Section § 1301

Explanation

This section explains how the law is determined when a business deal has connections to California and another state or country. If the parties involved agree, they can choose which location's law will apply. If they don't make such an agreement, California law will typically be used if the deal relates closely to California. However, there are specific laws that will take precedence no matter what, and in those cases, parties can only choose otherwise if those laws allow flexibility.

(a)CA Commercial Law Code § 1301(a) Except as otherwise provided in this section, when a transaction bears a reasonable relation to this state and also to another state or nation, the parties may agree that the law either of this state or of the other state or nation shall govern their rights and duties.
(b)CA Commercial Law Code § 1301(b) In the absence of an agreement effective under subdivision (a), and except as provided in subdivision (c), this code applies to transactions bearing an appropriate relation to this state.
(c)CA Commercial Law Code § 1301(c) If one of the following provisions specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law so specified:
(1)CA Commercial Law Code § 1301(c)(1) Section 2402.
(2)CA Commercial Law Code § 1301(c)(2) Section 4102.
(3)CA Commercial Law Code § 1301(c)(3) Section 5116.
(4)CA Commercial Law Code § 1301(c)(4) Section 6103.
(5)CA Commercial Law Code § 1301(c)(5) Section 8110.
(6)CA Commercial Law Code § 1301(c)(6) Sections 9301 to 9307, inclusive.
(7)CA Commercial Law Code § 1301(c)(7) Sections 10105 and 10106.
(8)CA Commercial Law Code § 1301(c)(8) Section 11507.
(9)CA Commercial Law Code § 1301(c)(9) Section 12107.

Section § 1302

Explanation

This section allows people to change certain terms of the code through agreements, except the obligations of good faith, diligence, reasonableness, and care cannot be avoided. However, they can decide on reasonable standards to measure these obligations. Agreements can set a specific timeframe for actions if it's reasonable, even if the code says a reasonable time is required. Lastly, just because some parts of the code explicitly allow changes doesn't mean other sections can't be changed by agreement.

(a)CA Commercial Law Code § 1302(a) Except as otherwise provided in subdivision (b) or elsewhere in this code, the effect of provisions of this code may be varied by agreement.
(b)CA Commercial Law Code § 1302(b) The obligations of good faith, diligence, reasonableness, and care prescribed by this code may not be disclaimed by agreement. The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not manifestly unreasonable. Whenever this code requires an action to be taken within a reasonable time, a time that is not manifestly unreasonable may be fixed by agreement.
(c)CA Commercial Law Code § 1302(c) The presence of certain provisions of this code of the phrase “unless otherwise agreed,” or words of similar import, does not imply that the effect of other provisions may not be varied by agreement under this section.

Section § 1303

Explanation

This section explains three key concepts in contracts: 'course of performance,' 'course of dealing,' and 'usage of trade.' 'Course of performance' looks at the repeated behavior between parties in a specific deal, where one party consistently accepts the other's performance without objection. 'Course of dealing' refers to past interactions that create a common understanding for current transactions. 'Usage of trade' is a common practice in a trade that parties expect to follow. All these factors help clarify a contract’s terms, but if they conflict, the priority is express terms first, then 'course of performance,' followed by 'course of dealing,' and lastly 'usage of trade.' 'Course of performance' can indicate a waiver or change to the contract, and you must inform the other party if you want to use 'usage of trade' as evidence in court to avoid unfair surprise.

(a)CA Commercial Law Code § 1303(a) A “course of performance” is a sequence of conduct between the parties to a particular transaction that exists if:
(1)CA Commercial Law Code § 1303(a)(1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and
(2)CA Commercial Law Code § 1303(a)(2) the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.
(b)CA Commercial Law Code § 1303(b) A “course of dealing” is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
(c)CA Commercial Law Code § 1303(c) A “usage of trade” is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage must be proved as facts. If it is established that such a usage is embodied in a trade code or similar record, the interpretation of the record is a question of law.
(d)CA Commercial Law Code § 1303(d) A course of performance or course of dealing between the parties or usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware is relevant in ascertaining the meaning of the parties’ agreement, may give particular meaning to specific terms of the agreement, and may supplement or qualify the terms of the agreement. A usage of trade applicable in the place in which part of the performance under the agreement is to occur may be so utilized as to that part of the performance.
(e)CA Commercial Law Code § 1303(e) Except as otherwise provided in subdivision (f), the express terms of an agreement and any applicable course of performance, course of dealing, or usage of trade must be construed whenever reasonable as consistent with each other. If such a construction is unreasonable:
(1)CA Commercial Law Code § 1303(e)(1) express terms prevail over course of performance, course of dealing, and usage of trade;
(2)CA Commercial Law Code § 1303(e)(2) course of performance prevails over course of dealing and usage of trade;
(3)CA Commercial Law Code § 1303(e)(3) course of dealing prevails over usage of trade.
(f)CA Commercial Law Code § 1303(f) Subject to Section 2209, a course of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance.
(g)CA Commercial Law Code § 1303(g) Evidence of a relevant usage of trade offered by one party is not admissible unless that party has given the other party notice that the court finds sufficient to prevent unfair surprise to the other party.

Section § 1304

Explanation

This law says that anyone with a contract or duty under this section must act honestly and fairly when they carry it out or enforce it.

Every contract or duty within this code imposes an obligation of good faith in its performance and enforcement.

Section § 1305

Explanation

This section of the law is about making sure that if you're wronged in a contract, you can be compensated to put you in the position you would have been if the contract was fulfilled. However, you can't get extra damages like special or punitive ones unless the law specifically says so. Also, any right or obligation mentioned in this code can be enforced by legal action, unless the law states otherwise.

(a)CA Commercial Law Code § 1305(a) The remedies provided by this code shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neither consequential or special damages nor penal damages may be had except as specifically provided in this code or by other rule of law.
(b)CA Commercial Law Code § 1305(b) Any right or obligation declared by this code is enforceable by action unless the provision declaring it specifies a different and limited effect.

Section § 1306

Explanation

If someone claims their rights have been violated due to a breach, they can choose to let it go entirely or partially, even without getting anything in return. They just need to agree in writing.

A claim or right arising out of an alleged breach may be discharged in whole or in part without consideration by agreement of the aggrieved party in a signed record.

Section § 1307

Explanation

This law is about documents like a bill of lading or insurance certificate used in legal cases related to a contract. Such documents created by a third party can be used as evidence. If the document seems genuine, it's assumed to be authentic. Moreover, if it's decided that the document is indeed real, the facts in it are taken to be true unless proven otherwise. This shifts the burden of producing evidence and proving facts to the opposing party.

(1)CA Commercial Law Code § 1307(1) A bill of lading, policy or certificate of insurance, official weigher’s or inspector’s certificate, consular invoice, or any other document authorized or required by the contract to be issued by a third party is admissible as evidence of the facts stated in the document by the third party in any action arising out of the contract that authorized or required the document.
(2)CA Commercial Law Code § 1307(2) In any action arising out of the contract that authorized or required the document referred to in subdivision (1):
(a)CA Commercial Law Code § 1307(a) A document in due form purporting to be the document referred to in subdivision (1) is presumed to be authentic and genuine. The presumption is a presumption affecting the burden of producing evidence.
(b)CA Commercial Law Code § 1307(b) If the document is found to be authentic and genuine, the facts stated in the document by the third party are presumed to be true. The presumption is a presumption affecting the burden of proof.

Section § 1308

Explanation

This law section says that if you agree to do something or actually do it while clearly stating you still have certain rights, you don’t lose those rights by doing so. You should use phrases like 'without prejudice' or 'under protest' to make it clear. However, this rule does not apply in cases of 'accord and satisfaction,' which is a special kind of agreement to settle a dispute.

(a)CA Commercial Law Code § 1308(a) A party that with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as “without prejudice,” “under protest” or the like are sufficient.
(b)CA Commercial Law Code § 1308(b) Subdivision (a) does not apply to an accord and satisfaction.

Section § 1309

Explanation

This law states that if a contract allows one party to ask for quicker payment, performance, or more security "at will" or if they feel "insecure," they can only do this if they honestly believe payment or performance is at risk. If the other party believes this was done without good faith, it’s up to them to prove it wasn't justified.

A term providing that one party or that party’s successor in interest may accelerate payment or performance or require collateral or additional collateral “at will” or when the party “deems itself insecure,” or words of similar import, means that the party has power to do so only if that party in good faith believes that the prospect of payment or performance is impaired. The burden of establishing lack of good faith is on the party against which the power has been exercised.

Section § 1310

Explanation

This law allows a person or business to agree that one debt (obligation) takes priority over another for repayment. A creditor can agree to have their right to be paid take a back seat to another creditor's right. However, this agreement doesn't mean the creditor gets any special claim or security over the debtor's assets.

An obligation may be issued as subordinated to performance of another obligation of the person obligated, or a creditor may subordinate its right to performance of an obligation by agreement with either the person obligated or another creditor of the person obligated. Subordination does not create a security interest as against either the common debtor or a subordinated creditor.