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Buyer Acceptance Under the Uniform Commercial Code

Lesson Transcript
Instructor: Ashley Dugger

Ashley has a JD degree and is an attorney. She has extensive experience as a prosecutor and legal writer, and she has taught and written various law courses.

Sales and other transactions are covered by the Uniform Commerical Code (UCC), including buyer acceptance. Understand UCC Article 2, examine contracts for the sale of goods, and learn what constitutes acceptance. Updated: 09/29/2021

UCC Article 2

Many businesses involve the sale of goods, or movable property. Selling goods often involves the use of sales contracts. Take, for example, Shelly. Shelly loves her job as a shoe salesperson! Because Shelly is in sales, it's helpful for her to be familiar with the Uniform Commercial Code, or UCC. The UCC is a uniform act that covers sales and other commercial transactions.

Keep in mind that the UCC isn't law. It's a model, or guide, meant to encourage uniformity and consistency between state laws. All 50 states have enacted at least portions of the UCC, but different states have adopted different parts and even different versions. This means that state laws regarding commercial contracts are similar, but they aren't exactly uniform.

Shelly doesn't need to know the entire UCC. For the most part, she'll want to be familiar with the UCC's Article 2. This article is entitled 'Sales' and addresses contracts for the sale of goods, like shoes.

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  • 0:05 UCC Article 2
  • 1:23 Contracts for the Sale…
  • 2:54 Acceptance
  • 4:27 Conforming Vs. Nonconforming
  • 5:13 Rejection and Treatment
  • 7:57 Lesson Summary
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Contracts for the Sale of Goods

Under Article 2, it's easy to form a sales contract. Article 2 states that a contract for sale of goods may be made in any manner sufficient to show agreement. Generally, this means that one party must make an offer and another party must accept that offer. However, the means for making or accepting an offer can vary.

For example, let's say that Shelly is in charge of ordering stock for the shoe store. She wants to buy 20 pairs of a particular type of sneaker. Seth is a supplier and offers to sell Shelly 20 pairs of sneakers for $20 a pair. Shelly accepts Seth's offer. This is a sales contract. Seth is now obligated to supply Shelly with the sneakers, and Shelly is obligated to pay Seth, even if the two never spoke in person or signed a written contract.

This is a common scenario. The majority of business agreements are made without the use of a written and signed contract. Many businesses rely on oral contracts, purchase orders and electronic communications. Article 2 contemplates the many different ways offer and acceptance can be achieved in contracts for the sale of goods.

Acceptance

Let's take a closer look at what constitutes acceptance under the UCC's Article 2. Article 2 states that a party can accept an offer in any manner and by any medium reasonable in the circumstances. Courts define 'reasonable' in a lot of different ways. It's a broad definition that's determined by the type of contract and the parties' circumstances.

In general, acceptance can occur in a variety of ways. However, acceptance must fall under at least one of these categories:

  • The buyer signifies that the goods are conforming after a reasonable opportunity to inspect them
  • The buyer signifies that he or she will retain the goods even if they are nonconforming
  • The buyer has a reasonable opportunity to inspect the goods and fails to reject the goods
  • The buyer treats the goods in a way that is inconsistent with the seller's ownership

Note that, in each of these categories, acceptance of any part of a commercial unit constitutes acceptance of that entire unit. In other words, the buyer must accept or reject the entire order. If a buyer accepts part of the order, then the buyer has accepted the entire order.

Let's explore each of these categories.

Conforming v. Nonconforming

Let's say that Shelly orders 20 pairs of sneakers from Seth. She orders pairs of blue sneakers and pairs of red sneakers Seth ships the sneakers to Shelly. A week later, Seth calls Shelly to confirm she received the shipment and that she likes the shoes. She tells Seth she received the sneakers and can't wait to put them out on the shelves.

Shelly had a reasonable amount of time to open the boxes and inspect the shoes. Her conversation with Seth signified that she's pleased with the goods and that they conform to her order. Shelly therefore accepted the goods and is obligated to pay Seth.

Now let's say Shelly opens the boxes and discovers that the sneakers are all blue. That's not what Shelly ordered. When Seth calls a week later, Shelly tells him about the mistake but tells him she's still excited about the sneakers. She says she'll still put them out on her shelves.

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