Sales of Goods, Part 3

Question 1: Discuss how the UCC addresses the following concepts as they relate to sales contracts:Statute of fraudsGreater flexibility than under common lawInterpretation of the agreement

Answer 1: Statute of frauds -- Under the UCC, agreements for the sale of goods for $500 or more is covered by the statute of frauds.Greater flexibility than under common law -- Whereas under common law it is a requirement that the parties agree on a price, under UCC a contract need not necessarily specify a price. Rather, it is sufficient if the parties agree on a “reasonable” at the time the goods are delivered.Interpretation of the agreement -- The UCC specifies certain criteria by which to identify the intent of the parties in entering into a sales contract. These criteria address such considerations as performance, past conduct, and custom, as opposed to more technical considerations.

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Question 2: Identify the CISG (Contracts for the International Sale of Goods), and describe the general scope of the CISG.

Answer 2: The CISG ratified by 75 nations, including the most important trading nations, governs law for most international sales transactions entered into by U.S. companies. The CISG only applies to contracts between companies located in two different countries. (The companies are free to agree that other laws, not the CISG, will apply, however.) Items under the purview of the CISG include: (a) the CISG’s “firm offer rule,” which addresses under what conditions a contract cannot be revoked; (b) the CISG’s “mirror image rule,” which addresses discrepancies between an offer and its acceptance, which may constitute material alterations of the contract and thus its lack of validity.

Question 3: Describe what is meant by the mirror image rule.

Answer 3: The mirror image rule concerns contracts in which there is a material difference between an offer and its acceptance as it relates to price, payment, quality, and quantity of the goods in question, and including questions about such matters as the time and place of delivery, liability, and the manner in which disputes are to be settled. In essence, the mirror image rule negates the formation of a contract within which such material differences are present. Should the offeror of the goods receive a contrary response from the receiver and, failing to recognize the significance of the receiver’s alteration, proceed as if the contract had been formed, the offeror may be considered to have accepted the receiver’s alteration to the contract. Further, if the receiver’s response to an offer contains material additions or limitations to it, then his response constitutes a rejection of the offer.

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