Section 2-207 of the Uniform Commercial Code
Learn about the definition for this legal term.
What is Section 2-207 of the Uniform Commercial Code?
This is a provision governing the acceptance in the formation of a contract for the sale of goods. An acceptance that contains new terms will be treated as an acceptance and the new terms will be offers to add to the contract. The new terms will become a part of the contract unless the offer limited acceptance to the terms of the offer or unless the new terms materially alter the contract. In those events, the "acceptance" would be a counter offer.
Examples and Case Studies
Real-Life Example
Imagine a scenario where Company A sends a purchase order to Company B for the sale of 100 widgets. Company B responds with an acknowledgment that includes additional terms, such as a different delivery date and a disclaimer of certain warranties. Under Section 2-207 of the UCC, Company B's response is considered an acceptance of the offer, and the additional terms are treated as proposals to add to the contract. If Company A does not expressly object to these terms and they do not materially alter the contract, they become part of the agreement.
Case Study: Brown v. ABC Corp.
In the case of Brown v. ABC Corp., Brown placed an order with ABC Corp. for the purchase of industrial equipment. ABC Corp. accepted the order but included additional terms regarding installation and maintenance in their acceptance form. Brown did not object to these terms. When a dispute arose over the installation process, the court had to determine whether the additional terms were part of the contract. Applying Section 2-207, the court found that since the additional terms did not materially alter the original offer and Brown had not objected, they were included in the contract.
Case Study: XYZ Industries v. Jones
In XYZ Industries v. Jones, XYZ Industries sent an offer to Jones for the sale of raw materials. Jones replied with an acceptance that included a term limiting liability for defects. XYZ Industries had specified in their original offer that acceptance was limited to the terms of the offer. The court ruled that Jones' acceptance constituted a counteroffer due to the additional term materially altering the original contract. Therefore, there was no contract formed under the original terms.
Legal Requirements
| Requirement | Description |
|---|---|
| Acceptance with New Terms | An acceptance that includes new terms is treated as an acceptance of the original offer. |
| Proposals to Add to Contract | The new terms are considered proposals to add to the contract. |
| Inclusion of New Terms | New terms become part of the contract unless the offer limits acceptance to its terms or the new terms materially alter the contract. |
| Counteroffer | If the new terms materially alter the contract or the offer limits acceptance, the "acceptance" is treated as a counteroffer. |
Common Issues and Disputes
Common issues in cases involving Section 2-207 of the UCC often include:
- Determining whether the new terms materially alter the contract.
- Establishing if the original offer limited acceptance to its own terms.
- Handling situations where one party fails to object to new terms in a timely manner.
- Deciding whether an "acceptance" with new terms is a counteroffer or an acceptance with additional terms.
Further Reading
For more detailed information, see our related Contracts terms:
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