The Table of Authorities
NY UCC § 2-725 (2014) …………………………………………………….………………6
2009 California Commercial Code – Section 2601-2616…………………………………………..……6
Subdivision (3) of Section 2711 – California……………………………………..…………6
41 U.S.C. §§ 6701–6707……………………………………………………………………..7
48 CFR § 52.246-25…………………………………………………………………….……7
Article 4 of the UCC…………………………….…………………………………………..7
A car, LX 570, is on offer at a price of $180,000. However, the price would go down as much as $175,000 for a willing buyer. The car is black and has a mileage of 70 kilometers only, and is in perfectly good condition. However, the purchaser would have to take it to the mechanic upon making the purchase for necessary checkups before putting in on road. Moreover, the buyer cannot return the product after making the purchase.
Mr. John accepts to purchase the car at the lowest possible price of $175,000. He consents in writing that he accepts the terms and chooses to remit the money in two installments before taking the car.
Intention to form legal connections
Both parties confirm the roles that they play in the contract. For example, the seller acknowledges the offer and admits that it is not bound to change. The buyer, on the other hand, wholeheartedly accepts to pay the requested amount after which both parties confirm the agreement through the issuance of a receipt and all car documents, including the log book.
The consideration applies for both cases. The consideration for the seller is that he will put the proceeds from the car into another work that is equally essential. The seller will also be saved from the burden or liabilities associated with keeping the vehicle. On the other hand, the consideration for the purchaser is that he will encounter ease in moving from one place to other without the pressure of having to use public transport.
The contract is in accordance with existing contractual laws as well as other regulations. The purchaser does not purchase the vehicle for the purposes of committing unlawful act and neither does the seller give out the car out of ill will.
The seller provides certainty that the car is not likely to develop any major complication and should that the buyer can return the vehicle should such an occurrence happens within the next half a year. The buyer, on the other hand, offers surety that he will not make unnecessary requests regarding the completed contract.
Contract laws are essential because they determine how the parties entering into a contract ought to relate to each other. The analysis pays considerable attention to the limitations that are likely to occur when relying on UCC as compared to common law, which both regulate contract formation in the U.S. The second part examines the limitations associated with service contracts. In both instances, the paper makes reference to applicable regulations that determine contract formation. The lesson from each part is the need to be watchful when entering into a contract to ensure that all regulations are adhered to because this would help to avoid the unfortunate circumstances that usually emergence in case of breach.
Limitations of having UCC as Opposed to Common Law
Contract law, at least in the U.S., is regulated by both the Uniform Commercial Code (UCC) and the common law. The primary variation between the two is that common law regulates contractual deals in areas such as insurance, services, employer-employee relations and mostly involve intangible assets. On the other hand, the UCC regulates contractual deals with products and mostly focus on tangible goods. In other words, the UCC governs all key commercial deals in the U.S. It is intended to improve sameness in transactions in the entire state and surrounding borders. Many states have already adopted the UCC code but it is yet to become a federal legislation.
One of the limitations of UCC as already hinted is that it cannot cover contracts involving exchanges of goods and services. For instance, the UCC may not be applicable in the above mentioned contract because the offer in this case is a good covered under common law. The other limitation of using the UCC is that it is not applicable across states as precisely as perceived. While some states were implementing the UCC, others engaged in significant transformations while making changes to develop regulations that meet their specific requirements. For example, the NY UCC § 2-725 (2014) that determine breaches in New York, demands that action for breach should be commenced within four years after the need of action has intensified (Justia, 2022). The same applies in California where an action for violation of any term of the contract for sale must start within four years after the need for action has been brought forth as provided for in 2009 California Commercial Code – Section 2601-2616 (Justia, 2022 a). However, what makes the two different is subdivision (3) of Section 2711 of the California regulation which defines how a buyer may have to rely mostly on the seller’s terms on breach as opposed to in New York where the purchaser has significant impact on determining the breach terms. Thus, knowing the limitations of having UCC covering a contract helps to acquire more insight into the complications associated with service contracts that are mostly covered by this regulation.
Complications of a Service Contract
Service contracts are engagements between a buyer or client and an organization or seller who will be offering the needed services. For instance, a service contract might be utilized to describe a working agreement between a contractor and landowner (LuxDev, 2022). Another example is where a firm hires a web designer to make some adjustments to the already existing form or introduce a new site. Typically, service contracts encompass details such as payment arrangements and deadlines. These contracts also often describe the task to be carried out and what processes need to take place if adjustments need to take place. Service contracts are legal pacts and can be challenged in court if necessary. Another key point about service agreements is that while they may involve verbal engagements, it is wiser to make the deal in writing as proof (Schwenzer, Ranetunge & Tafur, 2020). The writing allows parties to outline their expectations and makes it possible to determine the scope of work more effectively. Moreover, making service agreements in writing makes it easier to know how much it will cost to perform a particular task and how to handle possible disputes that occur in the course of the contract. For example, making the deal in writing provides an opportunity to determine whether the provisions of 41 U.S.C. §§ 6701–6707 are met, which seeks to ensure workers get fair wages when they purchase services from private contractors (govinfo, 2022). However, it is possible to identify certain limitations associated with service contracts.
One of the limitations of a service contract is that the purchaser is likely to carry the liabilities associated with the services that they acquire. Businesses that give services often encompass a limited liability clause in their services contracts to safeguard themselves from possible contractual harm that could emanate from a violation of contract terms and conditions (LuxDev, 2022). The limitation of liability refers to the cap on either the form of damages incurred or the measure of evident harm. The harm could be direct, in the sense that the effect shifts directly from the contractor’s failure, or can be consequential in the sense that the damage was a considerable factor in terms of amount but not largely the direct origin of the problem.
Assume the XYZEE Company provides website formation services. Wiley contracts the web developing company to create the website for his small and medium enterprise (SME). Little known to either parties, a malicious, ill-intentioned programmer develop Wiley’s site and installs some destructive software. The code does not cause any harm to the organization’s website, but instead affects buyers. In the absence of limitation of liability clause, the web developer could be in trouble for the incurred amount and the damage caused to Wiley. The presence of limitation of liability allows the web developer to restrict the total liability to the sum paid in the deal and it could also forbid certain forms of damages. According to the information by govinfo (2022 a) 48 CFR § 52.246-25 is the statute that covers liability in service contracts. Also Article 4 of the UCC provides information on how to deal with liabilities in service contracts. The regulation is mostly applicable in scenarios where defects are realized. However, the problem is not likely to occur when indulging in a goods contract such as the one mentioned at the beginning of this paper because all the terms are set beforehand. Thus, the evident limitation of service contracts is that it could subject one party to immense loss even in scenarios that the concern does not emanate from their side.
The description shows that using UCC as opposed to common law exposes contractors to limitations. Some of the constraints include the fact that the regulation covers service-based contracts and the terms tend to differ across states. The analysis also identifies some of the limitations associated with service contracts. The primary concern that forms the basis of the paper is the liability that one party into the contract is likely to experience. Hence, it is necessary to be as keen as possible during the implementation of the contract to avoid unanticipated losses.
govinfo. (2022). Title 41 public contracts. Retrieved from https://www.govinfo.gov/content/pkg/USCODE-2011-title41/pdf/USCODE-2011-title41-subtitleII-chap67.pdf
govinfo. (2022 a). Federal acquisition regulation. Retrieved from https://www.govinfo.gov/content/pkg/CFR-2004-title48-vol2/pdf/CFR-2004-title48-vol2-sec52-246-25.pdf
Justia. (2022). 2014 New York Laws UCC – Uniform Commercial Code Article 2 – SALES Part 7 – (2-701 – 2-725) REMEDIES 2-725 – statute of limitations in contracts for sale. Retrieved from https://law.justia.com/codes/new-york/2014/ucc/article-2/part-7/2-725/
Justia. (2022 a). 2009 California Commercial Code – Section 2601-2616: Chapter 6. Breach, repudiation and excuse. Retrieved from https://law.justia.com/codes/california/2009/com/2601-2616.html
LuxDev. (2022). General conditions for services contracts. Retrieved from https://luxdev.lu/files/documents/general_conditions_for_services_contracts.pdf
Schwenzer, I., Ranetunge, J., & Tafur, F. (2020). Service contracts and the CISG. Journal of Law and Commerce, 38(1), 305-332. https://doi.org/10.5195/jlc.2020.200