The UCC Battle of the Forms: Answers to Common Questions. Richardson. Wis. Law. March 1996.
Course of performance or practical construction. 402.208(1)(1)
Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement.
The express terms of the agreement and any such course of performance, as well as any course of dealing and usage of trade, shall be construed whenever reasonable as consistent with each other; but when such construction is unreasonable, express terms shall control course of performance and course of performance shall control both course of dealing and usage of trade (s. 401.303
Subject to s. 402.209
on modification and waiver, such course of performance is relevant to show a waiver or modification of any term inconsistent with such course of performance.
The requirement of “conformity" does not subject the seller to performing the contract to the satisfaction of the buyer, but only to the terms of the contract. H.B. Fuller Co. v. Kinetic Systems, Inc. 932 F.2d 681
A single occasion of conduct does not constitute a “course of performance" within the meaning of this section. Maritime-Ontario Freight Lines, LTD. v. STI Holdings, Inc. 481 F. Supp. 2d 963
History: 2009 a. 320
Modification, rescission and waiver. 402.209(1)(1)
An agreement modifying a contract within this chapter needs no consideration to be binding.
A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.
The requirements of s. 402.201
must be satisfied if the contract as modified is within its provisions.
Although an attempt at modification or rescission does not satisfy the requirements of sub. (2)
it can operate as a waiver.
A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.
Not every contract for the sale of goods over $500, nor every modification thereof, strictly complies with the requirements of the statute of frauds, and it would be unreasonable to declare categorically all such contracts unenforceable. The UCC and Wisconsin case law recognize exceptions to the statute of frauds, including waiver and performance. An attempt at modification contemplates a completed oral modification of a written contract that prohibits oral modification. The inquiry into whether there has been an attempt at modification sufficient to operate as a waiver of the statute of frauds is closely related to the inquiry to determine whether there was a valid oral modification. Royster-Clark, Inc. v. Olsen's Mill, Inc. 2006 WI 46
, 290 Wis. 2d 264
, 714 N.W.2d 530
A dealership agreement is primarily for the sale of goods, making this section applicable. American Suzuki Motor Corp. v. Bill Kummer, Inc. 65 F.3d 1381
Delegation of performance; assignment of rights. 402.210(1)(1)
A party may perform that party's duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his or her original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.
Unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on the other party by the contract, or impair materially the other party's chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of the assignor's entire obligation can be assigned despite agreement otherwise.
The creation, attachment, perfection, or enforcement of a security interest in the seller's interest under a contract is not a transfer that materially changes the duty of or increases materially the burden or risk imposed on the buyer or impairs materially the buyer's chance of obtaining return performance within the purview of sub. (2)
unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the seller. Even in that event, the creation, attachment, perfection, and enforcement of the security interest remain effective, but:
The seller is liable to the buyer for damages caused by the delegation to the extent that the damages could not reasonably be prevented by the buyer; and
A court having jurisdiction may grant other appropriate relief, including cancellation of the contract for sale or an injunction against enforcement of the security interest or consummation of the enforcement.
Unless the circumstances indicate the contrary a prohibition of assignment of “the contract" is to be construed as barring only the delegation to the assignee of the assignor's performance.
An assignment of “the contract" or of “all my rights under the contract" or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by the assignee to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract.
The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his or her rights against the assignor demand assurances from the assignee (s. 402.609
History: 1991 a. 316
; 2001 a. 10
GENERAL OBLIGATION AND CONSTRUCTION
General obligations of parties.
The obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance with the contract.
Unconscionable contract or clause. 402.302(1)(1)
If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.
Unconscionability requires an absence of meaningful choice on the part of one party, together with contract terms that are unreasonably favorable to the other. To find unconscionability requires a certain quantum of both procedural and substantive unconscionability. Procedural unconscionability bears on a meeting of the minds, while substantive unconscionability pertains to the reasonableness of the contract terms themselves. Deminsky v. Arlington Plastics Machinery, 2003 WI 15
, 259 Wis. 2d 587
, 657 N.W.2d 411
Conspicuousness necessary for effective warranty disclaimer is discussed. H.B. Fuller Co. v. Kinetic Systems, Inc. 932 F.2d 681
Allocation or division of risks.
Where this chapter allocates a risk or a burden as between the parties “unless otherwise agreed", the agreement may not only shift the allocation but may also divide the risk or burden.
Price payable in money, goods, realty, or otherwise. 402.304(1)(1)
The price can be made payable in money or otherwise. If it is payable in whole or in part in goods each party is a seller of the goods which that party is to transfer.
Even though all or part of the price is payable in an interest in realty the transfer of the goods and the seller's obligations with reference to them are subject to this chapter, but not the transfer of the interest in realty or the transferor's obligations in connection therewith.
History: 1991 a. 316
The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if:
The price is left to be agreed by the parties and they fail to agree; or
The price is to be fixed in terms of some agreed market or other standard as set or recorded by a 3rd person or agency and it is not so set or recorded.
A price to be fixed by the seller or by the buyer means a price for that party to fix in good faith.
When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other party may at his or her option treat the contract as canceled or fix a reasonable price.
Where, however, the parties intend not to be bound unless the price is fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.
An implied contract by a dairy plant to pay the competitive price to milk producers does not permit the plant to pay a lower price since the mere absence of misrepresentation or deceit does not establish good faith; an open price contract still requires fair dealing. Columbus Milk Producers v. Dept. of Agriculture, 48 Wis. 2d 451
, 180 N.W.2d 617
Under this section, which allows parties to a contract for the sale of goods to conclude the contract agreeing to settle the price at a subsequent date, the contract price is a reasonable price at the time of delivery if the parties are unable to agree. Schmieder v. Standard Oil Co. of Indiana, 69 Wis. 2d 419
, 230 N.W.2d 732
Output, requirements and exclusive dealings. 402.306(1)(1)
A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.
A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.
A “pay as used" proposal to purchase inventory was analogous to a “requirements contract." Lambert Corp. v. Evans, 575 F.2d 132
Delivery in single lot or several lots.
Unless otherwise agreed all goods called for by a contract for sale must be tendered in a single delivery and payment is due only on such tender but where the circumstances give either party the right to make or demand delivery in lots the price if it can be apportioned may be demanded for each lot.
Absence of specified place for delivery.
Unless otherwise agreed:
The place for delivery of goods is the seller's place of business or if the seller has none the seller's residence; but
In a contract for sale of identified goods which to the knowledge of the parties at the time of contracting are in some other place, that place is the place for their delivery; and
Documents of title may be delivered through customary banking channels.
History: 1991 a. 316
Absence of specific time provisions; notice of termination. 402.309(1)(1)
The time for shipment or delivery or any other action under a contract if not provided in this chapter or agreed upon shall be a reasonable time.
Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.
Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable.
Open time for payment or running of credit; authority to ship under reservation.
Unless otherwise agreed:
Payment is due at the time and place at which the buyer is to receive the goods even though the place of shipment is the place of delivery; and
If the seller is authorized to send the goods the seller may ship them under reservation, and may tender the documents of title, but the buyer may inspect the goods after their arrival before payment is due unless such inspection is inconsistent with the terms of the contract (s. 402.513
If delivery is authorized and made by way of documents of title otherwise than by sub. (2)
then payment is due regardless of where the goods are to be received at the time and place at which the buyer is to receive the documents; or at the time the buyer is to receive delivery of the electronic documents and at the seller's place of business or, if none, the seller's residence; and
Where the seller is required or authorized to ship the goods on credit the credit period runs from the time of shipment but postdating the invoice or delaying its dispatch will correspondingly delay the starting of the credit period.
History: 1991 a. 316
; 2009 a. 322
Options and cooperation respecting performance. 402.311(1)(1)
An agreement for sale which is otherwise sufficiently definite (s. 402.204 (3)
) to be a contract is not made invalid by the fact that it leaves particulars of performance to be specified by one of the parties. Any such specification must be made in good faith and within limits set by commercial reasonableness.
Unless otherwise agreed specifications relating to assortment of the goods are at the buyer's option and except as otherwise provided in s. 402.319 (1) (c)
specifications or arrangements relating to shipment are at the seller's option.
Where such specification would materially affect the other party's performance but is not seasonably made or where one party's cooperation is necessary to the agreed performance of the other but is not seasonably forthcoming, the other party in addition to all other remedies:
Is excused for any resulting delay in his or her own performance; and
May also either proceed to perform in any reasonable manner or after the time for a material part of his or her own performance treat the failure to specify or to cooperate as a breach by failure to deliver or accept the goods.
History: 1991 a. 316
Warranty of title and against infringements; buyer's obligation against infringement. 402.312(1)(1)
Subject to sub. (2)
there is in a contract for sale a warranty by the seller that:
The title conveyed shall be good, and its transfer rightful; and
The goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.
A warranty under sub. (1)
will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or herself or that the person selling is purporting to sell only such right or title as the person selling or a 3rd person may have.
Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any 3rd person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.
Express warranties by affirmation, promise, description, sample. 402.313(1)(1)
Express warranties by the seller are created as follows:
Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.