This paper examines four interconnected business law scenarios involving the Uniform Commercial Code (UCC), common law contracts, and the doctrine of commercial impracticability. It analyzes when the UCC governs vendor-merchant relationships versus common law, addresses a construction subcontracting dispute and whether commercial impracticability can excuse a breach, considers the rights of a minor to disaffirm an automobile purchase contract, and evaluates the contractual rights of a grocery retailer in a flood-related supply dispute. Together, these scenarios illustrate how default contract rules, commercial impracticability defenses, and capacity doctrines interact in real commercial contexts.
The Uniform Commercial Code (UCC) does apply in situations where vendors are supplying goods and products to stores. As Mallor (2003) notes, "Many of the Code's provisions apply only to merchants or to transactions between merchants." It is possible that common law contracts might also apply. However, for any issue that arises to be governed by common law rather than the UCC, it would have to concern a service provided by the vendor, not the vendor's product. Often, when there is a mixture of both service and product involved in a legal dispute involving commercial transactions, the UCC will take precedence if the service component is merely incidental to providing the goods.
There are at least three separate issues in the Masterpiece Construction dispute. The first concerns whether the contract between Grocery, Inc. and Masterpiece Construction specified that Masterpiece was not to subcontract or delegate any work. The second concerns specific time and quality performance requirements written into the contract. The third concerns whether Masterpiece could expect relief based on commercial impracticability.
Regarding the first question, because Grocery, Inc. brought action based on the subcontract, it is at least likely that the contract specified either that no subcontractors were to be involved, or that Grocery was to be notified of any subcontracting and had possibly reserved the right to relief if it did not approve the subcontractor. That specific detail is unknown, however. The second concern is likely relevant; had Masterpiece not been facing sanctions for failure to fulfill its performance requirements under the contract, it might not have employed a subcontractor.
Because Masterpiece was apparently seeking to prove that subcontracting was necessary due to commercial impracticability, it is also safe to assume that Masterpiece was in breach of the contract and knew it was in breach. Whether commercial impracticability applies is tenuous at best. While it is a legitimate excuse for breaching a contract, "the impracticability must be caused by an unexpected contingency that affects or creates conditions that neither party contemplated, such as a natural disaster, war, or shortage of materials caused by an embargo" (Insurance CCH Web site). Unfortunately for Masterpiece, it would have a hard time proving that such an event caused its increase in jobs. More likely, its own sales and marketing efforts caused the increase in workload, meaning its being overscheduled was its own responsibility — not a matter of an act of God, nature, or political intervention.
"Jeff's right to void an underage auto purchase"
Grocery's rights under contract law are limited to securing the best outcome in the current circumstances. As Tasini (1998) explains, "The idea of contract flexibility is embedded in general contract law theory … which leads to a preference for laws that provide background rules, playing a default or gap-filling function in a contract relationship. A default rule applies if the parties do not agree to the contrary." In the case of the Cereal/Grocery dispute, it is apparent that neither party can agree on what should be done.
In this case, Cereal could actually rely on the principle of commercial impracticability: it was not through its own fault that a flood damaged a significant portion of its product. It would therefore be within its legal rights to cancel the contract altogether or, if it saw fit, to substitute a different product for the one ruined in the flood in order to fulfill the contract's terms. The fact that Grocery had requested a different shipment than originally contracted does not mean that Cereal was obligated to comply, especially given that the exact components of each case shipped to each store had been left to further discussion.
By leaving that detail unspecified in the contract, it may be that Cereal does not even need to claim commercial impracticability. Under common law, it would have been up to Cereal to decide which products to ship to fulfill the contract in the first place. At the very least, Cereal has a strong claim to modify the number of boxes shipped under the commercial impracticability rule. For a broader discussion of how courts analyze force majeure and impracticability defenses in commercial supply contracts, legal scholars continue to examine the balance between contractual certainty and equitable flexibility.
Commercial impracticability. Insurance CCH Web site. Retrieved 8 August 2004 at
Forum. Free Advice Web site. Retrieved 8 August 2004 at http://forum.freeadvice.com/showthread.php?s=f4bbb3a767a023c2e52ee4f4fbd776e3&p=682153#post682153
Mallor. (2003). Business law: The ethical, the global & ecommerce environment. New York: McGraw-Hill Companies.
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