Business law

Posted: August 13th, 2013





Business Law

Differences between requirements of contract under the Common Law and under the UCC

Common law derives its existence from the decision of judges. The common law also referred to as the law of precedents occurs during court proceedings where the ruling of the judge forms part of the precedents. The precedents are binding to other law court judges in making decisions regarding similar cases. The jurisdiction of a court determines the extent to which it is bound by the precedents. The decision of an appellate court is binding to lower courts while the ruling of a lower court has no effect on the future decisions of an appellate court. The uniform commercial code on the other hand began its existence in 1952 to help in improving laws dealing with commercial activities. It aims at harmonizing the commercial transactions across the states of America. This enhances the flow of assets across the states ad offers common ground for the merchants to trade.

The common law deals with issues relating to real estate, services and intangible assets. The services include personal services and professional services. The intangible assets include patent rights, copyrights, software and other assets that cannot be physically identified. The code addresses issues relating to tangible assets and their management. It addresses the movement of the assets between merchants that normally occurs during trade.

Common law appears very strict in setting the terms for formation of contracts. It stipulates that there have to be an offer and acceptance of the offer for the contract to be valid just like in the uniform commercial code. However, on the terms of acceptance it becomes very rigid in the determination of the terms and conditions. If in the acceptance the offered accepts the offer and at the same time adds some new conditions, the common law recognizes that as a counter offer instead of a mere acceptance. The uniform commercial code on the other hand appears more flexible in determining the terms of acceptance. If in the acceptance the offered accepts the offer granted based on some additional conditions, the conditions become included in the terms of the contract instead of gaining the distinction as a counter offer.

The common law under the mailbox law recognizes the acceptance when the offered dispatches his intention to accept the offer granted. The acceptance by the party is requires to be communicated through similar means of communication adopted by the offered or through a faster means. The uniform commercial code on the other hand does not necessarily require the use of a faster mode of communication but instead requires the adoption of a reasonable means of communication done in a reasonable way. This rule occurs where the parties involved in the contract carry out businesses from different regions and therefore physical meeting are impossible.

In the provisions of the common law, the terms of performance must be definite and the omission of details such as the consideration, day and venue of delivery may render the contract unenforceable. The omission of these details make the terms of the contract ambiguous hence difficult to determine the precise conditions. Under the UCC, the omission of the price, venue and time of delivery has no effect on the validity of a contract. If price is omitted, the ordinary price of the seller’s goods is used. In case the contract omits venue and time of delivery, the payment is to be submitted at the time and place where the buyer receives the goods.


Problem 20.6

The case covers issues of breach of a contact. The breach of a contact occurs when one of the parties fails to honor its obligations as stated in the contract. In this case, a contact existed between the two parties and they therefore had to honor their obligations. The parties should also not interfere with the other’s performance. The breach of a contact causes damages due to the nonperformance of the contract. The damages resulting from the breach may be classified as minor of material. For the aggrieved party to obtain maximum compensation for the damages, he needs to prove that the breach caused substantial damages to him. In this case, the damages may occur due to the dishonoring of the promises given by the seller. The buyer would prove that the actions of the sellers resulted in major losses for the business. To avoid liability, the seller should inform the buyer of the changing conditions. The notice must reach the buyer within reasonable time for him to look for an alternative supplier and mitigate the losses experienced from the lack of supply for the items.

The remedy sought by the aggrieved party in this case is specific performance where the court would require the seller to perform his obligations as earlier agreed ion. This would force the seller to make the delivery of the goods to the buyer. For this remedy to apply in this case, the buyer requires proof that it would be difficult to get an alternative source of supply within the given time. The payment already made to the seller may act as a source of defense for the buyer. The specific performance remedy may act for the benefit of the buyer especially if the value of the goods in question varies with time. The remedy would also save the buyer time required to trace a potential supplier and negotiate the terms of sale.


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