silence rule is:
Restatement (2d) Contracts Sec. 69(1)Silence is NOT acceptance, unless:
– (a) The offeree “takes the benefit” with reasonable opportunity to reject and knows that payment is expected OR
– (b) When the offer specifically calls for (invites) acceptance by silence AND offeree intends to accept by silence OR
– (c) Course of Performance, Course of Dealing, Usage of Trade IMPLY acceptance.

Hypo example: Merchant A offers to buy 100 widgets from Merchant B for $50 each. Merchant B writes back and says he will sell them to Merchan A for $60 each. Merchant A never responds to Merchant B’s counter offer. Merchant B ships the 100 widgets to Merchant A. For this hypo assume Course of dealing (which means prior K’s between the same parties) implies there is an acceptance when one of the two parties doesn’t reject or make a counter offer.
Merchant A and B would have a contract for 100 widgets at $60 each because A’s silence implies there was an acceptance to B’s counter offer by A.
So this meets the requirement of your rule that additional terms become part of the contract, even if they materially alter it (change in widget price for $50 to $60) if there’s no objection made ( Merchant A never responded). I hope you do well on your exams.



Good example, and it pinpoints where courts will usually find acceptance by silence re: terms that materially alter the bargai.. where silence is taken as an explicit acceptance given a course of dealings. I'm just finding *alot* of people under the impression that a lac of objection means that the materially altering terms automatically get defaulted into the contract.

Thanks for the wish of luck... I did well on my contracts exam that dealt with the UCC. I'm involved in the discussion just because I'm a masochist and find the UCC interesting.




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