The “Widget” Scenario – Part I: A widget salesman gives a brochure for the 2009 new and improved widget to the CEO of your company at a trade show. The CEO says that the new widget is really great and his company should have a complete set of the new widgets for the accounting department.
Does the salesman have a contract? Why or why not?
The “Widget” Scenario – Part II:Given the wonderful response from the CEO to the brochures for the new widgets, the salesman visits your company's accounting department, talks to the CFO, and gives him a written proposal for the complete set of new widgets. The CFO says “Great. Let's get this going.”
Does the salesman have a contract? Why or why not?
The “Widget” Scenario – Part I
In the event of contracts concerning a sale of goods (where goods are referred to as movable items) and the sale is being conducted in a commercial setting, then the Uniform Commercial Code (UCC) is applied straight away. The Section 2- 206, of UCC lays down certain conditions regarding offer and acceptance in the formation of contract as:
a) The offer being made for the purpose of contract shall be unambiguously construed as inviting acceptance by the offered.
b) Offer for purchasing goods should be construed as invitation for acceptance by reflecting prompt promise due to the promptness of current situation regarding conforming or non-conforming goods (Danzig, 1975).
c) The mode of acceptance is reasonable only when requested performance should have begun and in the event of offeror not being notified about the acceptance then he may treat the offer as lapsed whatsoever.
So, as per the UCC, a contract regarding sale of the goods can be created in any way that is sufficient to show the agreement that unambiguously involve offer as well as acceptance. This whole procedure is to be carried out by both the parties that fully recognizes the establishment of a contract. In the present scenario, the CEO made a statement suggesting that the company which he was working for was indeed requiring the widget and it would be really great for the company to have a whole new set of the widgets for the accounting department. Having said that, in no situation can it be concluded on the CEO’s part that he made an offer or gave any kind of order to the salesman regarding the widgets. Rather, he was just expressing his interest and the need for the widgets. There was no mention of offering any quantity, no discussion regarding price terms or time of delivery. So, it can at least be said that the situation remained completely ambiguous. It could at maximum be construed as an invitation of making an offer on the CEO’s part. Therefore, we can conclude that the salesman had no contract at all.
The “Widget” Scenario – Part II
The Uniform Commercial Code (UCC) has been proven to be a comprehensive code in order to address a number of aspects regarding commercial law. UCC is being considered now as one of the most important developments in the American Law history. The National Conference of Commissioners on Uniform State Lawsalong with American Law Institute drafted these important statutes in order to make UCC a model code. After that, different state legislatures enacted the UCC provisions. Gradually, the Code became a broad brush set of statutes that govern the important business terms regarding contracts (Summers, 1968). As we know, the whole business activities around the world are based on these elementary terms and no other law could have defined these terms in a better way and therefore, the business law becomes absolutely clear.
As per the Subsection (2), 2-206 of UCC that says Offer and Acceptance in Formation of Contract. It says that the mode of acceptance is reasonable only when requested performance should have begun and in the event of offeror not being notified about the acceptance then he may treat the offer as lapsed whatsoever("§ 2-206. Offer and Acceptance in Formation of Contract.",n.d.). In this second case scenario, as per the UCC, an offer for the purchasing of a certain goods regarding prompt or current shipment was made. It would be construed as inviting the acceptance by a prompt promise for that prompt or current shipment regarding the conforming and non-conforming goods.
So, here, as per the facts of the situation, a contract was clearly seemed to have formed because of the fact that the sales man had proffered a written proposal that was apparently had written on it the terms and conditions regarding the sale of the widgets. It surely should be construed as a valid offer being made on the part of salesman. It is important to note that the CFO of the company, being at his command of an authority for the company, told the salesman that they should “get that going”. The CFO, therefore, was making it absolutely clear about his intentions and expectations to the salesman that his firm should start making the widgets and supply them to the company. Then, it was up to the salesman to either make the promise regarding the sale or should actually supply the widget to the company. Therefore, we can conclude at the end that a valid as well as enforceable contract has been formed between the two parties.
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§ 2-206. Offer and Acceptance in Formation of Contract.. LII / Legal Information Institute. Retrieved 6 October 2016, from https://www.law.cornell.edu/ucc/2/2-206
Danzig, R. (1975). A Comment on the jurisprudence of the Uniform Commercial Code. Stanford Law Review, 621-635.
Summers, R. S. (1968). " Good Faith" in General Contract Law and the Sales Provisions of the Uniform Commercial Code. Virginia Law Review, 195-267.