SPECIAL AND NEW LAWS
© Phil Orr, all rights reserved
CHAPTERS 11-12: SPECIAL CONTRACT LAWS
UNIFORM LAWS: UCC, UETA, UCITA
Uniform laws are proposed laws, designed to be
passed into law the same in many states. This
makes business across states less costly and complicated.
Some newer CONTRACT LAWS are uniform laws.
They make additions or changes to basic (classic,
traditional) contract law we already learned, for
UCC: contracts for SALE OF GOODS
Contracts for SALE OF GOODS are under the UNIFORM COMMERCIAL CODE (UCC), article 2 (Law of
For a sale of goods, UCC is the state law in all 50
states, and by treaty, also in many other nations.
“SALE” : ownership (title) of goods passes from a
seller to a buyer for a price. “GOODS” : physical
products or substances. “MERCHANT” : a person
or business regularly dealing in such goods. UCC
has special rules for merchants, mostly making
their deals faster, simpler. A big idea behind UCC
is DEFAULT RULES: many parts of contracts are
AUTOMATICALLY SUPPLIED (and need not be repeated in a contract), unless the parties agree
otherwise. This makes contracts shorter, less costly to make, and quicker to make and use.
SOME MAIN PARTS OF UCC for SALE OF GOODS:
TITLE (ownership of goods) passes from seller to
buyer, and the RISK OF LOSS to the goods (example: a truck carrying goods is destroyed; who pays
for the loss?) passes to the buyer when possession
(of the goods, or of any document of title to the
goods) passes to the buyer. As with most of UCC,
this rule is automatic (is in the deal if nothing else
is agreed). This makes deals faster and contracts
WRITING REQUIREMENT: UCC STATUTE OF
FRAUDS: A “sufficient” writing is needed to enforce a sale for a price of $500+. Between merchants, either party can make and send a “writing
in confirmation” of the deal, and (if not timely objected to) use that in court as the needed “writing.”
PARTIES’ BASIC DUTIES OF CONTRACT PERFORMANCE:
SELLER’S DUTY: tender (provide) to buyer goods
which conform to (fit) the contract. If some goods
do not conform, the buyer can reject all, or else
reject just the nonconforming (unfit) goods, and
accept conforming ones. If time for performance
remains, the seller can CURE the problem (= give
notice and ship replacement goods).
BUYER’S BASIC DUTY: accept conforming goods
and pay for them. Buyer can INSPECT goods first,
REJECT nonconforming goods; but must NOTIFY
seller of rejection. If seller cannot CURE the problem within time allowed by original contract (send
proper “conforming” goods), buyer can “COVER”:
buy substitute goods from another seller. If that is
more costly, Buyer can charge the difference off
to Seller. Unless agreed otherwise, PAYMENT is
due when buyer accepts goods.
NEWER CONTRACTS UNIFORM LAWS: UETA AND
UCITA: The UCC was created in a paper-based
world, and not aimed specifically at network and
UETA: for ELECTRONIC SIGNATURES AND
The newer UETA, Uniform Electronic Transactions
Act, allows electronic documents and signatures
to be used in place of paper ones. (this is by any
way a person verifies identity and shows agreement, such as entering a username and password,
and pushing a button on a website.) The contract
can then be used in court. If a state has not
passed UETA, then a federal law (“E-Sign Act”)
works in that state.
UCITA: for deals in “COMPUTER INFORMATION”
UCITA, Uniform Computer Information Transactions Act, covers contracts in “informational
rights,” mostly “licensing agreements.” A license
agreement gives limited rights to a “licensee”,
e.g., to install and use another’s company’s (“licensor’s”) software, such as Microsoft Office ™,
or to access information, such as an online database subscription. UCITA is “under construction,”
not the law in most states. For now, courts mostly follow the parties’ own contract language and
some mix of older state laws.
E-COMMERCE and E-CONTRACTS
This is business done electronically, as on the Internet. Laws on this are still being created. Current topics with changing laws include Internet
taxes, court jurisdiction over interstate legal disputes from online deals, and Internet gambling.
“SHRINK-WRAP AGREEMENT”: the terms of purchase/license are inside the packaging of a product. These have generally been upheld, as long as
the buyer has an opportunity to reject the agreement once it is accessed.
“CLICK-ON AGREEMENT” or “CLICK-SRAP AGREEMENT”: buyer’s agreement is by clicking on button (marked, for example, “I AGREE”). Both these
types of contracts are generally enforceable, but
courts have sometimes refused to enforce parts,
based on ideas of UNCONSCIONABLE CONTRATCS
(see previous notes).
“BROWSE-WRAP AGREEMENT”: this grew out of
the earlier ones. Here, a visitor to a website is
(claimed by the website’s owner to be) automatically agreeing to “terms of service” or some similar name for an agreement. Often this agreement
is displayed only on some other page. These ARE
generally enforceable, he courts have held, but
sometimes courts have blocked by extreme or
surprising terms. Courts have been more friendly
to agreements (or terms) displayed more conspicuously (obviously) in front of the “user” of the
So, a company wishing to use these, should take
some care to be sure they are within acceptable
standards. The Internet is full of sites that are
“experiments” in the sense that their claimed
agreements have not been fully tested in the
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