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If BOTH PARTIES ARE MERCHANTS the additional terms in an acceptance become part of the contract unless “O-CAN”,O: offeror OBJECTS to the original terms within a reasonable time
C: original offer expressly CONDITIONED agreement exclusively to those terms contained in the offer
A: when the additional terms materially ALTER the contract terms, then those terms do not become party of the contract
- • a term contained in the acceptance MATERIALLY ALTERS the contract offer if it would cause surprise or hardship if the offeror were not made aware of its existence.
- Materially altering terms are "J-STRAW"
NON-MERCHANTS: where one or both parties are non-merchants, then offeror can remain silent and is not bound to accept either material or non-material additional terms that have been added to the acceptance
- • The UCC considers them mere proposals that do not become part of the contract.
- Materially altering k terms are J-STRAW,Materially Altering k terms are (J-STRAW)
- o J – clause bestowing JURISDICTION upon a particular court; or, requiring offeror to consent to jurisdiction in a particular court
- o S- SHORTENING the SoL to sue for non-conforming goods
- o T – limiting TORT liability or limiting the seller’s liability for a buyer’s consequential damages (3 R Clause)
- o R – altering the UCC rules for RISK of loss
- oA –adding an ARBITRATION clause (unless arbitration was the customary practice in that trade)
- oW – a clause disclaiming the 'M-FEET' WARRANTIES (i.e. merchantibility, fitness for a particular purpose, express warranty, etc...)•
- Note: ‘J-STRAW’ is not an excusive list. Materially altering k terms can also include other terms that would materially alter a contract’s offer.
- •Additional terms added to an acceptance that DO NOT MATERIALLY ALTER the offer become part of the contract UNLESS objection is timely made by the offeror.
A: ACCEPTANCE can be revoked
- R: REJECTION of non-conforming goods
- A sales contract may contain the following express or implied warranties. [M-FEET],•MERCHANIBILITY
- oUnless, expressly excluded, a merchant impliedly warrants, that the goods sold are “fit for their ordinary purpose”.
- oThe goods must pass without objection in the trade under the description in the contract – not the best, not the worst – but fair and average quality.
- oThe implied warranty of Merchantability is given by only a limited class of merchants – namely, merchants with respect to goods of that kind.
- This restricts the merchantability warranty that is narrower than just those who engage in business.
- oThus, a merchant, making only an isolated sale of this type of good, is not considered a merchant and gives no implied warranty of merchantability.
- Ex: I go to barber shop. They try to sell hair tonic. I buy hair tonic. It takes my hair out. I can go after them for breach of implied warranty of merchantability.
- Ex: I go to barber shop. They sell me a tv. TV fails at home. I can’t go after barber for implied warranty of merchantability becaus
- Express Warranties are SAD,oExpress Warranties (EW) can be given by both merchants and non-merchants.
- oBut, in order to sue on an EW, the EW must have been the “basis of the bargain”. That is, the buyer must have seen/heard the EW and relied on the Express Warranty.
- oExpress Warranties derive from the SAD
- •Any sample/model that was the basis of the bargain
- oEx: The “Shamwow” sample that influenced your decision that allegedly absorbs 12x its weight and soaks up to 3 gallons of water.
- •Any written/oral affirmation of fact/promise made by the seller to the buyer relating to the goods that becomes part of the basis of the bargain which induced the buyer to purchase the goods.
- •Statements made by the seller during contract negotiations are considered affirmations of fact
- •UNLESS that statement would be construed by a reasonably prudent person (RPP) only as a seller’s opinion or puffery.
- •Any description of the goods in an advertisement/brochure/catalog.
- oAny S
- Plaintiff’s claim against Seller for defective good can be based upon one or more overlapping PINE theories of liability.
- Hint: I PINE for defective product liability,oProducts liability
- oImplied warranty breach – contract theory implied warranty
- oNegligence tort theory
- oExpress Wararnty – contract theory for breach of ‘SAD’ Express Warranty
- G.P.PALMS is not liable for breach of warranty.,•In a breach of warranty claim, the Seller Can Raise the Following Defense to Breach of Warranty
- 1) GOVERNMENT Contractor Defense
- •A manufacturer cannot be held liable for a defectively designed military product, if the (1) defect was caused by the government’s own design specifications AND (2) the manufacturer warned the government of any known dangers.
- 2)P - Lack of PRIVITY of Contract
- •Breach of warranty claims arising from sale of goods require some form of privity of contract with the seller who has expressly/impliedly warranted the performance of that product.
- •Parties who have entered a contract with each other (i.e. buyer and seller) are in direct privity.
- oAt common law, only buyers in direct privity could recover for the harm caused by the defective/unsafe product.
- •Extension of PRIVITY
- ooHousehold Privity: Under UCC Article 2, a seller express/implied warranties extend horizontally beyond the buyer to any natural person who suffers a physical injury (per
- a DIM product is defective,•A manufacturer (or regular seller) of a DUD (defective and unreasonably dangerous) product is strictly liable for physical harm proximately caused by the product’s dangerously defective DIM conditions (DEFECTIVE design, INADEQUATE warning, MISTAKE in manufacture)