Tuesday, January 30, 2007
I am prepping for what at Tulane is known as Contracts II, the required course in the second semester of the first year in which we teach Articles 2 (Sales) and 2A (Leasing) of the Uniform Commercial Code, and the United Nations Convention on Contracts in the International Sale of Goods. I decided to switch books, and am using Daniel Keating, Sales: A Systems Approach (on which the jury is still out). One of the points in the book's favor is its attempt to place sales law within a real-life business context, and it does so in part by relating interviews with real lawyers about their use of the various provisions of the law.
We will begin discussion of the UCC's version of the statute of frauds (Section 2-201) next week, just after I finish completing bamboozling them with the "battle of the forms" (interested pedagogues may write in for my handy-dandy 2-207 flow chart!). Here's what stopped me in my tracks. The first couple pages of the assignment discuss why it is that many businesses do not bother with written agreements, notwithstanding Section 2-201's general rule that any contract for the sale of goods of more than $500 ($5,000 in the revision), subject to certain exceptions, must be evidenced by a writing sufficient to indicate there is a contract, including a quantity term, and signed by the party against whom the contract is asserted. In many cases, the cost of putting it in writing exceeds the value obtained, or non-legal or relational remedies (like not doing business with somebody who reneges) suffice.
Of course, there are responsible opposing views. This is the one that gave me pause:
"Although our contracts to purchase clothes from wholesalers or manufacturers are probably formed on the phone, we insist that our purchasing people always follow with a signed written purchase order for at least two reasons: first, for purposes of our internal record-keeping, and second, because it makes me feel comfortable as a lawyer to think that we have something in writing."
Is it just me, or is there something odd here? Why would "comfort as a lawyer" be relevant? Is that because lawyers are naturally anal-retentive, slightly obsessive-compulsive nitpicking butt-coverers? Or it because "lawyer comfort" is shorthand for some actual value in the world? Do this lawyer's business people also feel more comfortable to think they have something in writing? Or are they doing their own internal cost-benefit analysis to try to understand what planet this person is coming from? And has the lawyer ever advised his people that, being on the purchasing side of the purchase order-invoice boilerplate battle, if there's a performed contract, there IS an exception to the statute of frauds, and all the remedies of the UCC, including consequential damages run in the purchaser's favor?
I would agree, as a purchaser, that sending a form saying nothing more in the boilerplate than "PURCHASER RESERVES ALL RIGHTS AND REMEDIES UNDER THE UNIFORM COMMERCIAL CODE, AND THIS PURCHASE ORDER IS EXPRESSLY CONDITIONED ON SELLER'S ACCEPTANCE OF THIS RESERVATION" would achieve precisely the stalemate than any competent UCC lawyer ought to achieve for a purchaser. But if the industry custom is not to use any paper at all, you don't need it. And you certainly don't need it for your own comfort.
Of course, that's just my opinion. I could be wrong.