Contracts for Sale of Goods Must Be in Writing but Can Be Enforceable Even When Not in Writing or When Missing a Contract Term

You are in the business of selling or buying things (as opposed to real property), which is the realm of commercial law.

These types of transactions are frequently done quickly with little thought to “putting it in writing.”

Maybe you send out a purchase order and that is the extent of any writing between you and the seller.

Can that P.O. be enough to show that there is a contract between you and the seller in case something goes wrong?

What if there is nothing written between the parties? Are you out of luck with no way to enforce the agreement between the parties?

Maybe not.

The commercial code regulates in general the sale of goods.

There’s a Uniform Commercial Code (UCC) that is a model code which many states use as the basis their own code.

In California, the UCC is found in the California Commercial Code.

Sales of goods that are covered by the commercial code are transactions that are generally between merchants or parties who are in the business of buying or selling a given product.

This means that the parties are assumed to be well-aware of how to fend for themselves in a business transaction.

So the commercial code allows for more leeway in forming contracts to promote commercial intercourse.

“Goods” are basically anything that is not fixed to a building or the ground. So pretty much any “widget” you can think of is likely a “good” under the commercial code.

Except when “goods” are crops and the contract states that the given crops will be harvested (“severed”) from the ground. Such crops, before “severing,” when contracted for sale are considered “goods” just as an order of widgets would be.

If the transaction for sale of goods is for $500 or more, the contract for such transaction cannot be oral but must be contained in “some writing.”

But because the commercial code is very concerned with facilitating commerce, the writing that satisfies the rule for a written contract can be any writing that is sufficient to establish that there is a contract between the parties.

So if a buyer submits a purchase order and the seller sends goods in response to that purchase order, the purchase order is a sufficient writing (against the seller).

A seller might send back an order acknowledgment. If that is done, the contract between the parties is comprised of both the purchase order and the acknowledgement.

(When the forms from the seller and buyer conflict, or one form adds a new term, that problem is the so-called “battle of the forms,” which is another topic altogether.)

Whatever writing or writings there are to evidence the contract between the parties, the contract is still enforceable even if the writing(s) omits or states incorrectly a term between the parties.

The main point is that the writing or writings be detailed enough to show that the buyer and seller agreed to buy and sell some identifiable goods.

The commercial code in this regard is so flexible that even if one party sends the other party a letter confirming the transaction, that writing is also sufficient to satisfy the written contract requirement against the recipient of the letter (unless the recipient objects within 10 days).

The code is so flexible in supporting commercial transactions, that even when there is not a sufficient writing a contract can still exist between the parties under certain situations.

If the goods are to be specially made just for the buyer, and the seller has started making the goods or procuring the goods, that is enough to establish an enforceable contract even without a sufficient writing.

If goods, whether specially made or otherwise, have been paid for (and payment has been accepted  by the seller) or the goods are received (and the goods have been accepted by the buyer), that can establish the contract even if there is no sufficient writing.

So the commercial code is one of those areas of the law that really works hard to help the parties transact business.

Knowing the rules of contract formation under the commercial code can help you protect yourself in the event something goes wrong and you need to prove what was agreed between the parties.

References: California Commercial Code section 2201.

This discussion is not legal advice, a solicitation of you as a client, nor the engaging in the practice of law in any jurisdiction.

This discussion is merely for information/education and should not be relied upon for legal advice by anyone because the facts discussed may be different from your own situation.  If you need legal advice, consult a qualified attorney.

For more information please visit my website at www.palacioslawoffice.com.

SPONSORED LINKS

Electronics at Amazon
Cell Phones and Accessories at Amazon
Amazon Instant Video – Movies
Amazon Instant Video – TV Shows
Accounting and Finance Software at Amazon
Business and Money at Amazon Books

Advertisements

About Elio Palacios, Jr.

Attorney Elio Palacios, Jr., represents individuals, corporations, entrepreneurs, small businesses, startups and early stage businesses, physicians, dentists, and healthcare businesses in corporate, business and commercial transactions and litigation. He also counsels employers and individuals on visa, immigration and naturalization matters. Visit www.PalaciosLawOffice.com to learn more.
This entry was posted in Uncategorized and tagged , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s