The Comprehensive Approach: Intra Article

An example of the impact of the intra Article comprehensive approach can be seen with a simple hypothetical.  Buyer of goods purchases 80 commercial washing machines from seller.  Shortly after installation, buyer experiences difficulty with the machines and it turns out that they are all defective due problems with the motors.  The machines work intermittently. Seller and buyer are unable to resolve the dispute, and ultimately, buyer sues for breach of the warranty of merchantability under Section 2-314.   

Buyer’s attorney does not use the comprehensive approach, and feels that he has this case locked under what he perceives to be the dispositive section and language of the case:

(1) Unless excluded or modified (Section 2-313), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind….

(2) Goods to be merchantable must be at least such as

(a) pass without objection in the trade under the contract description; and
…
(c) are fit for the ordinary purposes for which such goods are used

 

Seller was a merchant dealing in goods of the kind; client was a buyer in the ordinary course; the goods were defective. The washing machines did not work. Clear violations of the merchantability warranties of Section 2-314(2)(a)(c).  Buyer thinks ‘case over’. 

Seller’s attorney on the other hand, follows the comprehensive approach and sees the applicability of other sections under Article 2 which might shed light.*   For example, was there any disclaimer of warranties?  As you will see, disclaimers of warranties can be disclaimed by trade usage, course of performance and course of dealing.  They need not be in writing.  Are there documents, trade information, or conversations between the parties which can help seller? Section 2-202 creates channels for the introduction of certain types of evidence if done in a manner consistent with the section.  

If buyer claims rejection, was timely notice given by the buyer under Section 2-602; if timely, did it satisfy the particularity requirement of Section 2-605.  If the rejection is not effective, then the product has been accepted per Section 2-606(1)(b).  If goods are accepted, and defects claimed, there are notice requirements for the buyer once again per Section 2-607.The failure to give proper and timely notice can result in a dismissal of the case.  There is great leverage in these sections.  If the goods were shipped, were they damaged in transit? What were the shipping terms? If it was an F.O.B. shipment contract, and proper shipping and notice were done, the risk of loss would pass to the buyer at the time of shipment?  Is there an exclusive remedy under Section 2-719?

At this point, the plaintiff buyer is no longer controlling the playing field.  His or her goal is to keep the case within Section 2-314.  You are now in control of where the case goes, because you have created a new playing field. The other side must now respond to your points of law, and each time a challenging response is required, you are moving toward a successful resolution of the case.  This is all done in good faith, and with the skill of someone who understands the meaning of the text of the Code and how to apply it consistent with your professional responsibility to represent your client at the highest possible level.

The foregoing illustration occurs in the litigation context.  The facts have already been fixed and the damage done.  In the drafting context however, you are predicting what might go wrong and to eliminate as much risk as possible.  You are looking for anything in applicable Code sections which impacts your client’s position.  I think drafting is the most intellectually challenging component of law, for you are attempting to imagine the totality of what will and might happen in a dynamic commercial setting, and how to establish protection for your client.  Unquestionably, for this endeavor you need to look at the whole Code.

* As you will see, Article 1 can have an enormous impact on any contract under the Code.  For now, I am using Article 2 to illustrate the potential impact of the comprehensive approach within a substantive Article.  Also, the sections being cited in connection with the example are illustrative.  There are many other sections activated by the facts.