Sierra Nevada Trees Inc. Legal Analysis
The disclaimer that protects Sierra Nevada Trees Inc - Sierra Nevada Trees Inc. Legal Analysis introduction. from liability in a claim for consequential damages contained in the purchase order acknowledgement is part of the agreement with Burger Ranch Inc. Burger Ranch Inc. accepted the terms of the offer and there was proper performance by both parties.
As stated in the Gould Commercial Code Section 2-207 subsection 1, “A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. ” In this case, the seller (Sierra Nevada Inc. ) stated additional terms in the purchase order acknowledgement that provided new terms to the contract.
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These additional terms were sent within 5 days of the receival of the purchase order to the buyer (Burger Ranch Inc. ), a reasonable amount of time necessary to meet the guidelines set by the Gould Commercial Code. Furthermore, the buyer had enough time, approximately two months, to negate the contract if they found the consequential damages disclaimer not to be in their best interest. However, they still accepted the new terms in the purchase order acknowledgement, had the trees shipped to their locations, paid for the trees once they were set up, and never objected to these terms until a single unfavorable incident on December 2nd.
Additionally, the fact that both parties performed their respective obligations under the terms of the contract despite the disclaimer can be construed that the buyer accepted the terms of the contract. Sierra Nevada Trees Inc. was obligated to provide, set up, and decorate trees and in return Burger Ranch Inc. was obligated to pay $150 per tree upon the seller’s performance. These obligations were met by both parties. There must be acceptance before there can be performance.
According to Article 2A Section 515 of the Uniform Commercial Code, “Acceptance of goods occurs after the buyer has had a reasonable opportunity to inspect the goods and (a) the buyer signifies or acts with respect to the goods in a manner that signifies to the seller or the supplier that the goods are conforming or that the seller will take or retain them in spite of their nonconformity; or (b) the seller fails to make an effective rejection of the goods. ” Mr. Simon, the manager of the damaged Burger Ranch, inspected the tree, was satisfied with the tree, initialed the receipt, and paid the $150 for the tree.
These facts definitively imply that the buyer did accept the goods after he had a reasonable opportunity to inspect it and then made the judgement that it conformed to their satisfaction, therefore legally accepting the goods. The buyer may contend that regardless of these facts, the disclaimer clause of the purchase order acknowledgement represents a “material alteration” to the original contract and therefore would not become part of the contract as per Gould Commercial Code Section 2-207 subsection 2, “The additional terms are to be construed as proposals for addition to the contract.
Between merchants such terms become part of the contract unless: a. The offer expressly limits acceptance to the terms of the offer; b. They materially alter it; or c. Notification of objection to them has already been given or is given within a reasonable time after notice of them is received. ” Despite this contention, the additional consequential damages disclaimer does not represent a “material alteration” that would hold with the Gould Commercial Code and render the clause invalid. In the precedent case of Aguilar Manufacturing Inc v Richfield Inc. the court was faced with a similar dilemma in which one party alleged that the inclusion of a one-year limitation clause materially altered the original contract and therefore rendered it invalid.
The court presiding over this case ruled in its decision that the clause in question met the guidelines set out by the Gould Commercial Code that “Examples of clauses which involve no element of unreasonable surprise and which therefore are to be incorporated in the contract unless notice of objection is seasonably given are: . . . clause fixing a reasonable time for complaints within customary limits. ” The court ruled that since the plaintiff had a reasonable amount of time to object to the clause and that such limitation clauses are normal, there was no material alteration of the contract. Additionally, Mr. Washington of Burger Ranch Inc. asserts that since the purchase order acknowledgment wasn’t signed the consequential damages disclaimer isn’t legally applicable. This assumption is false since, as proved above, both parties abided by their respective obligations laid out in the contract equalling performance.
Essentially, performance by both parties equals acceptance of that contract in spite of a missing signature. Valid transactions took place despite the missing signature. Mr. Washington, most likely wouldn’t have raised the issue of a missing signature had the tree in question not been defective. Also, in court this argument would be looked upon as one-sided as it gives the buyer the opportunity to raise an issue anytime they choose, giving them an unfair advantage over the seller.. Therefore, the additional terms on the purchase order acknowledgement that protect Sierra Nevada Trees Inc. rom liability of consequential damages form a valid part of the agreement with Burger Ranch Inc. However, despite this conclusion, the court will have the final say in deciding this case depending based upon the court’s own contentions and agenda.
Potential Liability for Consequential Damages: Assuming that a court deems that the consequential damages disclaimer is not part of the contract and further assuming that the delivery crew was negligent in decorating the tree, it is likely that Sierra Nevada Trees Inc. an be held liable for lost profits/consequential damages based upon Burger Ranch Inc. ’s provided financial data. According to Article 2 Section 715 of the Uniform Commercial Code, “(2) Consequential damages resulting from the seller’s breach include (a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and (b) injury to person or property proximately resulting from any breach of warranty.
In this case, the deliverers’ negligent decoration of the tree amounts to a breach of the implied and express warranty of merchantability set within the general conditions of the purchase order and as stated within the UCC, consequential damages may be awarded. Under the “Reasonable Certainty” standard, financial data used to calculate the amount of lost profit must not be speculative, can rely on past data and statistics, and does not require absolute precision. In the case of Kids world v…. the court ruled that since the financial data was too speculative it could not be used to award the plaintiff consequential damages from lost profit, however the data provided by Burger Ranch According to Article 2 Section 719 of the Uniform Commercial Code, “(3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not. ”