Grocery Inc. Essay

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Question 1

The Common Law of Contracts and The UCC apply to sales contracts. The Common Law governs Contracts involving trade of tangible items termed as goods (Henry R.Cheeseman, 2004, p.381). The UCC is “a model act that contains uniform rules that govern commercial transactions” (Henry R.Cheeseman, 2004, p.381). Article 2 in the UCC establishes rules for sales transactions specifically (Henry R.Cheeseman, 2004, p.381). Since there is a transaction of tangible items between Grocery Inc and its vendors the contracts are subject to both the Common Law and The UCC. However, “The Common Law of contracts governs if either Article 2 or Article 2A is silent on an issue” (Henry R.Cheeseman, 2004, p.381).

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There are a few contrasts between the Common Law and the UCC. Most of these pertain to the offer made and the acceptance by the buyer. According to Henry R.Cheeseman (2004),

The Common Law allows for a retraction of the offer by the offeror before acceptance. An exception, called option contract, is made when a consideration is paid to keep the offer open. The UCC on the other hand permits an exception where, by a written assurance on a separate form, an offer cannot be revoked before a period of three months. This is called the firm offer rule [UCC 2-205] (p.385).

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The mirror-image rule of the Common Law doesn’t permit additional terms in the offer. The addition of new terms would hold the offer ‘extinguished’. On the contrary, The UCC 2-207(1) permits expressions of acceptance that are definite and timely and these qualify as an acceptance even when there are additional terms. However, in the case of both parties being merchants, this exception is not given if the acceptance is conditional for an assent. In the case of one party or both parties being non-merchants, additional terms would be considered as ‘proposed additions’ and the offer would not be ‘extinguished’. If the additions are rejected by the offeror, the sales contract would have the terms of the original offer [UCC 2-207(2)] (p.387).

Question 2

The Business law has provisions for a firm to delegate its duties in cases where it feels that it would not be able to perform the contract. However, “if the obligee has a substantial interest in having the obligor perform the acts required by the contract, duties may not be transferred” (Henry R.Cheeseman, 2004, p.286), Masterpiece is obliged to perform the contract without delegation. Since Grocery Inc has sued Masterpiece for breach of contract and specific performance, it must have had a clause included that restricts transfer of duties.

             Since Masterpiece claims that it has the right to delegation of duties and has indirectly agreed to have delegated duties, it is “legally liable for the performance of the contract” and Grocery Inc has the right to sue Masterpiece (Henry R.Cheeseman, 2004,

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p.286).  In a different scenario where the term “assumption of duties” has been used in the delegation, the delegatee  (here ‘Build Them to Fall’) is liable for nonperformance and Grocery Inc can either sue the delegator ‘Masterpiece’ or the delegatee ‘Build Them to Fall’(Henry R.Cheeseman,2004,p.286). If the contract of the delegation does not contain the term ‘assumption’ the delegation is called a ‘declaration of duties’ since the delegatee ‘Build Them to Fall’ hasn’t assumed duties (Henry R.Cheeseman,2004,p.287). Now, only ‘Masterpiece’ is liable.

            The contract between the obligor and obligee (Here ‘Masterpiece’ and Grocery) would contain a ‘Force Majeure’ clause that excuses non-performance due to ‘unforeseen circumstances’ (Henry R.Cheeseman, 2004, p.295). Masterpiece has stated commercial impracticability as the excuse for non-performance. The increase in jobs made it impossible for Masterpiece to complete the renovation. This is an unforeseen circumstance hence, Masterpiece can be excused. However, this doctrine has not been recognized by all states. If ‘My Town’ is in a state that recognizes this doctrine, Masterpiece could be spared. It should also be mentioned that this doctrine is being examined only on a ‘case-to-case basis’ since it is not ‘fully developed by the courts’ (Henry R.Cheeseman, 2004, p.295). In a circumstance such as this there is a high possibility that ‘Masterpiece’ might be excused for non-performance.

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Henry R. Cheeseman, Business Law: Legal, E-Commerce, Ethical and International

            Environments, Fifth Edition (2004), Ch.19 (p.381-387)

Henry R. Cheeseman, Business Law: Legal, E-Commerce, Ethical and International

            Environments, Fifth Edition (2004), Ch.15 (p.286-295)