Chapter 402

subch. II of ch. 402 SUBCHAPTER II

FORM, FORMATION, AND READJUSTMENT
OF CONTRACT

402.201 402.201 Formal requirements; statute of frauds.

402.201(1) (1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by the party’s authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subsection beyond the quantity of goods shown in such writing.

402.201(2) (2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of sub. (1) against such party unless written notice of objection to its contents is given within 10 days after it is received.

402.201(3) (3) A contract which does not satisfy the requirements of sub. (1) but which is valid in other respects is enforceable:

402.201(3)(a) (a) If the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller’s business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or

402.201(3)(b) (b) If the party against whom enforcement is sought admits in that party’s pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this paragraph beyond the quantity of goods admitted; or

402.201(3)(c) (c) With respect to goods for which payment has been made and accepted or which have been received and accepted (s. 402.606).

402.201 History History: 1991 a. 316.

402.201 Annotation Receipt and acceptance of goods consistent with an oral contract is part performance sufficient to take the oral contract out of the statute of frauds even though the conduct is not inconsistent with some other dealings arguably had between the parties. Gerner v. Vasby, 75 Wis. 2d 660, 250 N.W.2d 319 (1977).

402.201 Annotation The statute of frauds was not satisfied when the only indication of a purchase contract between the parties was the unexplained notation “purchase price” in a document prepared by one party in response to the other’s request for an appraisal. First Bank v. H.K.A. Enterprises, Inc., 183 Wis. 2d 418, 515 N.W.2d 343 (Ct. App. 1994).

402.201 Annotation Not every contract for the sale of goods over $500, nor every modification thereof, strictly complies with the requirements of the statute of frauds, and it would be unreasonable to declare categorically all such contracts unenforceable. The Uniform Commercial Code and Wisconsin case law recognize exceptions to the statute of frauds, including waiver and performance. An attempt at modification contemplates a completed oral modification of a written contract that prohibits oral modification. The inquiry into whether there has been an attempt at modification sufficient to operate as a waiver of the statute of frauds is closely related to the inquiry to determine whether there was a valid oral modification. Royster-Clark, Inc. v. Olsen’s Mill, Inc., 2006 WI 46, 290 Wis. 2d 264, 714 N.W.2d 530, 03-1534.

402.201 Annotation When a letter confirmed an oral agreement under sub. (2), subject to completion of formal memorializing documents, the bargain was enforceable even though the document was not executed. Lambert Corp. v. Evans, 575 F.2d 132 (1978).

402.201 Annotation The statute of frauds is not applicable in an action based on promissory estoppel. Janke Construction Co. v. Vulcan Materials Co., 386 F. Supp. 687 (1974).

402.201 Annotation The Statute of Frauds of the Uniform Commercial Code and the Doctrine of Estoppel. Edwards. 62 MLR 205 (1978).

402.202 402.202 Final written expression: parol or extrinsic evidence. Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:

402.202(1) (1) By course of dealing or usage of trade (s. 401.303) or by course of performance (s. 402.208);

402.202(2) (2) By evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.

402.202 History History: 2009 a. 320.

402.203 402.203 Seals inoperative. The affixing of a seal to a writing evidencing a contract for sale or an offer to buy or sell goods does not constitute the writing a sealed instrument and the law with respect to sealed instruments does not apply to such a contract or offer.

402.204 402.204 Formation in general.

402.204(1) (1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

402.204(2) (2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.

402.204(3) (3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

402.204 Annotation Even if the parties’ writings do not constitute a contract, a contract may be found through the parties’ conduct. Associated Milk Producers, Inc. v. Meadow Gold Dairies, Inc., 27 F.3d 268 (1994).

402.204 Annotation Shrinkwrap license agreements contained in computer software packages are enforceable unless their terms are objectionable on general contract grounds. ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (1996).

402.204 Annotation Offer and acceptance are defined more liberally under the Uniform Commercial Code than under Wisconsin common law. C.G. Schmidt, Inc. v. Permasteelisa North America, 825 F.3d 801 (2016).

402.204 Annotation Contract Formulation Under Article 2 of the Uniform Commercial Code. Edwards. 61 MLR 215 (1977).

402.205 402.205 Firm offers. An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed 3 months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

402.205 Annotation Although a bid for pipe did not meet the “firm offer” requirement, the facts pleaded and relied upon by the contractor to support its claim and to which the supplier responded in entering its defense gave rise to the doctrine of promissory estoppel. Janke Construction Co. v. Vulcan Materials Co., 386 F. Supp. 687 (1974).

402.206 402.206 Offer and acceptance in formation of contract.

402.206(1) (1) Unless otherwise unambiguously indicated by the language or circumstances:

402.206(1)(a) (a) An offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;

402.206(1)(b) (b) An order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods, but such a shipment of nonconforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

402.206(2) (2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

402.206 Annotation Offer and acceptance are defined more liberally under the Uniform Commercial Code than under Wisconsin common law. C.G. Schmidt, Inc. v. Permasteelisa North America, 825 F.3d 801 (2016).

402.207 402.207 Additional terms in acceptance or confirmation.

402.207(1) (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.

402.207(2) (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:

402.207(2)(a) (a) The offer expressly limits acceptance to the terms of the offer;

402.207(2)(b) (b) They materially alter it; or

402.207(2)(c) (c) Notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

402.207(3) (3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of chs. 401 to 411.

402.207 History History: 1979 c. 89; 1991 a. 148, 304, 315.

402.207 Annotation A seller’s “acknowledgment of order” that purports to deny liability for damages for defects becomes part of the contract only if it is assented to by the buyer. Air Products & Chemicals, Inc. v. Fairbanks Morse, Inc., 58 Wis. 2d 193, 206 N.W.2d 414 (1973).

402.207 Annotation When an offer to purchase contained the term “FOB, our truck, your plant, loaded,” the offeree’s response stated “as is, where is,” and the parties had no prior oral agreement, there was no valid contract, and the court could not reach the issue of whether additional or different terms in response to an offer destroyed an agreement between parties. Koehring Co. v. Glowacki, 77 Wis. 2d 497, 253 N.W.2d 64 (1977).

402.207 Annotation By signing an order form that provided that the buyer of a machine would indemnify and hold the seller harmless, the buyer expressly agreed to the provisions, whether or not there was a previously existing contract and whether or not the buyer read the order form before signing. Deminsky v. Arlington Plastics Machinery, 2001 WI App 287, 249 Wis. 2d 441, 638 N.W.2d 331, 01-0242.

402.207 Annotation Affirmed on other grounds. 2003 WI 15, 259 Wis. 2d 587, 657 N.W.2d 411, 01-0242.

402.207 Annotation An invoice is a written confirmation of a request for work by one party, the performance of work by the second, and the cost of the work agreed upon. While interest may not have been discussed originally, adding it to the bottom of the invoice constitutes the addition of a term not previously discussed between the parties, making the interest an additional part of the agreement unless one of the exceptions in sub. (2) applies. This section eliminates the traditional “meeting of the minds” requirement. Mid-State Contracting, Inc. v. Superior Floor Co., 2002 WI App 257, 258 Wis. 2d 139, 655 N.W.2d 142, 02-0761.

402.207 Annotation The question under sub. (2) (c) was not whether the defendant acquiesced to interest added to the bottom of invoices without inclusion in a contract, but whether the defendant objected to stop it. Mid-State Contracting, Inc. v. Superior Floor Co., 2002 WI App 257, 258 Wis. 2d 139, 655 N.W.2d 142, 02-0761.

402.207 Annotation This section recognizes that, in practice, parties’ forms may not be identical, a party might later add divergent terms, and the parties may not always read each other’s forms. This section allows for enforcement of the parties’ agreement, including the added terms. An invoice falls within the ambit of this section. It is a written confirmation of a request for work by one party, the performance of work by the second, and the cost of the work agreed upon. If purchase orders and order confirmations were immovable bookends to a contract, ensuing transactions between the parties would be composed of a cumbersome, inefficient series of mini-contracts. That is what this section seeks to avoid. Converting/Biophile Laboratories, Inc. v. Ludlow Composites Corp., 2006 WI App 187, 296 Wis. 2d 273, 722 N.W.2d 633, 05-1628.

402.207 Annotation What constitutes “supplementary terms” under sub. (3) is not limited to provisions under this chapter, but includes any terms arising under the Uniform Commercial Code and necessarily encompasses those sections relating to course of performance under s. 402.208, course of dealing, and usage of trade under s. 401.205. Dresser Industries, Inc. v. Gradall Co., 965 F.2d 1442 (1992).

402.207 Annotation When a contract specified “free alongside” (FAS) terms, the buyer’s confirmation form containing inconsistent terms did not relieve the buyer of liability for goods properly delivered FAS. Melrose International Trading Co. of Canada v. Patrick Cudahy Inc., 482 F. Supp. 1369 (1980).

402.207 Annotation The UCC Battle of the Forms: Answers to Common Questions. Richardson. Wis. Law. Mar. 1996.

402.208 402.208 Course of performance or practical construction.

402.208(1) (1) Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement.

402.208(2) (2) The express terms of the agreement and any such course of performance, as well as any course of dealing and usage of trade, shall be construed whenever reasonable as consistent with each other; but when such construction is unreasonable, express terms shall control course of performance and course of performance shall control both course of dealing and usage of trade (s. 401.303).

402.208(3) (3) Subject to s. 402.209 on modification and waiver, such course of performance is relevant to show a waiver or modification of any term inconsistent with such course of performance.

402.208 History History: 2009 a. 320.

402.208 Annotation The requirement of “conformity” does not subject the seller to performing the contract to the satisfaction of the buyer, but only to the terms of the contract. H.B. Fuller Co. v. Kinetic Systems, Inc., 932 F.2d 681 (1991).

402.208 Annotation A single occasion of conduct does not constitute a “course of performance” within the meaning of this section. Maritime-Ontario Freight Lines, LTD. v. STI Holdings, Inc., 481 F. Supp. 2d 963 (2007).

402.209 402.209 Modification, rescission and waiver.

402.209(1) (1) An agreement modifying a contract within this chapter needs no consideration to be binding.

402.209(2) (2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.

402.209(3) (3) The requirements of s. 402.201 must be satisfied if the contract as modified is within its provisions.

402.209(4) (4) Although an attempt at modification or rescission does not satisfy the requirements of sub. (2) or (3) it can operate as a waiver.

402.209(5) (5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.

402.209 Annotation Not every contract for the sale of goods over $500, nor every modification thereof, strictly complies with the requirements of the statute of frauds, and it would be unreasonable to declare categorically all such contracts unenforceable. The Uniform Commercial Code and Wisconsin case law recognize exceptions to the statute of frauds, including waiver and performance. An attempt at modification contemplates a completed oral modification of a written contract that prohibits oral modification. The inquiry into whether there has been an attempt at modification sufficient to operate as a waiver of the statute of frauds is closely related to the inquiry to determine whether there was a valid oral modification. Royster-Clark, Inc. v. Olsen’s Mill, Inc., 2006 WI 46, 290 Wis. 2d 264, 714 N.W.2d 530, 03-1534.

402.209 Annotation A dealership agreement is primarily for the sale of goods, making this section applicable. American Suzuki Motor Corp. v. Bill Kummer, Inc., 65 F.3d 1381 (1995).

402.210 402.210 Delegation of performance; assignment of rights.

402.210(1) (1) A party may perform that party’s duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his or her original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.

402.210(2) (2) Unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on the other party by the contract, or impair materially the other party’s chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor’s due performance of the assignor’s entire obligation can be assigned despite agreement otherwise.

402.210(3) (3) The creation, attachment, perfection, or enforcement of a security interest in the seller’s interest under a contract is not a transfer that materially changes the duty of or increases materially the burden or risk imposed on the buyer or impairs materially the buyer’s chance of obtaining return performance within the purview of sub. (2) unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the seller. Even in that event, the creation, attachment, perfection, and enforcement of the security interest remain effective, but:

402.210(3)(a) (a) The seller is liable to the buyer for damages caused by the delegation to the extent that the damages could not reasonably be prevented by the buyer; and

402.210(3)(b) (b) A court having jurisdiction may grant other appropriate relief, including cancellation of the contract for sale or an injunction against enforcement of the security interest or consummation of the enforcement.

402.210(4) (4) Unless the circumstances indicate the contrary a prohibition of assignment of “the contract” is to be construed as barring only the delegation to the assignee of the assignor’s performance.

402.210(5) (5) An assignment of “the contract” or of “all my rights under the contract” or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by the assignee to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract.

402.210(6) (6) The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his or her rights against the assignor demand assurances from the assignee (s. 402.609).

402.210 History History: 1991 a. 316; 2001 a. 10.

subch. III of ch. 402 SUBCHAPTER III

GENERAL OBLIGATION AND CONSTRUCTION
OF CONTRACT

402.301 402.301 General obligations of parties. The obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance with the contract.

402.302 402.302 Unconscionable contract or clause.

402.302(1) (1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

402.302(2) (2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.

402.302 Annotation Unconscionability requires an absence of meaningful choice on the part of one party, together with contract terms that are unreasonably favorable to the other. To find unconscionability requires a certain quantum of both procedural and substantive unconscionability. Procedural unconscionability bears on a meeting of the minds, while substantive unconscionability pertains to the reasonableness of the contract terms themselves. Deminsky v. Arlington Plastics Machinery, 2003 WI 15, 259 Wis. 2d 587, 657 N.W.2d 411, 01-0242.

402.302 Annotation Discussing the conspicuousness necessary for an effective warranty disclaimer. H.B. Fuller Co. v. Kinetic Systems, Inc., 932 F.2d 681 (1991).

402.303 402.303 Allocation or division of risks. Where this chapter allocates a risk or a burden as between the parties “unless otherwise agreed”, the agreement may not only shift the allocation but may also divide the risk or burden.