Rights and Obligations Contract of Sales

RE: Clean Sales Contract

1. Was a Contract created between Clean and Pros under the UCC

The basic elements of a contract are offer, acceptance, consideration, and the writing requirement (Chapter 8, Introduction to Sales and Leases, 2012). An offer is a party’s expression of its intention to contract with another under certain terms and for a certain consideration. Pros’ email to Clean requesting the seller to deliver six cases of Carpet Re-New cleaning product for $200 per case to Pros’ warehouse before 1st April 2019 symbolizes a valid offer, with definite terms. The UCC, unlike Common Law, does not require definiteness for an offer to be valid. As such, under Section 2-204 of the UCC, Pros’ offer would have been valid even if it had open terms such as if it did not specify the price and place of delivery (Chapter 8, Introduction to Sales and Leases, 2012).

Under Common Law, Clean would have been required to accept the offer in writing and send a response email to Pros to signify acceptance. Section 2-207 of the UCC, however, eliminates the need for writing, expressing that the conduct of the parties recognizing the existence of a contract sufficiently signifies acceptance and establishes a contract of sale (Chapter 8, Introduction to Sales and Leases, 2012). Clean did not respond to Pros’ email, but acted by making a delivery to Pros within the stipulated timeframe, and Pros accepted the same. The conduct of the two parties signified acceptance and established a contract of sale. Section 2-201 requires writing for a contract of sale exceeding $500 to be enforceable. Under S2-201, therefore, the current contract, which is worth $1,200, is voidable (Chapter 8, Introduction to Sales and Leases, 2012). However, subsection 3(c) of S2-201 expresses that a contract that does not satisfy the writing requirement above is still enforceable if the goods in questions have been received and accepted by the buyer or if payment for the same has been made (LII, Scope, n.d.). Under the UCC, therefore, a valid contract of sale was created between Clean and Pros.

2. What are the rights and obligations of Pros following inspection?

The contract between Pros and Clean was a delivery contract, implying that the title of the goods passed when Clean made the delivery of cleaning products at Pros’ place of business (Chapter 12, Title and Risk of Loss, 2012). Pros has three main obligations upon receiving the delivery: to inspect, accept, and pay (Chapter 10, Performance and Remedies, 2012). Section 2-513 of the UCC grants the buyer the right to inspect the goods for conformity within a reasonable time of delivery. If he fails to exercise his right to inspect and later discovers a defect that inspection would have revealed, he cannot revoke acceptance later (Chapter 10, Performance and Remedies, 2012). If upon inspection, the buyer finds the goods to be in conformity, they have a duty to accept and pay the amount agreed in the contract of sale (Chapter 10, Performance and Remedies, 2012). However, if the goods do not conform to the terms of the contract, the buyer has the right to reject the consignment (either entirely or in part) under section 2-601(a) of the UCC and refuse to pay, or revoke their acceptance and claim their money if payment had already been made (Chapter 10, Performance and Remedies, 2012).

There is no standard rule on what constitutes a reasonable period for inspection. Pros exercises its obligation to inspect the consignment received from Clean three days after delivery. In essence, this could be termed a reasonable period given that payment had not yet been made. Following the inspection, the company realized that the consignment did not conform to the contract terms since the cases contained Floor Re-New and not Carpet Re-New cleaning products. Since the inspection is made within a reasonable time, Pros can still exercise its right to reject the consignment and revoke the acceptance made at the time of delivery (Chapter 10, Performance and Remedies, 2012). Pros could reject the entire consignment and issue a notice of the rejection to Clean, in which case Clean would reclaim ownership and incur all relevant costs of transporting the goods from Pros’ warehouse. However, since it had already taken possession of the goods before rejecting them, Pros has an obligation to hold the same with reasonable care until Clean can collect (Chapter 10, Performance and Remedies, 2012). If the goods are destroyed while in its possession, Pros would partly bear the risk of loss (Chapter 9, Title and Risk of Loss, 20012).

If Clean does not respond to Pros’ notice of rejection within a reasonable time, Pros has the right to store the goods, reship the same to Clean, or resell and charge the seller for services (Chapter 10, Performance and Remedies, 2012). Under section 2-105, Pros could also decide to accept the consignment in part, such as accept three cases of Floor Re-New and reject three. A notice of rejection would still be given for the rejected consignment and the same actions taken as for the rejection of the entire consignment above. In cases where payment has already been made and the goods are found to be non-conforming upon inspection, the buyer has a right to demand to get their money back if the seller does not correct the non-conformity within a reasonable period (Chapter 10, Performance and Remedies, 2012).