The Uniform Commercial Code (UCC) governs the sale of contracts for movable goods in the United States. Enacted in 1953, the purpose of the UCC was to make doing business across state lines easier by avoiding the inconsistencies and complexities of various state laws.
There are nine articles of the UCC, each dealing with a separate issue. As a business owner in Florida, chances are that most of your contracts involve movable goods and are therefore subject to the UCC.
How the battle of the forms begins
If you are like most business owners, you do not have the time or desire to create your own specific contract for each business transaction. You likely rely on preprinted forms or templates with boilerplate language.
The problem is that the other party to the contract is probably also using their own pre-printed templates. Many business transactions are conducted by exchanging these pre-printed forms and proceeding with the transaction without thoroughly reading the forms or signing a final contract.
If a dispute arises after the transaction is complete, this is when the “battle of the forms” begins. The transaction is governed by Article 2 of the UCC if the transaction involves movable goods.
The UCC contains rules to follow for situations involving contracts with conflicting terms. How the conflicting terms are resolved depends on whether you and/or the other party are considered merchants.
Determining if you are a merchant
Under the UCC, a merchant is someone who regularly deals with goods of the kind involved in the transaction. You are likely considered a merchant you regularly buy or sell the goods involved and are familiar with the type of goods.
On the contrary, if you have never bought or sold the goods before and this was a one-time time, unique transaction involving these types of goods, you might not be considered a merchant.
When the transaction is between two merchants, once an offer is made, any new or additional terms become part of the agreement, with some exceptions.
They will not become part of the agreement if the agreement limited the acceptance to only its own terms, the other party objects to the new or different terms within a reasonable time or the new or different terms materially alter the terms of the offer.
To materially alter the terms of the offer, the new or different terms must impose a hardship on the other party or significantly change the major terms of the contract.
If neither you nor the other party are merchants, or only one of you is, any new terms are considered only proposals and do not automatically become part of the final agreement. Any different terms become part of the contract.
How to avoid the battle of the forms
The battle of the forms can become complicated, costly and time consuming. You can avoid the battle of the forms by taking time to negotiate a specific contract for the transaction containing terms agreed upon by both parties.
This is a good idea if you and the other party plan to engage in future business transactions. Another option is to review the other party’s form and look for any conflicting terms before going forward with the transaction. Address the terms and negotiate a solution before proceeding.