Friday Frivolity: A Limerick for Wisconsin Knife Works

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I am teaching Wisconsin Knife Works v. National Metal Crafters for the first time this year. It is hard to find good cases on modification under the UCC's Article 2, and I think I may stick with this one, even though it forces me to talk about the Statute of Frauds long before I am ready to talk about the Statute of Frauds. It is a fun case to teach because it is interesting to see Judge Posner and Judge Easterbrook (pictured, as ChatGPT and I imagine them dueling, at right) on different sides of a case when they were both quite new to the Seventh Circuit. They are trying to make sense of UCC § 2-209's provisions relating to oral modifications in the face of a no-oral-modifications clause. 

Judge Posner begins with two thoughts that epitomize what I love about his writing. He dismisses the "reasoning" (scare quotes his) behind the common law's willingness to set aside no-oral-modification clauses through subsequent oral agreements as not reasoning but "a conclusion disguised as a metaphor." Second, he is willing to concede that perhaps the challenge of reconciling the provisions of § 2-209 is simply a product of a failure of foresight. The drafters of the UCC made a "big break" from the common law in eliminating the requirement for consideration. They did not imagine all of the "ramifications of the break." Article 9 underwent significant revisions soon after adoption. Revision of Article 2 could also use a tune-up. I wonder why nobody ever attempted to revise Article 2 . . .  Even if Judge Posner is right about §2-209's blind spots, I don't think either he or Judge Easterbrook comes up with an entirely satisfactory solution grounded in the UCC's text.

Judge Posner correctly identifies the problem: while § 2-209(2) says that no-oral-modifications clauses will be enforced, and § 2-209(3) says that modifications within the Statue of Frauds are also within the statute of frauds, § 2-209(4) seems to undercut both. It says that "attempted" modifications may operate as waivers of the writing requirement. But if all attempted modifications count as waivers, we are back at the common law rule whereby parties can just ignore their own no-oral-modifications clauses.

Judge Posner's solution relies on the fact that § 2-209(4) does not say that all attempts are waivers; they only can operate as waivers. So far so good. But then Judge Posner adds a reliance requirement before an attempted modification transforms into a waiver. It comes out of nowhere. Worse still, UCC § 2-209(5) talks about reliance, so if the drafters wanted reliance to be a necessary element of waiver in §2-209(4), they certainly could have said that. Even worse still, as Judge Easterbrook points out in dissent, it is hard to imagine a scenario were there would not be reliance on a modification, so Judge Posner hasn't taken us far from the common-law conclusion disguised as a metaphor.

Judge Easterbrook's solution, which allows conduct to operate as a waiver, preserves some usefulness to § 2-209(2) and (3). They still prevent an oral modification of a contract that can only be modified through a signed writing, either because of a no-oral-modifications clause or because of the Statute of Frauds. The problem is that Judge Easterbrook provides no textual basis for why waiver through conduct should be favored over waiver through oral agreement. He praises the drafters of the UCC and calls it "one of the most carefully assembled statutes in American history." Seems like careful drafters could have distinguished modification by conduct from modification by oral agreement if that were their intention.

Moreover, I am not sure that there would be many more cases of attempted modification unaccompanied by conduct than there would be cases of attempted modification without reliance. Again, we seem not to have moved far from the common law rule. Perhaps no-oral-modifications clauses really are just standard boilerplate that nobody seriously intends and thus we should not be overly concerned if they are routinely ignored both by the parties and the courts.

The Limerick

Judge Easterbrook thought there was waiver,
While Judge Posner views with disfavor
Such nonchalant changes
To written exchanges
This case is one knife-fight to savor!