A Practical Application

During the past year, this blog has presented a number of creative readings and applications of a large number of Code Sections.  Among those section are Sections 1-201(b)(20) which defines good faith; Section 1-304 which imposes a duty of good faith in all contracts or duties under the Uniform Commercial Code;  Section 1-103(b) involving supplemental laws applicable to the Code, and Section 2-607(5)(a) which involves ‘vouching in’ a seller of goods whose buyer is sued.

An Ohio court recently considered some of these claims in an opinion which is linked to this post.  As you will see, consistent with the majority of cases which have addressed the issue, the court found that there was no independent cause of action for a breach of the duty to act in good faith.  However, the court did not discuss whether certain remedial provisions were lost if a party were not found to have been acting in good faith. Such a result is consistent with the comments to Section 1-304 as discussed in a previous post. The court did not address this point since it was not before the court on the plaintiff’s motion for summary judgment. As the court noted it did not consider the report I wrote which was a correct ruling.  It is the job of the attorneys to present respective interpretations of the law to the court, so that the court can make the most informed decision possible.

Section 2-607(5)(a) was discussed in relatively recent post. If you recall my suggestion was to be certain to track the language of the statute to avoid having to prove ‘substantial compliance’.  In the case under discussion, a good letter was drafted, but not one that tracked the language of Section 2-607(5)(a).  Fortunately for the plaintiff, the court found substantial compliance with the notice requirements of Section 2-607(5)(a) and found for plaintiff on the most critical issues of the case.  As discussed in the opinion, this finding rendered plaintiff’s cause of action for collateral estoppel moot. 

Finally, the court did not discuss the recovery of attorney’s fees under Section 2-607(5)(a) since it was not before the court.  An award of attorneys’ fees is supported by case law which was discussed in the post on Section 2-607(5)(a). It may be that if the case goes to trial they can be recovered.

For those of you who have read all the posts, you will see many things in the court’s opinion.  I have posted the opinion and the Expert Witness Report so that you can see some of the concepts we have discussed in action.  I also do so to emphasize how critical it is to have the facts down cold. That is how good arguments are put together.  Finally, to emphasize the role of the attorney in UCC cases.  Courts are busy.  Courts want to reach the right result.  They will make decisions based upon what is properly pled and in the record.  The attorney who consistently does this will win almost every time.

Find the Opinion and Expert Witness Report here.