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Contracts Law Chapter 8 Special 
Contractual Issues Introduction 

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Contracts are the backbone of 
legal agreements in both 

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personal and business 
transactions. 

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While the fundamental principles
of contract law apply broadly, 

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certain types of contracts 
present unique challenges and 

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considerations. 
Chapter 8 explores these special

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contractual issues, focusing on 
contracts for the sale of goods 

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under the UCC, E contracts and 
digital transactions, and 

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international contracts governed
by the SYSC. 

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Understanding these specific 
areas is crucial for navigating 

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the complexities of modern 
contractual relationships, which

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often involves sophisticated 
transactions, technology, and 

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cross-border elements. 
Part 1 Contracts for the Sale of

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Goods UCC UCC Article 2 Overview
What is the UCC? 

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The Uniform Commercial Code UCC 
is a comprehensive set of laws 

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designed to regulate commercial 
transactions within the United 

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States. 
The UCC was developed to provide

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a consistent and standardized 
legal framework across all 

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states, addressing the 
complexities of modern 

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commercial practices that often 
cross state boundaries. 

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It aims to simplify, clarify, 
and modernize laws governing 

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commercial transactions, making 
it easier for businesses to 

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operate in multiple 
jurisdictions without facing 

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drastically different legal 
rules. 

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UCC Article 2 specifically deals
with contracts for the sale of 

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goods. 
Goods are defined under the UCC 

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as tangible movable items, 
distinguishing them from other 

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types of property like real 
estate services or intangible 

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assets such as intellectual 
property. 

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This article of the UCC is 
particularly important because 

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it introduces specific rules and
standards that differ in some 

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respects from the general 
contract law principles that 

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apply to other types of 
contracts. 

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Key points. 
Applicability UCC Article 2 

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applies to the sale of goods, 
excluding real estate, services,

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and intangibles. 
National Uniformity By providing

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a uniform legal framework, the 
UCC facilitates Interstate 

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commerce, reducing legal 
uncertainties and conflicts 

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between state laws. 
Focus on commercial transactions

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The UCC is designed with the 
realities of commercial 

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practices in mind, allowing for 
flexibility and adaptability in 

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contract terms and practices. 
The purpose of UCC Article 2. 

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UCC Article 2 is specifically 
tailored to govern contracts for

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the sale of goods, addressing a 
wide range of issues that arise 

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in such transactions, including 
contract formation, performance,

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breach, and remedies. 
The primary goal of Article 2 is

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to provide a predictable and 
efficient legal framework that 

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reflects the unique nature of 
goods transactions, which often 

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involve complex logistics, 
varying standards of quality, 

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and the need for prompt 
performance. 

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Key Objectives Standardization 
Establish uniform rules for 

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contracts involving the sale of 
goods, reducing the need for 

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parties to negotiate every 
aspect of a contract from 

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scratch. 
Flexibility Allow parties the 

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freedom to tailor their 
contracts according to their 

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specific needs, while providing 
default rules that apply when 

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the parties have not agreed 
otherwise. 

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Commercial Practicality Adapt 
legal principles to reflect the 

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realities of the marketplace, 
facilitating smoother 

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transactions and quicker 
resolutions of disputes. 

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UCC Article 2 also acknowledges 
the distinction between 

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merchants and non merchants. 
Merchants, defined as 

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individuals or businesses that 
regularly deal in goods of the 

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kind involved in the 
transaction, are held to a 

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higher standard of conduct 
because of their expertise. 

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This distinction is crucial 
because it imposes different 

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obligations and expectations on 
merchants, such as the duty to 

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act in accordance with 
reasonable commercial standards 

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of Fair dealing. 
Key Concepts under UCC Article 2

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To understand UCC Article 2 
fully, it is important to grasp 

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its key concepts, which form the
foundation for the rules 

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governing contracts for the sale
of goods. 

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Goods under UCC Article 2 goods 
are defined as all things that 

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are movable at the time of 
identification to the contract 

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for sale. 
This broad definition covers a 

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wide range of items, from 
consumer products like 

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electronics and clothing to 
industrial goods like machinery 

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and raw materials. 
However, certain categories are 

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specifically excluded from this 
definition, including real 

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estate. 
Since real estate involves land 

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and permanent structures, it 
falls outside the scope of UCC 

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Article 2. 
Services. 

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Contracts primarily for 
services, even if they involve 

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some goods, are generally not 
governed by UCC Article 2. 

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For example, a contract for 
construction services may 

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involve the delivery of goods, 
but the primary purpose is the 

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provision of services. 
Intangible property, 

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intellectual property, stocks, 
bonds, and other intangible 

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assets are not considered goods 
under the UCC. 

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Implications Tangible and 
movable The focus on tangible 

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and movable items ensures that 
UCC Article 2 is applicable to a

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wide array of commercial 
transactions, excluding more 

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complex areas like real estate, 
which are governed by different 

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legal principles. 
Hybrid Contracts In cases where 

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a contract involves both goods 
and services, the predominant 

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factor test may be applied to 
determine whether the UCC or 

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another legal framework governs 
the contract. 

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Merchants The UCC distinguishes 
between merchants and non 

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merchants because of the 
expertise and experience that 

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merchants bring to their 
transactions. 

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A merchant is defined as a 
person who deals and goods 

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regularly, deals and goods of 
the kind involved in the 

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transaction, making them 
knowledgeable about the goods 

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and the practices of the trade. 
Holds themselves out. 

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Holds themselves out as having 
knowledge or skill peculiar to 

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the goods or practices involved 
in the transaction. 

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Employs an agent or broker. 
Employs an agent or broker who 

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possesses the necessary 
knowledge or skill. 

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Why? 
The distinction matters. 

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Higher standards. 
Merchants are held to higher 

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standards, such as the 
requirement to act in good faith

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and in accordance with 
reasonable commercial standards 

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of Fair dealing. 
This reflects their greater 

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expertise and the expectation 
that they will conduct business 

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more professionally than non 
merchants. 

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Merchant specific rules Certain 
UCC provisions apply only to 

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merchants, such as the firm 
offer rule, which allows a 

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merchant's written offer to 
remain open without 

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consideration. 
Example, A retailer purchasing 

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clothing from a manufacturer 
would be considered a merchant 

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because they regularly deal in 
clothing and are expected to 

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have expertise in the products 
they are purchasing. 

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Flexibility Adaptability One of 
the hallmarks of UCC Article 2 

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is its flexibility and 
adaptability. 

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The UCC is designed to 
accommodate the diverse and 

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dynamic nature of commercial 
transactions, allowing parties 

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to customize their contracts 
while providing default rules 

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that apply in the absence of 
specific terms. 

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Key Features Default Rules The 
UCC provides a set of default 

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rules that fill in the gaps when
parties do not specify terms. 

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This includes provisions on 
price, delivery, and payment, 

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among others. 
Freedom of contract Parties have

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significant freedom to tailor 
their contracts to suit their 

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needs, overriding the Ucc's 
default rules as long as their 

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terms do not violate public 
policy. 

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Adaptability. 
The UCC is designed to evolve 

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with changes in commercial 
practices and technology. 

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This adaptability ensures that 
the UCC remains relevant in a 

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rapidly changing business 
environment. 

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Example Two businesses enter 
into a contract for the sale of 

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custom machinery. 
They agree on most terms but 

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leave the delivery date open. 
The UCC allows the court to 

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determine a reasonable delivery 
date based on industry standards

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if a dispute arises. 
Formation under the UCC The 

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formation of contracts under UCC
Article 2 is notably more 

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flexible than under common law, 
reflecting the practical 

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realities of commercial 
transactions. 

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The UCC recognizes that in the 
fast-paced world of business, 

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the parties may not have time to
negotiate every detail of a 

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contract and therefore allows 
for a more pragmatic approach to

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contract formation. 
Offer and acceptance Under the 

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UCC, the principles of offer and
acceptance are more relaxed 

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compared to common law. 
The focus is on the intent of 

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the parties to form a contract 
rather than on strict adherence 

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to formalities. 
Key points. 

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Intend to contract An offer to 
buy or sell goods does not need 

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to include all the terms as long
as the parties intend to make a 

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contract and there is a 
reasonably certain basis for 

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determining the breach and 
remedy. 

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Gap fillers. 
If certain terms are missing, 

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such as price or delivery date, 
the UCC provides gap fillers 

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that can be used to complete the
contract. 

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Example, A buyer places an order
for 1000 widgets with a seller, 

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but the price is not specified. 
Both parties intend to enter 

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into a contract. 
The UCC allows the court to fill

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in the missing terms based on 
market standards or the party's 

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past dealings, ensuring that the
contract remains enforceable. 

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Firm Offers One of the key 
differences between the UCC and 

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common law is the treatment of 
firm offers. 

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Under the UCC, a merchant's 
written and signed offer to buy 

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or sell goods is irrevocable for
a stated period or a reasonable 

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time if no period is stated 
without the need for 

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consideration. 
This rule reflects the 

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commercial reality that parties 
often need certainty in offers 

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without the burden of providing 
consideration to keep the offer 

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open. 
Key. 

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Points. 
Merchants Offer A merchants firm

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offer is binding even without 
consideration, provided it is in

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writing and signed. 
Irrevocability. 

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The offer cannot be revoked 
during the period it is stated 

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to be open or for a reasonable 
time if no period is stated. 

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Example, a supplier offers to 
sell 500 units of a product at a

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set price, stating that the 
offer is valid for 30 days. 

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Even if the buyer does not 
provide consideration to keep 

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the offer open, the supplier is 
bound to this firm offer under 

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the UCC. 
Battle of the Forms The Ucc's 

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approach to the battle of the 
forms is another area where it 

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departs from traditional 
contract principles. 

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In many commercial transactions,
the parties exchange forms, such

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as purchase orders and invoices,
that may contain conflicting 

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terms. 
Under common law, this could 

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prevent the formation of a 
contract or lead to disputes 

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about which terms apply. 
The UCC addresses this by 

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allowing a contract to be formed
even if the acceptance includes 

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terms that differ from the 
offer, as long as the essential 

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terms such as quantity and price
are agreed upon. 

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Key points formation. 
Despite conflicting terms, if 

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both parties are merchants, 
additional terms in the 

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acceptance become part of the 
contract unless they materially 

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alter it. 
The offer expressly limits 

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acceptance to its terms or the 
offerer objects within a 

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reasonable time. 
Material Alteration A term is 

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considered to materially alter 
the contract if it would result 

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in surprise or hardship if 
incorporated without the express

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awareness of the other party. 
Example A buyer orders goods 

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with a purchase order that 
includes specific delivery 

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terms. 
The seller's acceptance form 

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includes a different delivery 
term. 

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Under the UCC, the seller's 
terms could become part of the 

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contract unless the buyer 
objects, so the change is 

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significant. 
Statute of Frauds The statute of

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frauds under the UCC requires 
that contracts for the sale of 

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goods priced at $500 or more 
must be in writing and signed by

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the party against whom 
enforcement is sought. 

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This requirement is designed to 
prevent fraud and 

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misunderstandings by ensuring 
that significant contracts are 

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documented. 
However, the UCC provides 

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exceptions to this rule to 
accommodate the practicalities 

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of commercial transactions. 
Key points. 

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Writing requirement Contracts 
for the sale of goods over $500 

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must generally be in writing and
signed to be enforceable. 

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Exceptions There are exceptions 
to the writing requirement, such

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as when the goods have been 
received and accepted, when 

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payment has been made and 
accepted, or when the goods are 

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specially manufactured for the 
buyer and cannot be resold. 

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Example A buyer orally agrees to
purchase $1000 worth of goods. 

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The seller delivers the goods 
and the buyer accepts them, even

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though the agreement was not in 
writing. 

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The buyer's acceptance of the 
goods satisfies the Statute of 

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Frauds under the UCC, making the
contract enforceable. 

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Performance and breach under the
UCC. 

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Performance and breach under UCC
Article 2 are governed by 

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specific rules designed to 
reflect the realities of 

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commercial transactions. 
These rules address the 

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obligations of the parties, the 
standards for performance, and 

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the remedies available in the 
event of a breach. 

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Obligation of good faith The UCC
imposes an obligation of good 

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00:12:51,320 --> 00:12:54,760
faith on all parties to a 
contract for merchants. 

239
00:12:54,880 --> 00:12:57,400
This obligation includes 
observance of reasonable 

240
00:12:57,400 --> 00:12:59,360
commercial standards of Fair 
dealing. 

241
00:12:59,840 --> 00:13:03,080
Good faith is a central 
principle of the UCC, ensuring 

242
00:13:03,080 --> 00:13:06,000
that parties act honestly and 
fairly in the performance and 

243
00:13:06,000 --> 00:13:08,760
enforcement of contracts. 
Key points. 

244
00:13:09,480 --> 00:13:12,920
Universal Application The 
obligation of good faith applies

245
00:13:12,920 --> 00:13:15,920
to all parties, regardless of 
whether they are merchants or 

246
00:13:15,920 --> 00:13:18,880
non merchants. 
Commercial Standards For 

247
00:13:18,880 --> 00:13:22,240
merchants, good faith involves 
adhering to industry standards 

248
00:13:22,240 --> 00:13:25,240
and practices, ensuring that 
their actions are consistent 

249
00:13:25,240 --> 00:13:29,360
with what is expected. 
In the trade example, a seller 

250
00:13:29,360 --> 00:13:32,360
agrees to deliver goods by a 
specific date but encounters 

251
00:13:32,360 --> 00:13:35,360
unforeseen delays. 
The seller must act in good 

252
00:13:35,360 --> 00:13:38,200
faith to notify the buyer and 
make reasonable efforts to 

253
00:13:38,200 --> 00:13:40,440
fulfill the contract as soon as 
possible. 

254
00:13:40,920 --> 00:13:43,800
This could involve arranging 
alternative delivery methods or 

255
00:13:43,800 --> 00:13:45,760
compensating the buyer for the 
delay. 

256
00:13:46,200 --> 00:13:49,560
Tender of delivery. 
Tender of delivery refers to the

257
00:13:49,560 --> 00:13:52,480
seller's obligation to make the 
goods available to the buyer at 

258
00:13:52,480 --> 00:13:56,520
the agreed upon time and place. 
The UCC requires that the goods 

259
00:13:56,520 --> 00:13:59,240
be tendered in a manner that 
gives the buyer an opportunity 

260
00:13:59,240 --> 00:14:02,200
to take possession. 
Inspect the goods and if 

261
00:14:02,200 --> 00:14:05,760
necessary, reject them if they 
do not conform to the contract 

262
00:14:06,200 --> 00:14:08,640
key. 
Points reasonable time. 

263
00:14:08,640 --> 00:14:11,720
And Place The seller must tender
the goods at a reasonable time 

264
00:14:11,720 --> 00:14:14,600
and place, providing the buyer 
with an opportunity to take 

265
00:14:14,600 --> 00:14:17,360
possession. 
Notice The seller must give 

266
00:14:17,360 --> 00:14:20,120
reasonable notice to the buyer 
that the goods are available for

267
00:14:20,120 --> 00:14:22,080
delivery. 
Example. 

268
00:14:22,840 --> 00:14:26,000
A supplier agrees to deliver 
goods to a warehouse by noon on 

269
00:14:26,000 --> 00:14:29,040
a specified date. 
The supplier must ensure that 

270
00:14:29,040 --> 00:14:32,200
the goods are available for pick
up at the agreed location and 

271
00:14:32,200 --> 00:14:34,720
time. 
If the supplier fails to provide

272
00:14:34,720 --> 00:14:37,560
timely notice, the buyer may 
have grounds to reject the 

273
00:14:37,560 --> 00:14:39,800
goods. 
Perfect tender Rule. 

274
00:14:40,240 --> 00:14:43,160
Under the perfect tender rule, 
the buyer has the right to 

275
00:14:43,160 --> 00:14:45,800
demand that the goods delivered 
conform precisely to the 

276
00:14:45,800 --> 00:14:48,560
contract terms. 
If the goods do not meet the 

277
00:14:48,560 --> 00:14:52,280
specifications, the buyer can 
reject them in whole or in part.

278
00:14:52,800 --> 00:14:55,680
This rule provides strong 
protection for buyers, but also 

279
00:14:55,680 --> 00:14:58,600
places a significant burden on 
sellers to ensure that their 

280
00:14:58,600 --> 00:15:01,000
goods meet the contract 
requirements exactly. 

281
00:15:01,520 --> 00:15:04,240
Key points. 
Strict compliance. 

282
00:15:04,360 --> 00:15:07,720
The goods must conform exactly 
to the contract specifications, 

283
00:15:07,880 --> 00:15:10,920
including quality, quantity and 
other terms. 

284
00:15:11,400 --> 00:15:15,000
Right to reject If the goods do 
not meet the contract terms, the

285
00:15:15,000 --> 00:15:18,400
buyer has the right to reject 
them, either in full or in part.

286
00:15:18,840 --> 00:15:23,560
Example, A buyer orders 1000 
units of a product in a specific

287
00:15:23,560 --> 00:15:25,920
color. 
The seller delivers the correct 

288
00:15:25,920 --> 00:15:28,280
number of units, but in a 
different color. 

289
00:15:28,720 --> 00:15:31,720
The buyer can reject the goods 
under the perfect tender rule, 

290
00:15:31,840 --> 00:15:34,680
demanding that the seller 
fulfill the contract as agreed. 

291
00:15:35,160 --> 00:15:37,760
Cure. 
The UCC allows sellers the 

292
00:15:37,760 --> 00:15:40,720
opportunity to cure a breach by 
delivering conforming goods 

293
00:15:40,720 --> 00:15:43,440
within the contract time or 
within a reasonable time if the 

294
00:15:43,440 --> 00:15:46,480
seller had reasonable grounds to
believe the non conforming goods

295
00:15:46,480 --> 00:15:49,280
would be acceptable. 
This provision balances the 

296
00:15:49,280 --> 00:15:52,360
strictness of the perfect tender
rule by giving sellers a second 

297
00:15:52,360 --> 00:15:55,680
chance to meet their obligations
without immediately facing legal

298
00:15:55,680 --> 00:15:58,880
consequences. 
Key points, right? 

299
00:15:58,880 --> 00:16:02,160
To cure, the seller may correct 
a delivery that does not conform

300
00:16:02,160 --> 00:16:04,640
to the contract by providing 
conforming goods. 

301
00:16:05,120 --> 00:16:07,360
Time frame. 
The cure must occur within the 

302
00:16:07,360 --> 00:16:10,240
contract time or within a 
reasonable time that the seller 

303
00:16:10,240 --> 00:16:13,000
had grounds to believe the 
initial goods would be accepted.

304
00:16:13,480 --> 00:16:17,600
Example A seller delivers goods 
that do not meet the contract 

305
00:16:17,600 --> 00:16:20,800
specifications. 
The buyer notifies the seller, 

306
00:16:20,960 --> 00:16:22,960
who promptly delivers the 
correct goods. 

307
00:16:23,440 --> 00:16:26,360
The seller's ability to cure the
breach prevents the buyer from 

308
00:16:26,360 --> 00:16:29,080
terminating the contract, 
allowing the transaction to 

309
00:16:29,080 --> 00:16:32,680
proceed as intended. 
Anticipatory Repudiation 

310
00:16:33,160 --> 00:16:37,280
Anticipatory repudiation occurs 
when one party indicates before 

311
00:16:37,280 --> 00:16:39,760
performance is due that they 
will not fulfill their 

312
00:16:39,760 --> 00:16:43,120
contractual obligations. 
This can be expressed through 

313
00:16:43,120 --> 00:16:46,840
words, actions or circumstances 
that clearly suggests non 

314
00:16:46,840 --> 00:16:49,920
performance. 
When anticipatory repudiation 

315
00:16:49,920 --> 00:16:53,160
occurs, the non breaching party 
has the right to treat it as an 

316
00:16:53,160 --> 00:16:55,040
immediate breach and seek 
remedies. 

317
00:16:55,480 --> 00:16:56,320
Key. 
Points. 

318
00:16:57,040 --> 00:17:00,320
Right to seek remedies The non 
breaching party can immediately 

319
00:17:00,320 --> 00:17:03,480
seek remedies for breach, 
including covering by purchasing

320
00:17:03,480 --> 00:17:05,599
substitute goods or seeking 
damages. 

321
00:17:06,040 --> 00:17:09,680
Repudiation Withdrawal If the 
repudiating party withdraws the 

322
00:17:09,680 --> 00:17:12,960
repudiation before the non 
breaching party has relied on it

323
00:17:13,000 --> 00:17:16,079
or indicated that they treated 
as final, they may still perform

324
00:17:16,079 --> 00:17:20,000
the contract. 
Example A supplier informs a 

325
00:17:20,000 --> 00:17:22,800
buyer that they will not be able
to deliver goods as agreed. 

326
00:17:23,280 --> 00:17:26,560
The buyer can treat this as 
anticipatory repudiation and 

327
00:17:26,560 --> 00:17:28,760
seek alternative arrangements or
damages. 

328
00:17:29,200 --> 00:17:32,760
If the buyer finds a substitute 
supplier at a higher cost, they 

329
00:17:32,760 --> 00:17:35,240
can recover the difference from 
the original supplier. 

330
00:17:35,800 --> 00:17:39,800
Remedies for Breach The UCC 
provides a range of remedies for

331
00:17:39,800 --> 00:17:42,320
both buyers and sellers in the 
event of a breach. 

332
00:17:42,800 --> 00:17:45,520
These remedies are designed to 
compensate the non breaching 

333
00:17:45,520 --> 00:17:48,040
party and ensure that they 
receive the benefit of their 

334
00:17:48,040 --> 00:17:50,720
bargain. 
The remedies available depend on

335
00:17:50,720 --> 00:17:53,520
the nature of the breach and the
circumstances of the case. 

336
00:17:53,960 --> 00:17:57,880
Key Remedies for Buyers Cover 
The buyer can purchase 

337
00:17:57,880 --> 00:18:00,720
substitute goods and recover the
difference in cost from the 

338
00:18:00,720 --> 00:18:03,720
seller. 
Example A buyer contracts to 

339
00:18:03,720 --> 00:18:06,440
purchase 1000 widgets at $10 
each. 

340
00:18:06,920 --> 00:18:10,080
The seller fails to deliver and 
the buyer purchases the widgets 

341
00:18:10,080 --> 00:18:12,360
from another supplier at $12.00 
each. 

342
00:18:12,840 --> 00:18:15,840
The buyer can recover the $2.00 
difference per widget from the 

343
00:18:15,840 --> 00:18:19,240
original seller. 
Specific Performance The buyer 

344
00:18:19,240 --> 00:18:22,200
may seek a court order requiring
the seller to deliver the goods 

345
00:18:22,200 --> 00:18:25,600
as agreed, particularly if the 
goods are unique or if monetary 

346
00:18:25,600 --> 00:18:29,520
damages are inadequate. 
Example A buyer contracts to 

347
00:18:29,520 --> 00:18:32,800
purchase a rare piece of art. 
If the seller refuses to 

348
00:18:32,800 --> 00:18:36,480
deliver, the buyer may seek 
specific performance requiring 

349
00:18:36,480 --> 00:18:40,160
the seller to complete the sale.
Damages The buyer can seek 

350
00:18:40,160 --> 00:18:43,160
damages for any loss resulting 
from the seller's breach, 

351
00:18:43,200 --> 00:18:45,880
including incidental and 
consequential damages. 

352
00:18:46,360 --> 00:18:49,440
Example A buyer incurs 
additional shipping costs 

353
00:18:49,440 --> 00:18:52,120
because the seller fails to 
deliver the goods on time. 

354
00:18:52,560 --> 00:18:55,200
The buyer can recover these 
costs as damages. 

355
00:18:55,680 --> 00:19:00,160
Key Remedies for Sellers Resale 
The seller can resell the goods 

356
00:19:00,160 --> 00:19:02,720
and recover the difference 
between the contract price and 

357
00:19:02,720 --> 00:19:06,720
the resale price from the buyer.
Example A seller contracts to 

358
00:19:06,720 --> 00:19:10,800
sell goods at $100,000, but the 
buyer repudiates the contract. 

359
00:19:11,280 --> 00:19:14,920
The seller resells the goods for
$90,000 and can recover the 

360
00:19:14,920 --> 00:19:17,680
$10,000 difference from the 
original buyer. 

361
00:19:18,120 --> 00:19:21,040
Damages The seller can seek 
damages for the difference 

362
00:19:21,040 --> 00:19:23,960
between the contract price and 
the market price at the time and

363
00:19:23,960 --> 00:19:27,280
place of tender. 
Example A seller contracts to 

364
00:19:27,280 --> 00:19:30,320
sell goods at $10 per unit, but 
the buyer fails to take 

365
00:19:30,320 --> 00:19:32,880
delivery. 
The market price at the time is 

366
00:19:32,880 --> 00:19:36,880
$8 per unit, so the seller can 
recover the $2.00 difference per

367
00:19:36,880 --> 00:19:40,200
unit from the buyer. 
Cancellation The seller can 

368
00:19:40,200 --> 00:19:43,200
cancel the contract and seek 
damages if the buyer fails to 

369
00:19:43,200 --> 00:19:46,440
meet their obligations, such as 
by refusing to pay or take 

370
00:19:46,440 --> 00:19:48,280
delivery. 
Example. 

371
00:19:48,440 --> 00:19:51,480
A buyer refuses to pay for goods
after they have been delivered. 

372
00:19:51,960 --> 00:19:54,280
The seller can cancel the 
contract and sue for the 

373
00:19:54,280 --> 00:19:56,440
contract price. 
Warranties. 

374
00:19:56,440 --> 00:20:00,560
Under the UCC, warranties play a
critical role in contracts for 

375
00:20:00,560 --> 00:20:03,720
the sale of goods, providing 
assurances about the quality and

376
00:20:03,720 --> 00:20:05,520
performance of the goods being 
sold. 

377
00:20:06,000 --> 00:20:10,000
The UCC recognizes both express 
and implied warranties, offering

378
00:20:10,000 --> 00:20:13,000
buyers protection and legal 
recourse if the goods fail to 

379
00:20:13,000 --> 00:20:16,240
meet the promised standards. 
Express Warranties. 

380
00:20:16,720 --> 00:20:19,960
Express warranties are explicit 
guarantees made by the seller 

381
00:20:19,960 --> 00:20:23,040
about the quality, description, 
or performance of the goods. 

382
00:20:23,480 --> 00:20:26,200
These warranties are typically 
created through the seller's 

383
00:20:26,200 --> 00:20:29,840
statements, descriptions, 
samples, or models provided to 

384
00:20:29,840 --> 00:20:32,360
the buyer. 
Express warranties do not 

385
00:20:32,360 --> 00:20:35,760
require specific language, but 
they must be clear and specific 

386
00:20:35,760 --> 00:20:38,560
enough to create a reasonable 
expectation in the buyer. 

387
00:20:39,000 --> 00:20:43,680
Key Points Creation of Express 
Warranties Express warranties 

388
00:20:43,680 --> 00:20:46,440
are created when the seller 
makes an affirmation of fact or 

389
00:20:46,440 --> 00:20:50,160
promise, describes the goods, or
provides a sample or model that 

390
00:20:50,160 --> 00:20:52,160
forms part of the basis of the 
bargain. 

391
00:20:52,600 --> 00:20:55,960
Legal Implications If the goods 
fail to meet the standards set 

392
00:20:55,960 --> 00:20:58,960
by the express warranty, the 
buyer can claim a breach of 

393
00:20:58,960 --> 00:21:01,880
warranty and seek remedies. 
Example. 

394
00:21:02,600 --> 00:21:05,840
A seller states that a machine 
will produce 1000 units per 

395
00:21:05,840 --> 00:21:07,920
hour. 
This statement creates an 

396
00:21:07,920 --> 00:21:09,960
express warranty that the 
machine will meet this 

397
00:21:09,960 --> 00:21:12,960
performance standard. 
If the machine fails to produce 

398
00:21:12,960 --> 00:21:16,160
the promised output, the buyer 
can claim a breach of warranty 

399
00:21:16,160 --> 00:21:19,040
and seek repair, replacement, or
damages. 

400
00:21:19,520 --> 00:21:22,960
Implied warranties. 
Implied warranties are unwritten

401
00:21:22,960 --> 00:21:26,120
guarantees that arise by 
operation of law ensuring that 

402
00:21:26,120 --> 00:21:28,200
the goods meet certain minimum 
standards. 

403
00:21:28,680 --> 00:21:32,680
The UCC recognizes 2 primary 
types of implied warranties, the

404
00:21:32,680 --> 00:21:35,640
implied warranty of merchant 
ability and the implied warranty

405
00:21:35,640 --> 00:21:40,200
of fitness for a particular 
purpose, one implied warranty of

406
00:21:40,200 --> 00:21:43,120
merchant ability. 
The implied warranty of merchant

407
00:21:43,120 --> 00:21:45,760
ability ensures that the goods 
are of average acceptable 

408
00:21:45,760 --> 00:21:48,880
quality and are fit for the 
ordinary purposes for which such

409
00:21:48,880 --> 00:21:51,720
goods are used. 
This warranty automatically 

410
00:21:51,720 --> 00:21:54,320
applies when the seller is a 
merchant with respect to goods 

411
00:21:54,320 --> 00:21:56,440
of that kind. 
Key points. 

412
00:21:57,200 --> 00:22:00,280
Automatic Application The 
warranty of merchant ability 

413
00:22:00,280 --> 00:22:03,440
automatically applies to sales 
by merchants without the need 

414
00:22:03,440 --> 00:22:05,760
for specific language or a 
written agreement. 

415
00:22:06,200 --> 00:22:09,360
Minimum Standards The goods must
meet minimum standards of 

416
00:22:09,360 --> 00:22:13,080
quality, be adequately packaged 
and labeled, and be consistent 

417
00:22:13,080 --> 00:22:16,200
with any affirmations of fact or
promise made by the seller. 

418
00:22:16,640 --> 00:22:21,080
Example A consumer purchases a 
refrigerator from a retailer. 

419
00:22:21,520 --> 00:22:24,800
The refrigerator is expected to 
keep food cold and ordinary 

420
00:22:24,800 --> 00:22:27,680
purpose under the implied 
warranty of merchant ability. 

421
00:22:28,160 --> 00:22:31,400
If the refrigerator fails to 
function properly, the buyer can

422
00:22:31,400 --> 00:22:33,800
claim a breach of warranty and 
seek remedies. 

423
00:22:34,280 --> 00:22:38,040
Two implied warranty of fitness 
for a particular purpose. 

424
00:22:38,720 --> 00:22:41,920
The implied warranty of fitness 
for a particular purpose applies

425
00:22:41,920 --> 00:22:44,600
when the seller knows that the 
buyer is relying on the seller's

426
00:22:44,600 --> 00:22:48,200
expertise to select goods for a 
specific purpose, and the buyer 

427
00:22:48,200 --> 00:22:51,080
does in fact rely on that 
expertise. 

428
00:22:51,520 --> 00:22:54,280
This warranty ensures that the 
goods will be suitable for the 

429
00:22:54,280 --> 00:22:55,880
buyer's particular purpose.