Form, Formation And Readjustment Of Contract - Sales - Commercial Law - CA

Section § 2201

In simple terms, this law says that for a contract to sell goods worth $500 or more, there needs to be a written record signed by the person you're trying to enforce it against, showing a deal was made. Even if the record misses a detail, it can still count as long as it shows the amount of goods, but not more than that. However, if two businesses are involved and one sends a written confirmation, the other must object within 10 days or it's considered agreed upon. There are exceptions: if the goods are special-made and can't be sold to others, if the person admits in court to the contract, or if the goods have already been paid for or received. Qualified financial contracts have different rules and don't need to meet these standards if there is evidence of the contract or an agreement by the parties.

(1) Except as otherwise provided in this section, a contract for the sale of goods for the price of five hundred dollars ($500) or more is not enforceable by way of action or defense unless there is a record sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by the party’s authorized agent or broker. A record is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subdivision beyond the quantity of goods shown in the record.

(2) Between merchants if within a reasonable time a record in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subdivision (1) against the party unless notice in a record of objection to its contents is given within 10 days after it is received.

(3) A contract which does not satisfy the requirements of subdivision (1) but which is valid in other respects is enforceable:

(a) If the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller’s business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement;

(b) If the party against whom enforcement is sought admits in its pleading, testimony, or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or

(c) With respect to goods for which payment has been made and accepted or which have been received and accepted (Section 2606).

(4) Subdivision (1) of this section does not apply to a qualified financial contract as that term is defined in paragraph (2) of subdivision (b) of Section 1624 of the Civil Code if either (a) there is, as provided in paragraph (3) of subdivision (b) of Section 1624 of the Civil Code, sufficient evidence to indicate that a contract has been made or (b) the parties thereto, by means of a prior or subsequent written contract, have agreed to be bound by the terms of the qualified financial contract from the time they reach agreement (by telephone, by exchange of electronic messages, or otherwise) on those terms.

contract for sale sale of goods 500 dollars or more ...

Section § 2202

If two parties have put their agreement into writing as the final word on their deal, that written record can't be contradicted by anything they said before or at the same time orally. However, it can be clarified or added to by looking at how they have interacted before, how they behave under the contract, or common business practices. Also, you can add more terms that don't conflict with the existing terms unless the written agreement was meant to be complete and exclusive.

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a record intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:

(a) By course of dealing, course of performance, or usage of trade (Section 1303); and

(b) By evidence of consistent additional terms unless the court finds the record to have been intended also as a complete and exclusive statement of the terms of the agreement.

confirmatory memoranda final expression prior agreement ...

Section § 2204

This section of the law says that a sales contract for goods can be valid as long as the parties involved show they agree, even if it's unclear exactly when the contract was made. The contract is still valid if some details are missing, as long as the people involved intended to create a contract and there's enough clarity to determine a fair solution if something goes wrong.

(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.

(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

contract for sale agreement sale of goods ...

Section § 2205

This law outlines situations when a merchant's offer to buy or sell goods is not revocable. If a merchant makes an offer in writing that says it will stay open, it cannot be taken back just because there's no exchange of money or benefit (called 'consideration'). Normally, this period can't last more than three months unless the offeree agrees, in which case it must be separately signed. In a situation where a merchant offers goods to a licensed contractor, and the contractor uses this offer to bid on a construction project, the offer can't be revoked for 10 days after the contract is awarded, or beyond 90 days after the offer was made. If the offer is oral and worth $2,500 or more, the contractor must confirm it in writing within 48 hours, or the merchant is no longer bound by the offer.

(a) An offer by a merchant to buy or sell goods in a signed record which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

(b) Notwithstanding subdivision (a), when a merchant renders an offer, oral or written, to supply goods to a contractor licensed pursuant to the provisions of Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code or a similar contractor’s licensing law of another state, and the merchant has actual or imputed knowledge that the contractor is so licensed, and that the offer will be relied upon by the contractor in the submission of its bid for a construction contract with a third party, the offer relied upon shall be irrevocable, notwithstanding lack of consideration, for 10 days after the awarding of the contract to the prime contractor, but in no event for more than 90 days after the date the bid or offer was rendered by the merchant; except that an oral bid or offer, when for a price of two thousand five hundred dollars ($2,500) or more, shall be confirmed in a record by the contractor or the contractor’s agent within 48 hours after it is rendered. Failure by the contractor to confirm the offer in a record shall release the merchant from the merchant’s offer. Nothing in this subdivision shall prevent a merchant from providing that the bid or offer will be held open for less than the time provided for herein.

merchant offer irrevocable offer consideration ...

Section § 2206

This section deals with how offers to make contracts should be accepted. Generally, an offer can be accepted in any reasonable way unless the offer itself clearly specifies otherwise. If someone offers to buy goods expecting them to be shipped promptly, the offer can be accepted either by promising to ship or by actually shipping the goods. If the goods shipped don't match the order, it's not considered acceptance unless the seller tells the buyer it's a temporary solution. Also, if performing an action is how you accept an offer, and the person making the offer doesn't hear back in a reasonable time, they might assume the offer was not accepted.

(1) Unless otherwise unambiguously indicated by the language or circumstances

(a) An offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;

(b) An order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods, but such a shipment of nonconforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

(2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

contract acceptance offer acceptance reasonable manner ...

Section § 2207

This section explains how a contract can be accepted even if there are some different or extra terms in the reply. If someone responds to an offer with a prompt acceptance or written confirmation, it counts as acceptance unless they specify they only agree if the added terms are accepted too. When both parties involved are merchants, these extra terms usually become part of the contract unless the original offer says only it can be accepted as is, the new terms change things significantly, or there's been an objection to those terms. Moreover, if both parties act like there's a contract, then a contract exists based on any mutually agreed terms in their communications, along with any other applicable terms from the code.

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:

(a) The offer expressly limits acceptance to the terms of the offer;

(b) They materially alter it; or

(c) Notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this code.

expression of acceptance written confirmation additional terms ...

Section § 2209

If you want to change a contract in this division, you don't need to offer anything extra for it to be valid. However, changes or cancellations must be in writing if the contract says so, and if you're using a form from a business, the other party must sign separately to agree to that requirement. Changes must follow certain legal rules, like those for significant contracts (statute of frauds). Even if a change isn't properly documented, it might still count as a 'waiver,' meaning a temporary or informal acceptance of the change. If you waive your rights for part of a contract, you can take back that waiver but you have to notify the other party, and it shouldn't be unfair if they've relied on that waiver in a big way.

(1) An agreement modifying a contract within this division needs no consideration to be binding.

(2) A signed agreement which excludes modification or rescission except by a signed writing or other signed record 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.

(3) The requirements of the statute of frauds section of this division (Section 2201) must be satisfied if the contract as modified is within its provisions.

(4) Although an attempt at modification or rescission does not satisfy the requirements of subdivision (2) or (3) it can operate as a waiver.

(5) 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.

contract modification consideration signed agreement ...

Section § 2210

This section explains how duties and rights in a contract can be passed on to others, known as delegation and assignment. You can let someone else do your part of the contract unless the other party specifically wants you to do it or if it's written in the contract. Even if you delegate, you're still responsible for the contract. Assignments mean transferring contract benefits to someone else but can't be done if it would drastically change the original obligation or increase the risk for the other party. Creating a security interest (a legal claim on property) in a contract is allowed, but if it results in someone else doing the main job, you're liable for any damages. When a contract says you can't assign it, it usually means you can't delegate your duties to someone else. Accepting an assignment generally means the new person promises to fulfill those duties. If an assignment makes one party insecure, they can ask for proof the new person will uphold the contract.

(1) A party may perform his or her 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.

(2) Except as otherwise provided in Section 9406, 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 him or her by his or her contract, or impair materially his or her 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 his or her entire obligation can be assigned despite agreement otherwise.

(3) 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 subdivision (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 (A) 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 (B) 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.

(4) 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.

(5) 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 him or her to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract.

(6) 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 (Section 2609).

delegation of performance substantial interest assignment of rights ...