the parties to buy and sell 15,000 widgets if a quantity wasn’t specified? There are two exceptions to this rule:
requirements contracts (“as much as I need”) and output contracts (“as much as you can produce”). Even
though these ideas are illusory, they’re generally allowed in the commercial setting with good-faith limitations
under UCC 2-306.
Sometimes, however, the courts will not allow purported “requirements” contracts. In one case, a court ruled
that the contract was an unenforceable illusory contract instead of an enforceable requirements contract, even
though it was a contract for the sale of goods (“as much as I need”). The reason for this ruling was that it did
not appear that the buyer had any real intention of going through with any purchase.
Under Section 2-205 of the UCC, offers made by merchants are considered to be firm offers if the offers are
made in writing and explicitly state that there is a three-month irrevocability period. A three-month
irrevocability period is assumed if no mention is made with the offer. Acceptance of the offer can be made in
any reasonable manner, but the mirror-image rule does not apply under the UCC. This means that if the
terms of the acceptance do not mirror those of the offer, the acceptance is treated as a counteroffer and no
legal contract is formed. Sale of goods contracts must be in writing if the value of the goods is $500 or more.
Modifications to the contract must be made in good faith, and new consideration is not required. A contract
provision, or the entire contract itself, can be considered to be unconscionable if its terms are unfair or
unreasonable. If a court deems this to be the case, the contract, or certain provisions of it, may be
unenforceable.
Title
Title means ownership of a good. When the sale is completed, an agent must pass the title for the good to the
buyer. There are three types of titles:
1.
Good title describes a title that is obtained from an individual who owns the goods free and clear.
2.
Void title occurs when the title is passed to the buyer from a person who does not legitimately own the
title. An important point is that good faith is irrelevant when a void title is acquired. For example, a person
who unknowingly purchased stolen goods has a void title. An exception occurs when an owner entrusts
goods to a merchant who ordinarily deals in those goods, and then that merchant sells the goods to a
good-faith buyer. In this case, the buyer acquires a good title. For example, if a motorcycle owner takes
the motorcycle to a vehicle repair shop and the motorcycle is accidentally sold, the buyer acquires the
title.
3.
Voidable title occurs when the contract would have been good, but certain circumstances make it
voidable. For example, if the buyer was deceitful about his or her true identity, the buyer is a minor, or the
buyer wrote a bad check in the sale, then the title is deemed voidable.
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Chapter 8 Sales Contracts
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