Week 8 Assignment – Food, COVID, and the Uniform Commercial Code

Rebecca Miller

Commercial Law LEG565

Professor Lori Baggot

March 7, 2022
 Section 1: Determine whether a contract is formed and if the situation is governed by

common law contracts or the Uniform Commercial Code. Support your determination with

evidence.

For a contract to be formed, two private parties must be in agreement, with one party

making an offer and the other accepting the offer. The agreement comprises of mutual

obligation(s) that are enforceable by law. Legal enforceability is made possible by the existence

of a valid offer and mutual assent, consideration, capacity, and legality to enter into an

agreement. In the preceding scenario, Dan and Leo have entered into an agreement with Public

Growers Inc. to buy and sell groceries and sundries. As indicated, the obligation is entrenched in

a five-year contractual document; therefore, there is indeed a legal contract.

There exist two sources of contracts, the Common Contract Law and the Uniform

Commercial Code. While these two sources are similar, the Common Contract Law is rigid in

nature. It does not accommodate any deviation from the stipulated initial terms of the contract

and is thus governed by the mirror image rule. On the other hand, the Uniform Commercial

Code (UCC) is relatively accommodating and designed to create a fair platform for negotiating

commercial agreements, UCC (3). It employs a uniform set of rules to encourage fairness in the

execution and settlement of contracts by offering clarity and stability to critical matters of

statutory law. Article 2 of the UCC governs the sales of goods and tangible objects, and

therefore this indicates that the contract with Public Growers falls under UCC. The fact that the

above contract is vague and fails to define specific parameters, such as timelines, quantity
description, and identity of products, relegates it to being a UCC contract. Common law

contracts require a specific definition of each of these parameters to qualify as valid.

Section 2: Determine whether parol evidence is admissible to explain the terms of the

contract and whether any exceptions according to the Uniform Commercial Code apply.

The use of the parol evidence rule to explain the terms of the contract is inadmissible

because the parties appear to have engaged in good faith despite not clarifying the specific kind

of vegetables and fruits or specific supply quantities. It is noteworthy that the contractual

relationship had been progressing well but for the onset of the COVID 19 pandemic. The

structure of the contract demonstrates the lack of complete contract document integration.

Certain aspects of the contract, such as the product, have been left out and are ambiguous.

Thus, allowing for the consideration of "a course of dealing" according to Section 2-202

of the UCC. Thus, by benchmarking on the implied sales operations carried out prior to the

dispute, the use of parol evidence would help clarify aspects of the contract, and hence it

should be admissible. The parties appear to have been comfortable with the existing omissions

with regard to specific delivery parameters. This is also regarded as "A course of performance,"

which therefore makes the use of parol evidence admissible because of the existence of a

mutually accepted continuous mode of business operation between the parties prior to the

dispute. "A usage of trade" consideration can be used to permit admissibility of parol evidence

due to the fact that there is evidence showing that the buyers' expectations were based on

previous continuity of supply levels, which they had expected the supplier would maintain.
 The supplier, Public Growers Inc., was rendered incapable of executing its contractual

obligation by the COVID 19 pandemic and could therefore use parol evidence to demonstrate

its lack of contractual capacity. In this context, the parol evidence negates the written contract

terms on the basis of the lack of contractual capacity on the part of the supplier to fulfill its

obligation.

Section 3: Determine whether Dan and Leo can successfully sue for breach of contract

when they are forced to close two stores. Support your findings and provide an

understanding of the law.    

The UCC also provides flexibility to amend an offer based on prevailing circumstances,

and the contract with Public Growers Inc. falls under UCC. Dan and Leo would likely be

unsuccessful in suing for a breach of contract. On the other hand, Dan and Leo may sue for

damages at law, but many factors would determine the possibility of success. If they are suing

for compensation based on insured risk, then they could be successful at receiving

compensation for such loss.

However, should they be seeking damages from Public Growers Inc., the success may be

elusive based on certain principles that govern the law of contract. If the defendant is able to

demonstrate that the breach of contract resulting from the nonperformance of its contractual

obligation was occasioned by "an act of God" and they invoke "force majeure," the court would

have to exonerate the defendant of its obligation to the plaintiff. The UCC provides for a period

of four years of the progressive breach of contract and nonperformance of contractual

obligation to determine guilt. Based on the information given, it is evident that the supplier has
defaulted on its obligation for a period of between one year and less than four years. This may

not be substantive to constitute in liability on the part of the plaintiff.

Section 4: Research three potential contract defenses for Public Growers, Inc., and

explain how they could be utilized to avoid liability.

The existence of clauses to do with the termination of convenience may provide Public

Growers Inc. with relief if considered and permitted in its defense argument. The fact that the

pandemic was an occurrence caused by factors extraneous to the supplier and beyond its

control could be cited as a legitimate cause for the termination of its contractual obligation to

the customer. A continued business relationship should be considered because the current

casual circumstances are likely temporal, and the potential for future business engagement is

apparent. In this context, consideration of recovery is essential to fostering good relationships

and amicable settlement. The supplier should, at this point, seek a release of claims in exchange

for the settlement if there exists any.

Public Growers Inc. can invoke "Force Majeure" rights and demonstrate the impact of

the COVID 19 pandemic on its capability and capacity to deliver on its contractual obligation

and hence to prevent it from executing its obligation. This then creates an opportunity under

which Public Growers Inc. can be relieved of its liability for not performing its contractual

obligation to Dan and Leo. Critical to the success of this defense is the manner in which the

force majeure clause has been drafted. Common phrases used read as follows; "acts of God,"

acts of government, or "other circumstances beyond the parties' control." Katsivela (1).
Evidently, these cover occurrences such as the pandemic and the related consequences of

government interventions.

A third defense that is applicable is citing frustration of purpose. The supplier can

demonstrate how a "supervening frustrating event" such as the government instituted

regulations prevented it from fulfilling its contractual obligation of supplying vegetables and

fruits to its customers, an essential purpose to its business. The ability to prove that the causal

events in question were unforeseen, unprecedented, and unavoidable is critical for a successful

defense. This particular defense resonates with the doctrine of "Impossibility," which equally

requires the defendant to demonstrate that the circumstances resulting in nonperformance

and thereby a breach of contract was beyond its control. Additionally, the demonstration that

the executor of the contract could not have possibly anticipated or foreseen the factors or

events resulting in nonperformance of its contractual obligation must be satisfactory.

References

1. Katsivela, M, 2007, Contracts: Force Majeure Concept or Force Majeure

Clauses. Unif L. Rev, ns, 12, 101

2. Roger L. Miller. 2018. Business Law: Text & Cases - Commercial Law for

Accountants.

3. Uniform Commercial Code U.C.C. - ARTICLE 2 - SALES. 2002.