CONTRACTS & SALES — ANNOTATED MODEL ESSAY
This essay models a UCC Article 2 sale-of-goods problem layered with battle-of-the-forms, the perfect tender rule, and buyer's remedies. Read the black text as a timed answer; the gold boxes explain why each move earns points.
Baker, who owns a small bakery, emailed Mill, a flour wholesaler, an order: "Send 200 fifty-pound bags of your premium bread flour at your list price of $18 per bag; delivery by March 1." Mill replied the same day by email: "Accepted. Standard terms apply, including: all disputes to be resolved by binding arbitration in our home county." Both Baker and Mill are merchants. Neither party objected to the other's message, and Mill began preparing the shipment.
On February 25, Mill delivered 200 bags, but 30 of them were a lower-grade all-purpose flour, not the premium bread flour ordered. Baker immediately emailed Mill, rejecting the entire shipment and demanding conforming flour. With Baker's busy season approaching and no time remaining, Baker bought 200 bags of comparable premium bread flour from another supplier at $23 per bag. Mill argued that Baker was required to accept the 170 conforming bags and that, in any event, the parties' dispute must go to arbitration.
(1) Was a contract formed, and did it include the arbitration term? (2) Was Baker entitled to reject the entire shipment? (3) What damages, if any, may Baker recover?
Model Answer — with annotations
Black text is the answer you could realistically write under timed conditions. The gold boxes explain why each move earns points.
I. Governing Law and Contract Formation
Because the contract is for the sale of flour — movable goods — Article 2 of the UCC governs. Both parties are merchants, as each deals in goods of the kind, which triggers the UCC's special merchant rules.
Baker's email was an offer: a definite proposal of quantity (200 bags), subject matter (premium bread flour), price ($18), and delivery date. Under UCC § 2-206, an order to buy goods may be accepted by a prompt promise to ship or by shipment. Mill's same-day reply "Accepted," followed by performance, was an effective acceptance, so a contract was formed.
II. The Arbitration Term — Battle of the Forms
The question is whether Mill's added arbitration term became part of the contract. Under UCC § 2-207, an acceptance with additional terms still forms a contract unless acceptance is expressly conditioned on assent to the new terms; Mill's reply was not so conditioned. Because both parties are merchants, additional terms become part of the contract under § 2-207(2) unless (a) the offer expressly limits acceptance to its terms, (b) the new term materially alters the contract, or (c) the offeror objects within a reasonable time.
Here Baker's offer did not limit acceptance to its terms and Baker did not object. The decisive question is whether a binding-arbitration clause materially alters the contract. A clause that forces a party to surrender the right to a judicial forum is generally deemed a material alteration that would cause surprise or hardship. The arbitration term therefore does not become part of the contract, and the parties are not bound to arbitrate.
III. Baker's Right to Reject — Perfect Tender
In a single-delivery sale, UCC § 2-601 codifies the perfect tender rule: if the goods or tender fail in any respect to conform to the contract, the buyer may reject the whole, accept the whole, or accept any commercial units and reject the rest. Mill delivered 30 nonconforming bags of all-purpose flour out of 200; this is a failure to conform. Baker rejected within a reasonable time and seasonably notified Mill, so the rejection was effective. Baker was entitled to reject the entire shipment and was not obligated to keep the 170 conforming bags.
Mill might argue a right to cure under § 2-508. A seller may cure if the time for performance has not expired, or, where the seller had reasonable grounds to believe the tender would be acceptable, within a further reasonable time. Here delivery was on February 25 with a March 1 deadline, so Mill arguably retained a brief window to cure by tendering conforming flour. But Mill did not attempt to cure; it insisted Baker accept the shipment. Absent an actual offer to cure, the right does not bar Baker's remedies.
IV. Baker's Damages
Because Mill breached and Baker rightfully rejected, Baker may pursue buyer's remedies under § 2-711. Baker covered under § 2-712 by making, in good faith and without unreasonable delay, a reasonable substitute purchase. The cover remedy is the difference between the cover price and the contract price, plus incidental and consequential damages, less expenses saved.
Baker's contract price was $18 per bag and the cover price was $23 per bag, a difference of $5 per bag on 200 bags, or $1,000. Baker bought comparable flour promptly as the busy season approached, so the cover was reasonable and made in good faith. Baker may recover $1,000 in cover damages, plus any incidental costs of arranging the substitute purchase.
Conclusion. A contract was formed but the arbitration term did not become part of it, so Baker need not arbitrate. Baker properly rejected the entire nonconforming shipment under the perfect tender rule, and Mill did not cure. Baker may recover $1,000 in cover damages plus incidentals.
- Correctly selects UCC Article 2 at the outset and flags merchant status, controlling the whole analysis.
- Works the § 2-207 battle-of-the-forms step by step and resolves the material-alteration judgment call on arbitration.
- States the perfect tender rule and applies it to reject Mill's partial-acceptance argument.
- Raises and disposes of the seller's § 2-508 right to cure, showing both-sides analysis.
- Selects the right buyer's remedy (cover) and computes an exact damages figure with the statutory formula.
- Uses clean IRAC headings and ends with a conclusion that answers every call of the question.
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